Medicaid Expansion Presents Health Insurers With Opportunity, Risk

Health insurers could gain business by capitalizing on the new health reform law's expansion of Medicaid, but working with the program presents inherent risks, including potential cuts to insurer payments caused by state budget shortfalls, Reuters reports.

The new reform law raises the income eligibility limit for Medicaid to 133% of the federal poverty level and broadens qualifications to include adults who have no children.

According to the Congressional Budget Office, the changes will add 15 million U.S. residents to Medicaid, increasing enrollment by around 30%.

Large insurers could see the expansion as a welcome growth opportunity because the new reform law likely will have an adverse effect on their individual and Medicare plans, according to Reuters.

However, insurers cannot take advantage of the expansion until it begins in 2014. In addition, insurers could put themselves at risk by offering Medicaid plans because they will be insuring a new type of population and suddenly handling a large influx of beneficiaries.

Furthermore, states with budget issues stemming from the economic recession could cut payments to insurers that operate Medicaid plans, as happened in 2009.

Eileen Ellis, consultant and former director of Michigan's Medicaid program, said, "The opportunity is greater than the risk, but it's not all roses." She added, "There are going to be some bumpy times, especially between now and January 2014" (Krauskopf, Reuters, 3/30).

james mcniff
when medicaid is expanded and private insurers move into the medicaid managed care business,take a lesson from new york..don't allow all these plans to have their own claim adjudication system..use your states system as a central processing site..this will reduce redundant costs that are built into the york missed out on that boat..
James Roache
Medi-Cal providers have learned well the lesson of the State cutting payments. The State is learning well that providers will not be pushed out of business creating that void in the beneficiaries care entwork. Witness the recent wins by the Medi-Cal Defense Fund in the Superior Court and 9th Circuit Court of Appeals refusing to overturn the lower courts decisions. Having the large insurers continue to try and administer a program whereby they control the rates paid to providers becomes a death march for the providers. "If you fail to learn from your mistakes of the past, you are bound to repeat them." No provider can afford to make the same mistake twice. Omit the untrustworthy middlemen. In the 1990's during the beginning days of managed care, over 80% of the premium dollar paid for direct health care service costs. Ask these insurers what percentage of the premium makes it back to the benificiaries in terms of healthcare services today. I doubt more than 50% ever does.

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