NCPA: Better Coverage Than Medicaid Available in Health Insurance Exchanges by 2014


Dallas, TX – Many Americans just above the poverty level would get better access to higher quality health care by obtaining insurance in the health insurance exchange than through Medicaid, according to a new study from the National Center for Policy Analysis (NCPA).

“These people, usually referred to as the ‘working poor,’ will be able to qualify for free, subsidized private insurance that pays doctors and hospitals at higher rates than Medicaid,” according to study author and NCPA Senior Fellow Devon Herrick.

The study comes just after HHS Secretary Kathleen Sebelius’ decision to order states to fully expand Medicaid if states want the highest matching rate available under the Affordable Care Act. “This new decision hurts families just above 100 percent of the poverty level,” said Herrick. “And for the benefit of residents below the poverty level, each state should hold out for the flexibility to tailor its own Medicaid programs to best serve the poor.”

According to the NCPA study, if all 50 states participate in the health insurance exchanges, doctors, hospitals and patients would gain about $223 billion in additional medical spending over a decade.

“The five states that stand to gain the most financially by letting working poor residents access private coverage in the exchange are New York, California, Texas, New Jersey and Florida. Collectively, these five would enjoy an additional $140 billion in medical spending; accounting for nearly two-thirds of the total $223 billion,” said Herrick.

New York        $39 billion
California        $31 billion
Texas             $30 billion
New Jersey     $21 billion
Florida            $19 billion

“Residents just above the poverty level will get better quality and access to care in the exchange than they would get under Medicaid because the exchange will pay doctors and hospitals at higher rates,” said Herrick.  “Medicaid spends about $2,900 annually on adults. Private insurance pays about $4,500.

“Ideally, states should not even consider expanding Medicaid above 100 percent of poverty. Let everyone at that poverty level go into the exchange -- for a number of reasons,” said Herrick.

  • The government is willing to subsidize most of the premiums for private insurance for those just above 100 percent of the poverty line, but not for those below it.
  • In the exchange, a family only has to pay no more than two percent of its income for insurance and government pays the rest for people at this income level. But, people below 100 percent of poverty can’t go into the exchange because of the way the ACA was written.
  • Because Medicaid pays so little, a third of physicians won’t accept new Medicaid patients so people on Medicaid tend to overuse emergency rooms.

Overall, private insurers pay physicians fees that are about 75 percent more generous than what Medicaid pays. At the state level:

  • Texas physicians earn 67 percent more from private insurers than Medicaid.
  • Illinois physicians receive about 95 percent more from private insurers.
  • Florida physicians earn 97 percent more from private insurers than Medicaid.
  • In California, private insurers pay physician fees about 120 percent more than Medicaid.
  • New York doctors get 189 percent more from private insurers.
  • New Jersey private insurers pay 233 percent more than what Medicaid pays.

 “The reason Sebelius is taking a hard line is to save money by forcing more patients into Medicaid and limiting the number with access to federally subsidized private insurance under the exchange.”

Exchanging Medicaid for Private Insurance: http://www.ncpa.org/pub/st343