A new report Gorman Actuarial has revealed a strange healthcare problem. Even though Medicaid patients in New Hampshire are younger, they cost 39% more than those in the individual insurance market.
Medicaid and the Premium Assistance Program (PAP) helped expand New Hampshire’s individual health insurance market in 2016 by 75%. Yet, even though those enrolled in Medicaid as beneficiaries were younger, they actually incurred more costs than those in the individual market – something that policy makers thought was impossible.
Over 59% of Medicaid patients were found to be under 40 years old, compared to those in the non-Medicaid insurance market, only 39% were under 40. Medicaid beneficiaries over the age of 50 were found to be 46%, while in the non-Medicaid population, those over 50 years of age accounted for only 24% of the total.
“The age differences in these two populations might suggest that observed medical costs for the [Premium Assistance Program] population should be lower than the Non-[Premium Assistance Program] population, not higher,” the report states.
The report concluded that Medicaid beneficiaries however cost more. Those enrolled on Medicaid had an average claim cost of $538, while the non-Medicaid population had an average claim cost of $428.
The study also found that all individuals who signed up for Medicaid enrolled in a plan equivalent to platinum, while out of the individuals not on Medicaid, 35% signed up for a bronze plan.
“This distribution reflects those individuals who receive subsidies to enroll in more comprehensive plan designs,” the report states. “Since [Premium Assistance Program] enrollees are enrolled in more comprehensive plans, the lower member cost sharing has less influence on enrollee behavior and utilization of health care services. Therefore, PAP enrollee’s medical costs may be higher due to induced demand.”
Following adjustments for age and an increase in demand, the report found that individuals enrolled on Medicaid incur almost 39% more costs those in the individual market.
Additionally, the study discovered that with Obamacare’s risk-adjustment program, which was used to transfer funds from insurers that had low-risk individuals to those with high-risk ones, $41 million was taken from Medicaid covered plans to the others on the individual insurance market.
Reportedly, if New Hampshire had not expanded Medicaid and that population was not included in the individual market, there would have been a decline of 14% in claim costs.
“An analysis of 2016 data indicates that the PAP population has higher medical expenditures which impacts the overall individual market risk pool,” the report explains. “If this population was not included in the single risk pool, [Gorman Actuarial] projects that adjusted medical claim costs would have been lower by approximately 14% in calendar year 2016.”