Last week, the Centers for Medicare and Medicaid Services released its 2014 Actuarial Report on the Financial Outlook for Medicaid.
The report is making headlines because the actuaries estimate that for 2014 the newly eligible Medicaid expansion population had costs greater than the non-newly eligible Medicaid population.
But, Emma Sandoe writes in Health Affairs, “While we still do not have final figures on how much new Medicaid enrollees spent on medical care in 2014, we do have evidence—including a recent study by Naderah Pourat and co-authors published in the July issue of Health Affairs—that primary care and care coordination can help reduce the initial care costs of Medicaid enrollees entering the healthcare system for the first time.
“After all, evidence suggests newly eligible Medicaid beneficiaries are healthier and less costly than the current Medicaid population. However, when negotiating their managed care contracts, many states estimated that the newly eligible would cost more in the first year than non-newly eligible individuals. This approach was based on the theory that the first newly eligible people to enroll would be those previously locked out of the insurance market, quickly entering the healthcare system with pent up demand. Additionally, they would be sicker and would require more healthcare services.
“But it doesn’t have to work that way. Pourat and colleagues show how, several years ago, California found a way to reduce the cost of newly insured Medicaid beneficiaries entering the healthcare system for the first time: care coordination.”