Study: New Medicaid patients more expensive than current beneficiaries

The people who will be added to Medicaid through healthcare reform are more sick — and therefore will be more expensive to treat — than current beneficiaries.

Dan Mendelson, chief executive of Avalere Health, said the cost of covering the new Medicaid beneficiaries will likely spike in the first year, then come into line with existing Medicaid patients.

A new Avalere analysis found that roughly two-thirds of Medicaid beneficiaries report being in “excellent” or “very good” health — compared with only about half of the low-income uninsured population that will gain access to Medicaid in 2014.

“What it means is that this is a more expensive population to treat, at least initially,” Mendelson said.

He could not say whether the findings indicate that the Medicaid expansion will ultimately cost more than what the Congressional Budget Office projected in its estimates of the healthcare reform law. It’s normal for per-person costs to jump as new groups gain access to healthcare coverage, he said.

Low-income uninsured people lack access to basic preventive care, Mendelson said — so the discrepancy between newly eligible and existing patients could be even greater than what Avalere found. Its study relied on self-reported health status, but uninsured people often have health conditions that haven’t been diagnosed.

Mendelson said the findings underscore the importance of ensuring that healthcare plans cover preventive services, which can help reduce costs in the long run.

Average costs for the uninsured are also higher because the population doesn’t contain many children.

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