Obamacare is doing way more to help the poor than anyone expected

Obamacare’s Medicaid expansion will cover millions more Americans than initially expected, new Congressional Budget Office projections estimate.

Last year, CBO estimated that an average of 14 million low-income Americans would rely on the Medicaid expansion for coverage over the next decade. Now the forecasting agency expects that the program will have an average enrollment of 18 million.

More Medicaid enrollees means more federal spending; the additional 4 million Medicaid patients are expected to drive up the cost of the insurance expansion by $146 billion.

At the same time, expected enrollment in the marketplaces declined by 3 million, reducing spending on that private insurance program by $46 billion.

The shrinking exchanges, coupled with the expanding Medicaid program, show Obamacare’s insurance expansion playing out differently than drafters had expected.

Previously, budget forecasters had expected that the private marketplace would be significantly larger than the Medicaid program. Medicaid would be a bit of a supporting actor. The expansion of private, individual plans for middle-class Americans would take the leading role.

Now the two programs are expected to be nearly the same size. Medicaid has ended up playing in the health law’s insurance expansion — even with 19 states not currently participating in the Medicaid expansion.

In March 2010 — three days before President Obama signed the Affordable Care Act into law — CBO released an extensive report about how the bill would change health insurance coverage in America.

Obamacare had two main ways of expanding insurance. First, there was a new marketplace, where middle- and high-income Americans could buy private individual coverage. There was Medicaid, a public program that already existed, which would grow to cover all individuals who earn less than 138 percent of the federal poverty line (about $15,000 for an individual).

In that 2010 report, budget forecasters estimated that about 16 million or so people would come to rely on the Medicaid part of the expansion. At the time of that estimate, the Medicaid expansion was mandatory. Forecasters’ numbers assumed all 50 states would be participating in the new program.

Six years later, two things are different. First: A Supreme Court decision made the Medicaid expansion optional, and 19 states (including some very large ones, like Texas and Florida) have chosen not to participate. The Kaiser Family Foundation estimates that about 2.9 million low-income adults live in states that have not expanded coverage, and thus cannot gain coverage. Those are 2.9 million people that forecasters thought would be eligible for coverage when they drew up that original set of numbers.

Second: CBO now thinks that even with nearly half the states not participating, more people will sign up for Medicaid. The new figures estimate that, on average, the Medicaid expansion will cover 18 million people annually over the course of the next decade.

Think about that for a moment: The Medicaid program is operating in significantly fewer states, but covering millions more people.

This means the original forecasts seem to have missed how appealing the Medicaid expansion would be.

In hindsight, it’s actually pretty easy to see why Medicaid ended up getting such high enrollment: The program provides relatively comprehensive coverage at very little cost to the enrollee.

Medicaid has always been intended as a program to cover low-income Americans who can’t afford to purchase health insurance on their own. So it provides very generous subsidies. For example, most state Medicaid programs charge copays for doctor visits between 50 cents and $3 — if they even charge a copay at all.

There were good reasons the Congressional Budget Office (and reporters, including myself!) was skeptical that Medicaid enrollment would grow quickly. The very first article I wrote about Obamacare after it passed was about how hard it was to track down the people who are eligible for public programs and make sure they sign up.

Previous research has found that only about half of those eligible for Medicaid actually sign up for the program. Many who are eligible for the programs will assume that they aren’t, or never make it through the paperwork associated with signing up.

But Obamacare’s Medicaid expansion appears to be different. Perhaps because it was part of such a highly publicized law, the expansion seems to have attracted a greater share of those eligible than the public program historically has.

While the health care law garnered the most attention for its expansion of insurance coverage, the Upshot’s Margot Sanger-Katz points out that it also included new rules that made it easier to sign up for the program. And that could also play a role in making the Medicaid rolls swell.

All of this take together means that these enrollees are more expensive than CBO expected a year ago, and that Obamacare is likely to cover different and lower-income population than drafters and forecasters initially expected.