Don't Judge Obamacare by Medicaid Numbers

Megan McArdle is a Bloomberg View columnist. She wrote for the Daily Beast, Newsweek, the Atlantic and the Economist and founded the blog Asymmetrical Information. She is the author of "“The Up Side of Down: Why Failing Well Is the Key to Success.”
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How many people have signed up for Medicaid thanks to the Patient Protection and Affordable Care Act? A new report says not as many as you think.

The latest reports we have on Medicaid enrollment suggest that 6.3 million people had been "deemed eligible" for Medicaid since Obamacare went live Oct. 1. But almost no one thinks that means 6.3 million people have gained new insurance; some of them were already eligible, and some of them won't have actually signed up.

We don't know how big the difference is between people who were deemed eligible and people who actually got new insurance. The new report, from health-care consultancy Avalere Health LLC, suggests that the answer is "very big":

"Avalere estimates that from October through December 2013, between 1.1M and 1.8M people have newly enrolled in Medicaid as a result of the Affordable Care Act (ACA)."

Avalere gets that number by looking at enrollment in the summer months, then comparing it to the fall. The number probably includes people who were previously eligible for Medicaid but signed up thanks to what health-care economists call the "woodwork effect" -- the publicity of Obamacare drawing in the newly eligible. In fact, we know that's the case for the one-quarter of new signups that occurred in states that opted out of the law's Medicaid expansion.

This is less than a quarter of the 8 million people that the Congressional Budget Office projected would enroll in Medicaid this year thanks to the health-care overhaul. However, unlike the exchanges, Medicaid will remain open for enrollment year-round, so the administration doesn't need to sign up all those people in the next two months. We won't really have a good sense of what this year's Medicaid numbers will look like until we get data for April and May and see whether Medicaid enrollment falls off the way exchange enrollments are expected to, or whether it remains elevated throughout the year.

Still, this is a good reminder that the early gross data we're getting from the administration aren't necessarily a good guide to what the net result will be on insurance coverage.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

(Megan McArdle writes about economics, business and public policy for Bloomberg View. Follow her @asymmetricinfo.)

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