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May 14, 2014 5:00 PM The Medicaid “Woodwork Effect”

By Ed Kilgore

There was an interesting item from Jason Millman published at Wonkblog yesterday about the so-called “woodwork effect” that is boosting Medicaid enrollments among people who already qualified for services before the Affordable Care Act:

Medicaid enrollment in 17 of the 26 states that hadn’t expanded Medicaid as of the end of March saw their rolls increase by a combined 550,300 new beneficiaries, reports the Avalere Health consulting firm….
These states, just like the ones that did expand Medicaid, are experiencing what’s known as the “woodwork effect” among people who were previously eligible for coverage under existing Medicaid rules but didn’t sign up. Those previously eligible are now seeking coverage as there’s a massive effort to get people enrolled. The federal Centers for Medicare and Medicaid Services has reported Medicaid enrollment numbers so far, but the agency hasn’t yet said how many come from the ACA expansion or were eligible under existing rules.
There’s a big difference, however, in how states pay for woodwork enrollees and people newly eligible for Medicaid coverage. The federal government pays 100 percent of the costs for the expansion group through the end of 2016, and that reimbursement eventually ratchets down to 90 percent. The woodwork enrollees are financed by the traditional Medicaid system, in which the federal government pays on average 57 percent of the costs, and the state chips in the rest.

One is tempted to gloat about the discomfort of rejectionist states who turned down lavish federal funding for a Medicaid expansion but now face significantly higher per-enrollee costs for “woodwork effect” applicants. But the woodwork effect is operating in states that accepted the expansion, too. These, however, are by and large jurisdictions that understand increased costs are offset by this thing we call better access to health care. That makes all the difference in the world.

Ed Kilgore is a contributing writer to the Washington Monthly. He is managing editor for The Democratic Strategist and a senior fellow at the Progressive Policy Institute. Find him on Twitter: @ed_kilgore.

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