These states rejected Obamacare’s Medicaid expansion, but Medicaid is expanding there anyway

Even states that refused Obamacare's Medicaid expansion are seeing enrollment growth in the health-care program, according to a new analysis.

Medicaid enrollment in 17 of the 26 states that hadn't expanded Medicaid as of the end of March saw their rolls increase by a combined 550,300 new beneficiaries, reports the Avalere Health consulting firm.

The Affordable Care Act expands the Medicaid program to adults earning under 138 percent of the federal poverty level, but the 2012 Supreme Court decision on the health-care law said states couldn't be forced to expand their programs. About half the states haven’t joined, mainly arguing that Medicaid is a broken, unaffordable system.

The Medicaid growth between October and March varies across these 17 states, ranging from .1 percent growth in Texas to 10.1 percent growth in Montana. Georgia's 98,000 new enrollees, accounting for a 5.8 percent increase in the state's Medicaid enrollment, were the most of any state.

(Avalere Health)
(Avalere Health)

These states, just like the ones that did expand Medicaid, are experiencing what's known as the "woodwork effect" among people who were previously eligible for coverage under existing Medicaid rules but didn't sign up. Those previously eligible are now seeking coverage as there's a massive effort to get people enrolled. The federal Centers for Medicare and Medicaid Services has reported Medicaid enrollment numbers so far, but the agency hasn't yet said how many come from the ACA expansion or were eligible under existing rules.

There's a big difference, however, in how states pay for woodwork enrollees and people newly eligible for Medicaid coverage. The federal government pays 100 percent of the costs for the expansion group through the end of 2016, and that reimbursement eventually ratchets down to 90 percent. The woodwork enrollees are financed by the traditional Medicaid system, in which the federal government pays on average 57 percent of the costs, and the state chips in the rest.

This is particularly important for state budgets. States knew they'd have previously eligible people seeking Medicaid coverage this year, so it will be interesting to see how accurately they accounted for the woodwork effect.

Jason Millman covers all things health policy, with a focus on Obamacare implementation. He previously covered health policy for Politico.
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