‘The implementation of major legislation such as the Affordable Care Act (ACA) often results in fiscal outcomes that differ significantly from prior projections. Whenever this happens it leads to many questions, much confusion, and several claims and counter-claims. Rarely is it immediately clear whether the law is working differently than envisioned, or whether the unexpected outcomes are due to inevitable projection errors having nothing to do with the law.
On rare occasion, however, a prior projection proves so far off that its significance must be noted. Two weeks ago my colleague Brian Blase uncovered such a development with respect to the ACA’s Medicaid expansion. Recall that the ACA considerably expanded Medicaid eligibility – an expansion made optional for the states in a later Supreme Court ruling. It turns out that the 2015 per-capita cost of this Medicaid expansion is a whopping 49% higher than projections made just one year before.
This disclosure can be found on page 27 of the 2015 Actuarial Report for Medicaid, released this July. Here is how the report described the issue:
“While the newly eligible adult per enrollee costs in 2014 were slightly lower than estimated in last year’s report ($5,488 compared to $5,517, or about 1 percent lower), the estimated per enrollee costs for 2015 in this year’s report are substantially greater ($6,366 compared to $4,281, or about 49 percent higher).”’ - The Soaring Costs of the ACA’s Medicaid Expansion, economics21.org, 08/01/2016
Link to the entire essay appears below: