Obamacare Medicaid Enrollment: Too Good to Be True?

In the midst of the dismal enrollment numbers announced so far for the Obamacare health exchanges, Medicaid has stood as the silver lining in the clouds. Recent reports about issues with the Medicaid enrollment process, though, have raised questions about the number of individuals actually being enrolled in the hybrid federal-state program. Are the Obamacare Medicaid numbers provided by the federal government too good to be true?

A tale of two enrollments
From the outset, the volume of Medicaid enrollments seemed high to many. Matt Salo, executive director of the National Association of Medicaid Directors, said that the "huge spike" in Medicaid enrollments surprised state officials.

Compared with private health plan enrollment, Medicaid certainly appeared to be a big winner. The number of individuals determined to be eligible for Medicaid or the Children's Health Insurance Program, or CHIP, far exceeded the number of people selecting private health plans in October. While the figures weren't as lopsided in November, Medicaid/CHIP enrollment still came in well above the private health plan numbers.


Source: Health and Human Services 

While the higher Medicaid numbers were viewed by many as an indicator of success for at least part of Obamacare, some expressed concern that problems could arise. Enrollment skewed too heavily toward Medicaid could deprive insurers of healthy individuals signing up for private health plans. Without enough healthy members, these plans would lose money -- ultimately resulting in higher premiums and potentially deterioration into the so-called "death spiral".

On further review ...
Picture a running back sprinting into the end zone for a touchdown only to have the officials announce a few minutes later, "After further review, the ruling on the field is overturned." That's what essentially could now be happening with the Obamacare Medicaid enrollment numbers -- at least to some degree.

Reports are coming in from across the nation that the Obamacare website has erroneously informed many Americans that they qualified for Medicaid when they really didn't. The National Association of State Medicaid Directors expects to soon release information about the magnitude of the problem.

Another serious problem has also been identified. The Center for Medicare and Medicaid Services, or CMS, told the 36 states using the federal HealthCare.gov website a couple of weeks ago that Medicaid eligibility information wasn't transferring correctly to the state agencies.

The first problem could mean that the Medicaid enrollment numbers previously reported by the White House are overstated. By how much the figures are off has yet to be determined. The second problem doesn't impact the validity of the Medicaid enrollment numbers reported so far, but it does mean that some people who think they're enrolled in Medicaid really aren't -- at least not until the issue is resolved.

Implications
If the number of individuals affected by the Medicaid enrollment problems isn't very large, the impact of the issues should be minimal. However, if the problem turns out to be widespread, the implications could ripple across the health-care system.

Several large insurance companies stand to benefit from the Medicaid expansion fostered by Obamacare. WellPoint , in particular, appeared poised to reap financial gains from increased Medicaid enrollment. The company boasts the highest current Medicaid enrollment, with 4.3 million members -- around 12% of WellPoint's total enrollment.

Aetna and UnitedHealth Group also could emerge as winners from expanded Medicaid rosters. Medicaid makes up more than 9% of Aetna's total membership and a little under 9% of UnitedHealth's total membership. 

The likelihood is that the magnitude of the Obamacare Medicaid enrollment issues isn't enough to hurt these large insurers too much. However, WellPoint could be hurt to some extent by a possible corollary effect.

Individuals who were told that they qualified for Medicaid wouldn't have signed up for private health insurance. However, if they really didn't meet Medicaid eligibility criteria and don't find out about it quickly enough, these individuals could miss out on obtaining private health insurance altogether. Even if they do find out, it's possible that they could obtain private insurance later than they otherwise would have.

This scenario could affect WellPoint more than the other large insurers. Aetna and UnitedHealth took a cautious approach toward participation in state Obamacare exchanges. WellPoint, on the other hand, jumped aboard the exchanges in every state where it operates. As a result, the insurer could feel the pinch if too few members enroll in the private Obamacare plans.

Back in October, Medicaid experts were saying that they didn't exactly know why the Medicaid enrollment figures looked so good. The old saying now appears to be confirmed yet again: "If something seems too good to be true, it probably is."

The cold, hard truth about how Obamacare affects you
Obamacare seems complex, but it doesn't have to be. In only minutes, you can learn the critical facts you need to know in a special free report called "Everything You Need to Know About Obamacare." This free guide contains the key information and money-making advice that every American must know. Please click here to access your free copy.

The article Obamacare Medicaid Enrollment: Too Good to Be True? originally appeared on Fool.com.

Fool contributor Keith Speights has no position in any stocks mentioned. The Motley Fool recommends UnitedHealth Group and WellPoint and owns shares of WellPoint. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Learn about investing from the comfort of your own home.

Portfolio Basics

Take the first steps to building your portfolio.

