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In Red States, Obamacare Outreach Boosts Medicaid Enrollment

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Though 26 states decided against going along with an expansion of the Medicaid health insurance program for the poor under the Affordable Care Act, 17 of them have seen a boost in enrollment thanks to “increased outreach and awareness,” a new analysis indicates.

More than 550,000 new Medicaid beneficiaries signed up for the program in the first quarter of this year in these 17 states, which included Georgia (5.8 percent increase); Idaho (7.5 percent increase); Montana (10.1 percent increase); South Carolina (5.4 percent increase); Oklahoma (4.8 percent increase); and Tennessee (4.3 percent increase), according to Avalere Health, a research and advisory services firm on health policy issues tracking the Affordable Care Act.

While 8 million people signed up for private coverage on government run marketplaces known as exchanges, several million more Americans signed up for Medicaid coverage under the President’s signature health legislation through the expanded Medicaid program. Despite the opportunity to increase Medicaid benefits at little cost to state taxpayers, there remain holdouts like those documented in the Avalere report.

Yet even in the “non expansion states” consumers were subject to an advertising and marketing blitz to sign up for coverage. Analysts reason many found out they were previously eligible for Medicaid regardless of the health law’s expansion during overall promotion of the Affordable Care Act.

“The push to enroll in exchanges has brought a substantial number of new beneficiaries into Medicaid, even in states that decided not to expand their Medicaid programs,” Matt Eyles, executive vice president at Avalere Health said in a statement accompanying the firm's latest analysis on enrollment. “Though expansion states saw larger total enrollment increases, enrollment of these previously eligible individuals is significant in many non-expanding states.”

The federal government traditionally picks up a little more than half of the cost of Medicaid. But funding under the health law is unlike past efforts to expand Medicaid in that the federal government will pick up the full tab for the first three years. The state gradually has to pick up some costs in 2017, but by 2020,  the federal government is still picking up 90 percent or more of the Medicaid tab.

“Though new eligibles are 100 percent federally funded through 2016, states only receive their standard matching rate for these previously eligible beneficiaries,” said Avalere Health vice president Caroline Pearson . “As a result,  many of these non-expansion states that politically oppose the ACA are now facing unexpected financial and operational pressure due to woodwork enrollment.”

The costs of not expanding Medicaid for some states may also come on top of a provision under the Affordable Care Act that requires insurance companies pay a fee to help fund the law and expand benefits to the poor and uninsured.

State Medicaid programs and health insurance companies that contract with states to provide benefits to Medicaid beneficiaries are seeking clarity from the Obama administration on how to properly account for the new insurance tax.

“Over the past year, health plans have noted confusion among states and plans as to how the insurance tax will be handled in payments to plans,” Jeff Myers, president and chief executive officer of Medicaid Health Plans of America wrote in a letter dated Tuesday to Marilyn Tavenner, administrator for the Centers for Medicare & Medicaid Services.

It’s an important issue for the health insurance industry given an increasing number of state Medicaid programs are contracting with private health insurance companies like Aetna (AET), Humana (HUM), UnitedHealth (UNH), Centene (CNC) and Molina (MOH). More than 35 states and the District of Columbia contract with health to help manage their insurance programs for the poor.

“Medicaid health plans and states need clear written direction from CMS that tells Medicaid agencies that the insurance tax and the income tax effect must be factored into the rate-setting process and covered in payments to plans,” Myers wrote.

Wondering how Obamacare will affect Medicaid, Medicare and your own health care? The Forbes eBook Inside Obamacare: The Fix For America’s Ailing Health Care System answers that question and more. Available now at Amazon and Apple.