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 (NYSE: WLP  ) , 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 (NYSE: AET  ) and UnitedHealth Group (NYSE: UNH  ) 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."

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Read/Post Comments (15) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 15, 2013, at 3:54 PM, SomethingCryptic wrote:

    I am continually unsurprised at the level of ineffectiveness of any government institution, and in fact I am amazed that anybody would expect otherwise. Government regulation involving life decisions should frankly be eliminated, because government can only effectively work for the larger populations ie providing military, police. Government should not be in the role of legislating morality, or common sense.

  • Report this Comment On December 15, 2013, at 3:55 PM, SLTom992 wrote:

    Don't be silly Obama-care is the greatest thing to happen to this country. Just ask the President who is well known for the veracity of his statements.

  • Report this Comment On December 15, 2013, at 4:06 PM, altmd71 wrote:

    I don't know why we should applaud Medicaid enrollment. Isn't Medicaid paid for by a combination of state and federal tax money? Won't that increase everybody's tax burden, at least those who pay taxes? Looks like we are quietly galloping toward a single payer system whether we want it or not.

  • Report this Comment On December 15, 2013, at 4:22 PM, JackTroy wrote:

    If your aim is to give away billions of dollars a year by soaking the taxpayer it is really easy to be "successful."

  • Report this Comment On December 15, 2013, at 5:32 PM, Veritas177 wrote:

    Medicaid is another welfare program, and I am not sure why any nation would be cheering more people on welfare as a "silver lining."

  • Report this Comment On December 15, 2013, at 5:35 PM, ronboltp wrote:

    What is so wonderful about forcing a lot of people into Medicaid? Isn't it for poor people? That is the one thing Obama has really been good at, making people poor.

  • Report this Comment On December 15, 2013, at 10:44 PM, Foolmeagain wrote:

    In Obamacare, if you sign up for the subsidies, they can take your house from your estate, just like Medicaid.

  • Report this Comment On December 16, 2013, at 4:56 AM, ron2cu wrote:

    They think it is free

  • Report this Comment On December 16, 2013, at 5:49 AM, energizedat54 wrote:

    Here's the reality for those of us that work...

    After scrutinizing the new plans offered by Care-first BCBS in Maryland, I have learned that at ages, me - 54 and my husband - 61, respectively, our periodic prenatal visits are free of charge and our blood work for prescriptions is essentially uncovered... that is until we reach our deductible of $3,500.00 per person coupled with a $655.00 monthly premium. That quote is defined as the "Bronze" Obamacare PPO Plan offered by Carefirst in MD.

    Just last week, I visited my doctor in Carroll County, MD for a prescription renewal, one for which he ordered blood work. The blood work cost me $370.00 and the doctor's visit $120.00. I paid $490.00 for a $20.00 prescription that I've been taking for ten years for a Hypothyroid condition. I'm absolutely positive that the doctor has no idea how much that blood work cost.

    Needless to say, I've requested my entire 30 year medical file in order to scrutinize the history of the blood work, the test results, etc. to negotiate directly with the doctor and these labs before I go completely broke.

    Managing my little condition speaks nothing of the significant conditions, with which many suffer. The order of the day is one of taking charge of your own medical care and managing it yourself. That's where we are, like it or not.

  • Report this Comment On December 16, 2013, at 8:07 AM, rangerchuck wrote:

    Medicaid in the State of Florida is a joke, it frankly is not much better than a catastrophic health insurance. Hospitals must accept the coverage but most individual doctors will not. It is expensive in that they people covered are in hospitals not in doctor office. State pay 40% of the cost that cost will soon bankrupt most states.

  • Report this Comment On December 16, 2013, at 12:15 PM, SWIMNUT wrote:

    So, why is it a success to have more people on government subsidies?

  • Report this Comment On December 16, 2013, at 1:31 PM, impeachobammie wrote:

    Americans surely aren't that stupid to believe medicade is good. Impeach this s o b and get on with America

  • Report this Comment On December 16, 2013, at 6:40 PM, RickLV wrote:

    And the great socialist Democrat giveaway at the expense of the dwindling middle class continues...

  • Report this Comment On December 16, 2013, at 7:49 PM, Pakirk53 wrote:

    How in God's name is signing people up to a welfare program that will add to the weight of the millstone around the middle classe's neck a bright spot?

  • Report this Comment On December 16, 2013, at 8:03 PM, slapppy wrote:

    Just wait till you get older and develop a condition. Your health coverage will be dropped and no one will cover you. If so it will cost you everything. Go ahead and keep sabotaging the good that ACA is created foe and come back when you have cancer or some debilitating illness. You wonder be talking smack by that time and you can be proud for destroying the only help that could have been there for you.

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