Health officials knew they’d see thousands of new Medicaid enrollees regardless of their state’s decision to expand the program under the Affordable Care Act. Reports delivered to state legislatures referred to this population as the “woodwork effect”—people who were eligible under the existing program but didn't know it until they sought insurance from an online marketplace known as an exchange. With the recent release of first-month enrollment data from state and federal exchanges, they’re getting a glimpse of the effect, but experts caution that it’s too early to make any conclusions about its budgetary impact this fiscal year.
Between the 14 state-run exchanges, the District of Columbia’s exchange and the federal exchange that serves as a gateway for 36 states that declined to run their own, nearly 400,000 people qualify for Medicaid or the Children’s Health Insurance Program, another program for low-income people funded jointly by federal and state governments. Federal support for existing enrollees ranges by state. New enrollees who already qualified but didn't know it are covered at existing levels of federal support, not the 100-percent level of adults living in states that are expanding the program.
About half the states have signed onto Medicaid expansion that covers all childless adults earning up to 138 percent of the federal poverty level. Very few states cover anyone within that population now, and many have existing eligibility levels that make it hard for low-income parents to get health coverage through Medicaid.
The 400,000 figure provided by HHS doesn't distinguish between people who were already eligible and those who are part of the expansion population, but about 100,000 of them came from non-expansion states, indicating that upward of a quarter or more of potential new sign-ups were already eligible. The Congressional Budget Office estimates 9 million people will be added to Medicaid rolls in the health law’s first year, but a national figure for the woodwork effect alone is hard to come by. Estimates have come from the state level and have varied depending on population size, poverty, the number of uninsured and other factors. Kentucky, for instance, estimates about 17,000 of its new Medicaid enrollees this year will be people who were already eligible. One estimate in North Carolina was about 70,000. In Ohio, there are more than 300,000 who qualify under existing eligibility guidelines but aren't enrolled.
Speaking a day before HHS released data, Tennessee Medicaid Director Darin Gordon told a conference of health officials and contractors that he’s seeing a higher-than-anticipated woodwork effect. “Based on early reports, it’s a little higher than estimated (in Tennessee), and talking to other states it’s a little higher than estimated,” he said. About 4,000 people in Tennessee were deemed eligible for Medicaid in the first month of exchange enrollment, according to HHS.
But nationally, others are hearing mixed reports. “For every state saying it’s higher than expected there are others saying lower than expected and others saying it’s about as expected,” said Matt Salo, who heads the National Association of Medicaid Directors. Regardless of the projections, though, it’s too early to predict how state budgets will fare under the strain of new enrollees covered under the existing federal match program, he said. In large part that’s because it’s too early to assess the health of new enrollees, Salo added.
“Are they the transitional (food-stamp-like) population that are low cost and relatively healthy, or are they more of the (Supplemental-Security-Income) population or people with co-occurring substance abuse and mental health disorders? That obviously has a huge impact on not only the total cost but how you need to prepare your provider and plan infrastructure,” he said.
Scott Pattison, executive director of the National Association of State Budget Officers, echoed Salo. He said the health of people coming to Medicaid offices through the woodwork effect matters a lot more than their overall numbers. With a program like Medicaid, which is prone to unpredictability and cost overruns, state officials already expect the unexpected and have done so in anticipation of the health law, he said. “Finance and budget people are fairly used to having a fairly high level of uncertainty with Medicaid,” Pattison said.