Medicaid Expansion is Proving to be more Expensive

Government programs are always more expensive than politicians claim, and medicaid expansion is no different.

1. Initial Projections vs. Reality: The initial projections of costs for Medicaid expansion were significantly lower than the actual costs incurred. For instance, the Centers for Medicare & Medicaid Services (CMS) had projected that the adults newly eligible for Medicaid under the ACA would cost less to insure, on average, than other non-elderly adults already on the program. However, actual costs have exceeded these initial projections, with per enrollee spending on expansion adults being significantly higher than expected [ (https://www.openhealthpolicy.com/post/those-covered-under-medicaid-expansion-are-costing-much-more-than-expected)].

2. Higher Per Enrollee Costs: The gap between the expected costs and actual costs has been widening over time. In 2022, the last year in the CMS projection window, expansion adults were expected to cost $4,875 per enrollee, while other non-elderly adults were expected to cost $7,195 per enrollee, nearly 50% more. This indicates a significant underestimation of the costs associated with the expansion [ (https://www.openhealthpolicy.com/post/those-covered-under-medicaid-expansion-are-costing-much-more-than-expected)].

3. Inaccurate Enrollment Projections: The enrollment explosion in expansion states has also contributed to the higher-than-expected costs. Estimates by various think tanks and government agencies, including the Congressional Budget Office, have consistently underestimated how many able-bodied adults would enroll if states expanded Medicaid, leading to skyrocketing costs for taxpayers [ (https://thefga.org/wp-content/uploads/2018/01/How-the-ObamaCare-dependency-crisis-could-get-even-worse-%E2%80%94-and-how-to-stop-it-1-15-18.pdf)].

4. Unsustainable Budget Effects: The actual experience of expansion states shows that the initial per-capita cost came in much higher than expected, with new reports showing that the costs of newly eligible adults are 19% higher than non-newly eligible adults [ (www.mercatus.org)].

5. Misclassifications and Ineligible Enrollees: Audits in states that expanded Medicaid, such as California, New York, and Colorado, have suggested that about 10-25% of enrollees classified as newly eligible under the ACA are, in fact, either ineligible for coverage or misclassified. This artificially inflates per enrollee spending in the newly eligible group [ (https://www.openhealthpolicy.com/post/those-covered-under-medicaid-expansion-are-costing-much-more-than-expected)].

These factors combined have led to Medicaid expansion being more expensive than most people initially thought.