The Impact of Medicaid Expansion on Medicaid Focused Insurers in California

By McCue, Michael J. | Inquiry, Annual 2015 | Go to article overview

The Impact of Medicaid Expansion on Medicaid Focused Insurers in California


McCue, Michael J., Inquiry


Abstract

To gain insights into the impact of Medicaid Expansion under the Affordable Care Act, this study assesses the enrollment, utilization, and financial performance measures of California Medicaid focused health insurers. The study compares these quarterly measures, during the expansion period of 2014 to the same quarterly measures in 2013 and 2012. During 2014, Medicaid focused insurers expanded enrollment, decreased inpatient days, and generated higher profit margins.

Keywords

Medicaid Expansion, ACA, health insurers, financial performance, utilization

Introduction

In January 2014, the Affordable Care Act (ACA) expanded Medicaid coverage for adults up to the age of 65 with incomes under 138% of the federal poverty level. (A major limitation of this study is that the membership increase in Medicaid may also stem from the "out of wood work effect," whereby individuals who were previously eligible for MediCal, but were not enrolled, were found to be eligible when signing up for health care insurance under the ACA. One analysis estimates that at least 5% of California Medi-Cal members were previously eligible [see Gorn D, "Medi-Cal Enrollment Jumps to 11.3 Million," CaliforniaHealthline. http://www.californiahealthline.org/capitol-desk/2014/11/medical-jumps-to-11-3-million. November 12, 2014.]) California's Medicaid program called the "Medi-Cal" program has the largest Medicaid enrollment (1) in the United States. (2) (Total Medi-Cal enrollment grew to 11.9 million members by December of 2014 compared with 8.6 million members at the beginning of 2014.) To assess the impact of Medicaid Expansion, this study measures the enrollment, utilization, and financial measures of Medicaid focused health insurers during the quarterly time periods of 2014. (3,4)

Study Data and Methods

The study initially identified 27 full-service health insurers with Medi-Cal members in 2014. (The study excluded one specialty full-service insurer that was focused on aids treatment and one insurer with a senior care focus.) To assess the direct impact of the Medi-Cal expansion on utilization and financial measures, (5) the study identified 17 insurers with 70% of their enrollment in the Medi-Cal program. Enrollment and utilization data of these insurers were collected from the financial statement database of the California's Department of Managed Care. (6) (In 2013 and 2014, one Medicaid focused health insurer did not report inpatient days per thousand and ambulatory encounter data. Therefore, the utilization analysis is based on 16 health insurers. For 2012, only 12 Medicaid focused plans reported encounter data and one Medi-Cal health insurer's Medicaid enrollment was below 70% in 2012.) The study design was an "interrupted time series design," whereby the quarterly financial performance and utilization measures during the expansion period of 2014 were compared with the same quarterly measures in the prior years of 2013 and 2012. (7) (The growth analysis of these data points is defined as quarter over quarter basis. The major weaknesses of this design is the lack of a comparison group of health insurers that did not experience Medicaid Expansion in the state of California during these periods, which would enable the design to control for other extraneous events that occurred during these time periods. Given this design, the study compared over time each respective quarterly period of 2014 with its respective quarterly periods of 2013 and 2012. The strength of this design is that each Medicaid focused health insurer is able to act as its own control for seasonal effects that may occur from enrolling and dis-enrolling members as well as managing their care.)

Enrollment and Utilization Results

Medicaid focused insurers increased their total Medi-Cal enrollment in the last quarter of 2014 by 47% to 7.7 million members, from 5.2 million members for the last quarter of 2013 (see Table 1). …

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