Cost of Covering New People Under ACA Significantly Higher than Expected

WASHINGTON—The cost of covering people who qualified for Medicaid as part of the federal health law was significantly higher than expected in 2014, federal actuaries said Friday.

Adults who became eligible for Medicaid as a result of the health law’s expansion of the program to include most low-income Americans incurred average medical costs of $5,517, the Centers for Medicare and Medicaid Services office of the actuary said.

That was about $1,000 higher than had initially been expected for the first full year of the expansion, which marked a sweeping change for the government program that will see its 50th anniversary later this month.

The new enrollees had significant pent-up demand for health services, the actuary said, and the cost of their coverage is expected to fall over subsequent years.

The 2010 Affordable Care Act aimed to change Medicaid from a program long reserved for the poorest mothers and disabled people, as well as some children and pregnant women, to a program covering all residents making up to a third more than the poverty line.

Some 28 states have opted to use the extended eligibility rules while 22 have declined, in the wake of a 2012 Supreme Court decision that effectively gave them the right to opt out of that part of the health law.

The exact number of Americans who gained coverage through Medicaid who wouldn’t have qualified before has been unclear. The CMS actuary said that for 2014, the newly eligible accounted for 4.3 million of 5.7 million new enrollees in the program.

Since the early 2000s, Medicaid has swelled to cover more Americans than Medicare, the federal insurance program for people over 65 that was created alongside it.

More than 70 million Americans used the program in 2014, the actuary’s report said. In some states, as many as one in three residents are covered by it.