Contrary to the claims of many, the Affordable Care Act is unlikely to increase average insurance premiums in Kansas, according to a new study by RAND Corp. But that assumes Kansas expands Medicaid eligibility, which Gov. Sam Brownback and the Legislature have yet to allow.
Without Medicaid expansion, not only would fewer people be insured, but premiums likely will be higher.
Talk about a lose-lose situation.
RAND Corp. studied the impact of the Affordable Care Act on Kansas and nine other states. It concluded that for Kansas, and for the United States overall, the ACA would cause no change in average premiums in the individual and small-group insurance markets. What’s more, it projected that the percentage of Kansans who are uninsured would be 6.6 percent in 2016 if the ACA is implemented but 14.2 percent without the ACA.
The study also concluded that out-of-pocket premium spending in 2016 would be significantly lower, thanks to the ACA’s federal subsidies. With the ACA, Kansans would pay an average of $3,133 in net premiums in the individual insurance market in 2016. Without the ACA, they would pay $3,818 – 22 percent more.
But the cost comparisons assume that states expand Medicaid. In the wake of the U.S. Supreme Court ruling that states could decide whether to allow the expansion, several states, including Kansas, have yet to authorize it – even though the federal government would pay the full cost of expansion for the first three years and nearly the full cost after that.
RAND analyzed three states – Texas, Louisiana and Florida – to see the potential consequences of not expanding Medicaid. It concluded that without Medicaid expansion, the percentage of uninsured would be 5 to 6 percentage points higher.
More surprising, RAND estimated that nongroup premiums would increase by 8 to 10 percent if states don’t expand Medicaid. That’s in part because less-healthy individuals will be pushed into the private insurance market, which will raise rates.
There are other significant costs to not expanding Medicaid. Kansas would forgo about $3 billion in federal funding over the next seven years that could create 4,000 jobs and increase Kansas’ gross state product by nearly $1.9 billion, according to a study by the Kansas Hospital Association.
The ACA also reduces payments to hospitals that serve low-income uninsured patients (in expectation that many of these patients would be joining Medicaid). If Medicaid isn’t expanded, hospitals won’t be compensated for some of this care, which would be a particular hardship on smaller hospitals and likely raise hospital rates for everyone else.
The RAND study cautions that it is difficult to predict premium costs given the complexity of the changes and uncertainties about human behavior. Also, what a particular individual pays can vary based on age and other factors. But one thing is clear: If Kansas doesn’t expand Medicaid, it will lose.