Medicaid managed-care enrollment expected to soar

Thanks to Medicaid expansion and a greater push from some conservative states looking to reduce healthcare costs, enrollment of Medicaid and Children's Health Insurance Program (CHIP) beneficiaries in managed care will increase by 13.5 million by 2016, according to a new report from consulting firm Avalere Health.

In total, managed-care enrollment will increase from a previous 67% of Medicaid and CHIP enrollees in 2013 to 76% in 2016. Under Medicaid managed care, which is essentially an HMO for these beneficiaries, the state pays a fixed rate to the insurer, which administers payment for care.

New enrollment into Medicaid managed care will be particularly high in states that have expanded Medicaid. Those states had relied on managed care more heavily before ACA expansion. Also, newly eligible beneficiaries are predominantly enrolling in managed-care plans. Specifically, among states expanding Medicaid, the percentage of managed-care enrollees will rise from a previous total of 73% in 2013 to 79%, or 10.2 million new enrollees, in 2016.

Over the past few decades, 38 states and the District of Columbia have switched their Medicaid plans to some form of managed care for at least part of their government programs. A summer U.S. Government Accountability Office report, using fiscal 2011 data, found Medicaid managed-care plans received about 27%, or $74.7 billion, of federal Medicaid expenditures.

Even before Medicaid expansion, managed Medicaid organizations have seen their rosters swell in recent years as more states seek to gain greater control over program costs. In recent years, there's been a greater push to expand Medicaid managed care to cover people living in more rural regions, and to more vulnerable patient populations, such as the disabled and those relying on long-term care, according to Avalere.

“Medicaid managed care offers states the opportunity to deliver coordinated care to Medicaid beneficiaries at a defined cost,” Caroline Pearson, Avalere vice president, said in a statement. “As a result, the projected growth in Medicaid managed-care enrollment is driven by not only expansions under the ACA, but also state decisions to expand managed care programs to all or most of their existing beneficiaries.”

While some Medicaid managed-care organizations are not-for-profit, provider or government-owned, most belong to the major health insurers. United Healthcare, WellPoint, Aetna, Centene Corp. and Molina Healthcare—all publicly traded—have more than 1 million beneficiaries enrolled in their plans. Smaller players include Cigna and Humana.

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