Commentary

What can NC do to lower premiums in the Marketplace? Expand Medicaid.

Earlier today, the federal Department of Health and Human Services (HHS) released a report showing that premiums for health insurance plans on the Marketplace were 7% lower in states that had expanded eligibility for the Medicaid program as called for by the Affordable Care Act (ACA). So not only would closing the coverage gap create new jobs, generate economic activity for the state, increase access to care, and improve health outcomes, but it would also lower health insurance premiums for more than half a million North Carolinians who buy coverage on the Health Insurance Marketplace.

The study controlled for many of the other factors that could affect premium rates and found that Medicaid expansion was a clear difference-maker, as noted by the accompanying press release:

“The HHS analysis uses 2015 data on HealthCare.gov plans and enrollment to assess how Medicaid expansion affects Marketplace premiums. It controls for differences across states in demographic characteristics, pre-ACA uninsured rates, health care costs, and state policy decisions other than Medicaid expansion, finding a 7 percent difference in Marketplace premiums holding these factors fixed.”

In states that fully implement the ACA, consumers with incomes below 138% of the federal poverty level (FPL) can qualify for Medicaid, while those with incomes between 138-400% FPL may qualify for financial assistance on the Marketplace. However, in non-expansion states like North Carolina, some of the would-be Medicaid enrollees end up on the Marketplace, as they can qualify for financial assistance between 100%—not 138%—and 400% FPL. Not expanding Medicaid forces these higher-cost consumers into the Marketplace risk pool, increasing premiums for other enrollees. This study shows that expanding Medicaid would be a win-win, as these consumers and 300,000 others in the coverage gap can enroll in Medicaid (where they’re considered lower risk than the traditional Medicaid population), while their neighbors enrolling in private coverage on the Marketplace can enjoy lower premiums.

With news about incoming premium hikes and issuers having trouble affording costs of Marketplace enrollees, it’s important that decision-makers here in North Carolina explore what can be done to better the circumstances for their constituents. While the conversation about how to improve the ACA may be a complicated one, closing the coverage gap by expanding Medicaid in North Carolina is a no-brainer. It would help the uninsured, boost the economy, and lower premiums for low– and middle-income North Carolinians with private coverage. How long will state lawmakers continue to cut off their nose to spite their face?

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