View Course »

Investment Strategies

Learn the strategies you need to build a winning portfolio

View Course »

Add a Comment

*0 / 3000 Character Maximum

1 Comment

Filter by:
Jim Fitz

THE NEWS MEDIA AS A WHOLE IS NOT REPORTING ON THE VARIOUS WAYS OBAMACARE IS REDUCING THE OVERALL COST OF MEDICAL CARE.

I AETNA, HUMANA AND OTHER MAJOR INSURANCE COMPANIES ARE CREATING ACO'S THAT CONTRACT WITH DOCTORS AND HOSPITAL GROUPS TO OFFER QUALITY HEALTH CARE AT A LOWER PRICE. THIS IS CRITICIZED AS "YOU CAN NOT KEEP YOUR DOCTOR" BUT IN REALITY, IS A VERY EFFECTIVE WAY TO REDUCE COST.

2 CVS, WITH OVER 1500 CLINICS, & WALGREEN, WALMART, RITE AID, TARGET, KROGER & OTHERS ARE FOLLOWING THIS PLAN TO OFFER "TRIAGE" CARE FOR MINOR ILLINESS, VACCINATIONS, ETC. ONLY SERIOUS CASES ARE REFERRED TO DRS AND HOSPITALS. A VERY EFFECTIVE AWAY TO REDUCE COST AND EXPAND ADDITIONAL HEALTH CARE PROVIDERS!

3 THE PUBLIC IS UNAWARE OF THE 'RIDICULOUS' VARIATIONS IN CHARGES FROM HOSPITALS FOR THE SAME PROCEDURE. GO TO CMS.GOV, IT LISTS ALL HOSPITALS AND THEIR CHARGES FOR COMMON PROCEDURES.
EXAMPLE- A HOSPITAL IN CHARLOTTE, NC CHARGES $4135 FOR AN MRI, IN WINSTON SALEM, NC., 50 MILES AWAY, CHARGE IS $1525, FOR WHICH MEDICARE PAYS $325 FOR ALL HOSPITALS.

IF YOU DO NOT HAVE INSURANCE YOU ARE CHARGED FULL PRICE, WITH INSURANCE AND A DEDUCTABLE YOU GET A "BARGAIN" OF HALF PRICE AND MEDICARE PAYS 8%. NO WONDER PEOPLE GO BANKRUPT!!!

MEDIA SHOULD BE ALL OVER THESE PRICE VARIATIONS AND NOW CMS.GOV.POSTS AVERAGE PRICES FOR COMMON PROCEDURES, THE PUBLIC NEEDS TO BE EDUCATED HOW TO ACCESS THE PRICE GOUGING THAT IS GOING ON EVERY DAY!

4 ARKANSAS, WISCONSON, IOWA, AND PENNSYLVANIA ARE GETTING WAIVERS TO USE MEDICAID MONIES TO BUY PRIVATE INSURANCE THAT HAS DEDUCTABLES, MAX OUT OF POCKET, AND SHARED COST BY INSURES AND THE ENROLLEE. A GREAT REPUBLICAN IDEA!!!!

IT NOT COMMON KNOWLEDGE MEDICAID PAYS FOR OVER 60% OF BIRTHS @ $7000 EACH!!!
UNDER THIS WAIVER INSURERS AND THE ENROLLEES ARE RESPONSIBLE FOR A GREATER SHARE OF THESE COSTS.

5 THE REDUCTION IN READMISSIONS TO HOSPITALS HAVE SOME HOSPITALS WORKING WITH LOCAL CHURCHES TO MONITER THE HEALTH OF THEIR PARISHIONERS, MAKING SURE THEY ARE TAKING THEIR MEDICATIONS, PROVIDING TRANPORTATION TO DRS, ETC.. ANOTHER COST SAVER!

6 NEW DEVICES ARE BEING DEVLOPED FOR YOU TO MONITER YOUR HEALTH STATUS WITH YOUR CELL PHONE.

DO YOU KNOW YOUR BLOOD GLUCOSE, BLOOD PRESSURE, BLOOD OXYGEN, CHOLESTEROL, INR, RIGHT NOW? FROM PERSONAL EXPERIENCE, I LOST 30# BY CHECKING MY BLOOD SUGAR AND ADJUSTING MY DIEAT ACCORDINGLY!

OBAMACARE WILL BE IMPROVED AND THE REPUBLICAN PLAN HAS SOME IDEAS THAT COULD BE ADOPTED , BUT I DOUBT THEY ARE INTERESTED IN IMPROVING OBAMACARE.

READ BUSINESSWEEK ARTICLE BY DOCTOR & SENATOR BILL FRISK "OBAMACARE WILL NOT BE REPEALED & INFACT, IS DELIVERING QUALITY CARE AT A LOWER PRICE"!

December 19 2013 at 11:21 AM Report abuse rate up rate down Reply