Health plans with Medicaid contracts are poised to see significant enrollment growth with the expansion of the program in roughly half the nation's states. But those insurers are unlikely to see significant profits from new Medicaid customers in the early years of expansion, and could be at risk of losing money, according to a report by analysts at Standard & Poor's (PDF).
That's in large part because those signing up for coverage under the expansion—which has increased eligibility to 138% of the federal poverty threshold—are expected to be older, with more expensive healthcare needs than the existing Medicaid population. Those demographics could lead to significant costs stemming from pent-up care demand in the early years of coverage. According to HHS, at least 4.8 million additional individuals enrolled in Medicaid and the Children's Health Insurance Program since the Oct. 1, 2013 start of the open-enrollment period. Unlike the state and federal exchanges, Medicaid enrollment continues throughout the year.