Report: If Medicaid expansion ends, be prepared to pay more for private insurance

A new report released last week asks a fairly straightforward question: What would happen to the individual health insurance market in Montana if Medicaid expansion ended?

The answer is relatively easy to predict, say the authors of a new report, "Ending Medicaid Expansion: Effects on the Individual Market."

The report concludes that several related impacts would happen if Montana became the first — and only state — to end Medicaid expansion: Private insurance premiums would rise while the number of uninsured patients would soar, placing considerable financial strain on the state's rural healthcare network, which hasn't seen a single hospital closure since Medicaid's expansion began in 2015.

If Montana discontinued the Medicaid expansion program, it would mean that an estimated 54,000 to 74,000 would lose coverage, and the number of residents uninsured could rise to more than half of the population. Of those losing coverage, between 13,000 and 33,000 may have to find insurance on the private marketplace, if at all.

Wakely Consulting Group, which conducted the analysis the report on behalf of the Montana Healthcare Foundation, assumed that the group of newly uninsured Montanans would be somewhat less healthy than the private insurance customers, and that would cause premiums to rise between 6% and 8%. Translated to dollars, Wakely estimates that would mean on average an additional $547 to $767 per member.

"To date, of the 41 states (including DC) that have adopted the Medicaid expansion program, none have ended it. Consequently, there is no historical precedent as to what such a change could do," the report states.

However, two other studies and the federal Department of Health and Human Services have studied the private-market insurance rates for those states that did not opt for the Medicaid expansion and found that premiums were between 7% and 11% higher.

The report also predicts fewer former Medicaid enrollees will migrate back to the private individual marketplace, causing the percentage of uninsured residents to rise.

"The increase in cost-sharing, reduction in benefits, and, in some case, increases in premiums for individual enrollees will likely result in some portion of the Medicaid expansion beneficiaries becoming uninsured or seeking coverage elsewhere (for example, coverage that does not meet major medical standards like limited short-term duration plans)," it said.

The report traces the effects that could happen statewide if the percentage of uninsured Montanans started rising, which would substantially jeopardize healthcare systems' funding and operation.

"The current uninsured rate among non-elderly in Montana is slightly above the national average of 9.8% and has decreased materially since 2014. All scenarios estimated a significant increase in the number of uninsured individuals in the state, ranging from 37% to 51% as a direct result of Medicaid expansion sunsetting," the report noted.

With the current number of residents that don't have any coverage, Montana's level of uninsured could rise to be between 199,000 and 219,000.

"Prior research indicates that expansion reduced the number of hospital closures. Consequently, the reverse should also be true," the report said. "Ending Medicaid expansion should reduce provider revenue and increase the number of provider closures."

In addition to decreasing the availability of care and harming healthcare systems, the report also said that additional revenue comes to the state from the federal government and that would hurt the state budget.

And that's before factoring in what may happen with individual health conditions.

"There is vast literature on the positive effects Medicaid coverage has on the health status of beneficiaries, specific health conditions like cancer and diabetes, chronic conditions like heart disease, people with disabilities, maternal health, infant health outcomes, substance abuse treatment," the report said. "Additionally, specific populations such as federally recognized Native American Tribes may be even more adversely affected than the general population."