Some industry experts are warning that states that chose not to expand Medicaid coverage under Obamacare could see higher insurance premiums next year as hospitals continue to shift the costs of uncompensated care to private insurers.
Washington state Insurance Commissioner Mike Kreidler raised the issue at the White House last week during a gathering of state insurance commissioners with President Barack Obama.
Others, though, question whether uncompensated care could have much effect if any on 2015 rates, arguing that the rates are more likely to reflect each market's competitive landscape and the costs of caring for people newly covered through the insurance exchanges.
Washington was one of 26 states that did expand Medicaid in 2014, and Mr. Kreidler is right, according to hospital associations in some of the states that did not.
In Nebraska for instance, hospitals provide uncompensated care for many of the 54,000 uninsured residents who would have qualified for coverage under Medicaid expansion. “As a result of Nebraska's failure to expand Medicaid, insured Nebraskans are likely to see an increase in health insurance premiums as they continue to cover the uncompensated healthcare costs of the uninsured,” said Adrian Sanchez, a spokesman for the Nebraska Hospital Association.
In the course of Indiana hospitals' unsuccessful campaign to persuade state leaders to raise Medicaid eligibility last year, the Indiana Hospital Association generated a report indicating individuals would see premiums drop by $241 and families by $691 in 2015 if Indiana extended coverage to an additional 400,000 residents under the Patient Protection and Affordable Care Act.
“We do believe there would be savings in premiums for consumers from coverage expansion,” said Brian Tabor, vice president of government relations at the association.
Premium increases should be more moderate in states that have expanded Medicaid because of the downward effect on uncompensated care in the system, said Barbara Markham Smith and Vernon Smith of the consulting firm Health Management Associates.
Vernon Smith is a former Medicaid director for Michigan, and Barbara Markham Smith was director of HHS' division overseeing the CO-OP program, which provides grants and loans for consumer-oriented plans under the ACA. They added the effect would apply to premiums both inside and outside the new insurance marketplaces established under the law.
But other factors could have more significant influence on premiums for 2015 and even 2016, such as the number and cost of health care services pursued by the newly insured and mix of young and healthy people in the risk pools, said Mary Beth Chambers, a spokeswoman for Blue Cross and Blue Shield of Kansas.
Further she added that even if Kansas had expanded Medicaid this year, insurance companies would base premiums on claims experience from 2013, a year without guaranteed issue of coverage, and its best actuarial assumptions for 2014 claims experience.
As a result, “the full impact of this first year of expanded coverage might not fully be reflected in premiums until 2016,” she said.
Jeff Drozda, CEO of the Louisiana Association of Health Plans, agreed the biggest drivers of premiums increases, if there are any, will be the cost of medical procedures and specialty pharmaceutical drugs. He added that Louisiana has a generous fund to offset uncompensated care at hospitals.
The answer to whether a state expansion's decision will have an impact on premiums will also depend much on the makeup of a particular market, said John Holahan, a fellow at the Urban Institute.
In a competitive market, all the payers would have to agree to increase rates, Mr. Holahan said. “I'm skeptical that would happen; all it would take is one that didn't want to charge higher premiums and then that would be it.”
Representatives from the National Association of Insurance Commissioners and several insurance departments in states that declined to expand Medicaid said it's too soon to judge how that decision will affect rates.
Virgil Dickson writes for Modern Healthcare, a sister publication of Business Insurance.