Medicaid expansion would shift up to 30,000 people off the Affordable Care Act exchange in Wisconsin, which could lower premiums on the individual market, according to a new report produced for the state insurance commissioner.
The report, released Tuesday, comes after leaders of the Republican-controlled Legislature said last week they would strip Democratic Gov. Tony Evers' plan to expand Medicaid from the upcoming two-year state budget.
Republicans have said Medicaid expansion could increase the cost of private insurance, weaken the individual market and put the state at risk for paying for additional people on Medicaid if special federal funding falls through.
The Evers administration has said Medicaid expansion would cover 82,000 more people on Medicaid, half of whom are currently uninsured. The move would save the state $324 million over two years while bringing in additional federal dollars for a total $1.6 billion investment in health services, the administration says.
The new report, from Wakely Consulting Group, an actuarial firm, was produced for the state Office of the Commissioner of Insurance. It says 25,000 to 30,000 people on the exchange would become newly eligible for Medicaid through expansion and likely shift from the exchange to Medicaid.
That range is lower than the estimated 40,000 or so people the Department of Health Services has said would shift from the exchange to Medicaid under expansion. The new report suggests that significantly more than half, not just half, of the 82,000 people expected to join Medicaid are currently uninsured, health department spokeswoman Jennifer Miller said.
More than 200,000 people are on the exchange in Wisconsin.
While some Republicans have said shifting people from the exchange to Medicaid would increase premiums on the exchange, in part because the market would be smaller, the new report suggests the move would have the opposite effect. Rates would drop because of "improved morbidity," meaning those remaining on the exchange would be healthier than those leaving and thus less expensive, the Wakely report suggests.
"Previous research has shown that Medicaid expansion reduces individual market premiums," the report says.
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It cites previous studies by the Obama administration in 2016 and in the Journal of Health Economics in 2018 saying premiums are 7-11% lower in states that expanded Medicaid than in those that didn't.
"The evidence is clear: states that expand Medicaid see a reduction in the cost of health insurance on the individual market," Wisconsin insurance commissioner Mark Afable said in a statement. "There is a lot of misinformation being used in this discussion, so we wanted to set the record straight. At the OCI, our goal is to maintain a strong insurance market so that people have more access to affordable, reliable coverage. Medicaid expansion will help us accomplish that goal."
Kit Beyer, a spokeswoman for Assembly Speaker Robin Vos, R-Rochester, said Evers and Democratic lawmakers are "getting highly paid bureaucrats to promote their big government agenda. The truth is the population that Democrats want to push on government-run health care already has access to insurance on the federal exchange."
Will Flanders, research director for the conservative Wisconsin Institute for Law and Liberty, or WILL, said the new report "looks at a very narrow slice of the pie" by examining the effect of Medicaid expansion on the individual market and not on the more than half of Wisconsin residents who get insurance through their employer.
WILL released a study in February saying Medicaid expansion could cost a net $600 million a year, saying providers would increase prices to offset low Medicaid rates and pent-up demand among people joining Medicaid would lead to expensive emergency room visits.
However, a study last month by UW-Madison economists said Medicaid expansion could save $100 million a year, apart from the budget process. That study considered the current cost of providing free or discounted care to uninsured people, and of their unpaid bills — what is known as uncompensated care. The savings gained by covering those people through Medicaid would exceed the cost to private insurers, the study said.
Under Medicaid expansion, the state would extend eligibility for the state coverage to adults who make up to 138% of the federal poverty level, up from the 100% now. The federal government would pay at least 90% of the cost, up from its regular 60% share for most people on Medicaid.
Taking Medicaid expansion in 2014 would have saved the state $1.1 billion through 2019, according to the Legislative Fiscal Bureau.