Actuaries: Medicaid Expansion Decisions Can Affect Private Plans

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Sep 18, 2012, 12:44 ET

WASHINGTON, Sept. 18, 2012 /PRNewswire-USNewswire/ -- States' decisions about whether to expand Medicaid coverage or not can have implications for private health insurance plans, including increased premiums, according to the non-partisan American Academy of Actuaries.

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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 currently are considering whether and to what extent to implement the expansion, which would increase Medicaid eligibility to 133 percent 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 today released a Decision Brief, Implications of Medicaid Expansion Decisions on Private Coverage, highlighting how individual state decisions to expand Medicaid coverage could affect private health-care plans. In the brief, 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 also may 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.

The Decision Brief is part of the Academy's efforts to provide insights on health reform and ACA implementation to state and federal policymakers and regulators.

The American Academy of Actuaries is a 17,000-member professional association whose mission is to serve the public and the U.S. actuarial profession. The Academy assists public policymakers on all levels by providing leadership, objective expertise, and actuarial advice on risk and financial security issues. The Academy also sets qualification, practice, and professionalism standards for actuaries in the United States.

SOURCE American Academy of Actuaries