States Refusing ACA Medicaid Expansion Will Still See Growth, According to Findings from Decision Resources Group
March 31, 2014 – Burlington, Mass.
– Decision Resources Group finds that Medicaid expansion--occurring in 25 states plus the District of Columbia through the Affordable Care Act and special waivers--is creating substantial new business for managed care companies as more states expand Managed Care Organization (MCO) contracts to hold down costs. But many low-income people shopping the ACA’s health insurance exchanges have been surprised to learn they or their children are Medicaid-eligible, driving up enrollment in non-expansion states.
Other key findings from the 2014 Medicaid Analyzer report entitled Opportunity, Growth Follow ACA Expansion
High-acuity populations: States are expanding their MCO contracts to cover more high-acuity populations, including those in long-term care; the aged, blind, and disabled; the mentally ill; and others with high medical and pharmacy utilization.
Medicaid expansion funds: States like Arkansas have won special approval to use Medicaid expansion funds to cover their expansion population through exchange plans. Those plans typically have a lower Rx benefit and less access to prescription drugs than in Medicaid.
Medicaid pharmacy benefit: Medicaid MCOs are handling more of the Medicaid pharmacy benefit than ever before: 58 percent of Medicaid members have their pharmacy benefits managed by MCOs as of July 2013.
Medicaid MCOs: The flurry of 2012-2013 M&A activity among Medicaid MCOs has given the top five national Medicaid MCOs a whopping 37 percent share of the managed Medicaid market as of July 2013. That concentration will grow through 2014.
Comments from Decision Resources Group Principal Analyst Paula Wade:
“As Medicaid MCOs take on more high-acuity Medicaid patients, the key to profit will lie in managing their care and keeping them out of expensive institutional settings.”
“Medicaid is a highly politicized, expensive program serving a vulnerable segment of the population—and that is driving some states’ refusal to expand the program, as well as the gradual erosion of benefits—including access to drugs—in many states. Those states that have expanded the program to cover the adult working poor are essentially creating an income-based healthcare safety net.”