If States Opt Out of Medicaid Expansion, Premiums for Others May Rise

By Deborah Hirsch
TMCnet Contributor

My husband still complains about the healthcare law and having to buy insurance. But he’s really going to scream when he learns that, if and when he does buy it, his premiums may almost immediately go up, according to a story by Sarah Kliff.

A new report by the Academy of American Actuaries said premiums would indeed rise if states decide to opt out of the public insurance expansion, she reported.

If a state decides not to expand its Medicaid program, residents who qualify for it – individuals making between $11,170 and $14,893 – become eligible for subsidized health insurance on the public exchange, and they “can be expected to have higher healthcare needs than the higher-income exchange enrollees,” Kliff quoted the report.

To prove its point, the brief estimated, using CBO data, that those higher healthcare costs will be 2 percent higher than “projections made under the assumption that all states do expand Medicaid,” Kliff revealed.

Those premium increases would hit both the federal government, which helps buy coverage for subsidized individuals, as well as people like my husband (and me) themselves.

States that opt out, however, are likely to see premiums tick up even more. So far, California and Michigan are the only two charging ahead, while 15 other states are looking over healthcare reform, and all it entails.

Kliff blamed “a very wonky, Obamacare provision about reinsurance” for the rise in premiums. “When the Affordable Care Act was written, there was worry that very sick people would flood the insurance exchanges when they launched the exchanges. That would cause insurance premiums to spike,” she wrote.

To prevent that from happening, the Affordable Care Act included $25 billion in reinsurance funds: as Kliff explained, money meant to stabilize the insurance market, and send extra subsidies to the insurers that ended up with really sick members.

So if states choose not to participate in the Medicaid expansion, that same amount of money will be expected to cover a bigger number of people.

Fortunately for my family, we live in Connecticut, one of the states which already has a health insurance exchange. But my husband’s still not happy! 

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