The past several weeks we have been busy getting bills through committee and ready for floor debate as we approach the final "funnel week." In the background there has been quite a bit of discussion about whether Iowa should expand our Medicaid system as a part of healthcare reform. Most of the discussion has focused on what the costs to Iowa's state government would or would not be. The following study highlights another factor we should consider, and that is the potential cost to consumers.
Research conducted by the Society of Actuaries has shown that as many as 43 states could see double-digit percentage claims cost increases as the full effect of the new healthcare law is put into effect. The study finds that the claims cost of insurance in the individual market will increase by an average of 32 percent nationally.
The increase that Iowans who purchase insurance through non-group plans should expect depends on one important factor: whether or not Medicaid is expanded. The study conducted two analyses of per-member-per-month costs for non-group insurance under the Affordable Care Act. The one analysis assumes states will opt to expand Medicaid, while the other assumes the states will decline to expand Medicaid. The study shows that Iowans should expect an increase under both models, but that the increase would be less severe if the state does not expand Medicaid.
The study shows that, if Medicaid is expanded, Iowans could expect an increase of 9.7 percent for non-group per-member-per month costs once the provisions of the Affordable Care Act have been implemented. However, if Medicaid is not expanded, Iowans should still expect an increase, but it would be 5.5 percent for non-group per-member-per-month costs once the provisions of the Affordable Care Act have been implemented. While these amounts are lower than the projected national average, they are still increased costs on Iowans.
The five states that stand to see the largest increases include Ohio (80.9 percent increase with Medicaid expansion, 82.1 percent increase without), Wisconsin (80 percent increase with Medicaid expansion, 79.6 percent increase without), Indiana (67.7 percent increase with Medicaid expansion, 66.4 percent increase without), Maryland (66.6 percent increase with Medicaid expansion, 61.4 percent increase without), and Idaho (62.2 percent increase with Medicaid expansion, 61.8 percent increase without). Only four states stand to have these costs decrease under both models: Massachusetts, New York, Rhode Island, and Vermont.
Medicaid expansion is not a foregone conclusion either way. Governor Branstad said he is opposed to expanding Medicaid, while the Democrat-controlled Senate passed a bill this week that would expand that coverage to 133 percent of the Federal Poverty Level.
The largest reasons for the increase in costs exist as the study predicts the shifts of currently insured people from high-risk pools, the employer market, and previously uninsured persons who must pay most or all the cost of coverage to the individual market, which will likely overwhelm the expected lower costs anticipated by the influx of newly-insured persons in the insurance exchanges receiving federal benefit and premium subsidies. The study notes that, "[a]s a result, the underlying claims cost of insurance in the individual market will increase by an average of 32 percent nationally, when compared to what it would have been without the reform law."
A full copy of the report can be found at cdn-files.soa.org/web/research-cost-aca-report.pdf
Contact Rep. Deyoe at 515-382-2352; or via email at: Dave.Deyoe@legis.iowa.gov