Do low-income consumers in Medicaid opt-out states pay more out of pocket?

In the twenty-three states currently not expanding Medicaid under the Affordable Care Act (ACA), uninsured adults who would have been eligible for that program and have incomes at or above poverty are now generally eligible for subsidies to purchase health coverage in their state's Marketplace exchange. How would out-of-pocket costs in the Marketplace compare with Medicaid coverage for this group of low-income Americans living in states not expanding Medicaid? A new study, being released by Health Affairs as a Web First, estimated these costs under two simulation scenarios: calculating out-of-pocket costs for families covered by a subsidized silver Marketplace plan and comparing that with coverage under Medicaid. The author found that Medicaid would more than halve these adults' average annual family out-of-pocket spending ($938 versus $1,948). Under Medicaid, far fewer of these adults' family health costs would exceed 10 percent of their income: 6.0 percent, compared to 17.1 percent under silver exchange plans. In addition, larger reductions would be seen where there are smokers in the family because the silver Marketplace exchange charges a tobacco-user surcharge, while Medicaid does not.

To create these two simulation scenarios, the authors drew a sample from Medical Expenditure Panel Survey (MEPS) data for the period 2005-10. There were 1,466 adults ages 19-64 in the sample living in the twenty-three states not expanding Medicaid. "Although the ACA's Marketplace offers generous benefits to low-income uninsured adults who are eligible for Marketplace coverage because their states have not expanded Medicaid, these adults could possibly have lower out-of-pocket spending if states' decisions not to expand were reversed," concludes the author. "Medicaid would dramatically reduce the risk of their having to devote over 10 percent of their income to out-of-pocket spending for care and premiums, and may therefore offer the greater opportunity to promote their financial well-being."

Article: Medicaid Expansion In Opt-Out States Would Produce Consumer Savings And Less Financial Burden Than Exchange Coverage, Steven C. Hill, Health Affairs, DOI: 10.1377/hlthaff.2014.1058, published online January 2015.