How Expanding Medicaid Coverage May Affect Private Plans

A paper by the American Academy of Actuaries highlights how states’ decisions to expand
Medicaid coverage could affect private health-care plans. The U.S. Supreme Court’s June 28 decision on the Affordable Care Act (ACA) makes the implementation of the ACA’s Medicaid expansion optional for states. Many states are considering whether and to what extent to implement the expansion, which would increase Medicaid eligibility to 133% of the federal poverty level. “States need to consider the impact on private plan premiums and on employer penalties as they make their decisions on implementing the Medicaid expansion provisions in the ACA,” said Mita Lodh, member of the Academy’s Health Practice Council.

The Academy makes the following observations:

• Individual market premiums could increase in states that opt out of the Medicaid expansion, due to health status differences of new enrollees.
• Exchange premiums may also increase because fixed reinsurance subsidies would be spread over larger enrollee populations.
• Basic Health Program decisions by states, pending clarifications from the Department of Health and Human Services, could affect the risk profile of enrollees in an exchange.
• Employers may be at greater risk of penalties in states that don’t expand Medicaid eligibility.

For more information, visit www.actuary.org

Last Updated 9/8/2017

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