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Medicaid Expansion States Have Lower Premiums, HHS Says

By Erin Mershon, CQ Roll Call

August 25, 2016 -- States that expanded their Medicaid programs as a result of the 2010 health care law are seeing lower premiums in government-run insurance marketplaces, according to a new analysis from the Department of Health and Human Services (HHS).

Premiums appear to be 7 percent lower in the states in which people with low incomes had Medicaid as an option than in those where they did not, HHS said. This is based on an analysis that looked at 2015 data, with controls for differences in demographic characteristics, uninsured rates, health care costs, and some other state policy decisions, HHS said in a release.

Thursday's report represents another clear bid by the Obama administration to encourage more states to expand their Medicaid populations. A 2012 Supreme Court decision made that provision of the health overhaul optional for states. The Obama administration initially had expected Medicaid expansion to draw in more poor people with low incomes in all states, as eligibility requirements were eased. This would have resulted in a healthier customer base for the insurer-run plans in the marketplaces, according to HHS.

"A substantial body of scientific literature confirms a persistent connection between low income and poor health," wrote HHS's policy wing, the Office of the Assistant Secretary for Planning and Evaluation, in its analysis. "Not only are most diseases more common among the poor and near-poor at all ages, but there is evidence that poverty also results in faster progression of diseases, more complications, and poorer survival rates."

The analysis also appears to be a counter to Republican arguments that flaws in the law itself have led to double-digit premium increases in many areas. Most of the states that have chosen not to expand Medicaid are helmed by Republican governors. Keeping premium increases low and increasing affordability remains a primary goal for the Obama administration as it looks to shore up the health insurance exchanges that are central to the 2010 law.

"Today's report identifies yet another group that would gain if all states chose to expand Medicaid: Marketplace consumers, who would see lower premiums," said HHS Secretary Sylvia Mathews Burwell. 

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