Pent-up Health Care Demand among New Medicaid Enrollees after the Affordable Care Act

This study examines claims data for evidence of pent-up demand for health care among newly-enrolled adults in Medicaid as health reform rolls out.  We define pent-up demand as a spike in the demand for health care that occurs after obtaining insurance because of delaying or foregoing care while uninsured or underinsured.  If higher costs for new Medicaid enrollees are due to pent-up demand, the long-term costs of covering the newly insured and the on-going pressure on provider supply under the ACA may be lower than expected, as this need eases.  Lessons from Minnesota’s Medicaid expansion can also inform other states’ decisions about expansion and its costs.

 We will examine patterns in health care use for 18 months after enrollment (for enrollments Jan-Mar 2014) for Minnesota adults (age 18-64) who enrolled in a managed Medicaid plan with one large Midwestern insurer after the 2014 ACA implementation.  We define newly-enrolled as not having coverage with this insurer in the 12 months prior to enrollment, and thus our population may include some individuals who switched insurance companies.  We compare the utilization patterns of the newly-enrolled to that of Medicaid enrollees with on-going coverage with the same insurer.  

 Preliminary analysis using only 6 months of claims data indicate a lower likelihood of having an outpatient visit, hospitalization, emergency department visit, and a filled prescription among new compared to similar on-going Medicaid enrollees over 6 months of coverage.  However, we found that new enrollees do have a significantly higher likelihood of having a new patient visit in the first 6 months of coverage.  In addition, utilization declined for the newly enrolled across the first 6 months of coverage in every examined category except prescriptions filled.  Utilization remains steady in all categories of care for those with on-going coverage over the same period.  These preliminary findings are consistent with pent-up demand.  They also suggest that the newly enrolled may have lower health risk than those with on-going Medicaid coverage at the start of 2014.

 We have just received the full 18 months of claims data in addition to a measure of health risk based on diagnosis codes and prescriptions filled over a 12 month period.  We will repeat our analysis over this longer period and examine whether there are differences in health risk between the newly-enrolled and the comparison group.  We will also expand the analysis to account for the number of visits (not just the likelihood of any visit) and will add cost outcomes. 

 There is little evidence on the effect of health insurance expansions using claims data.  This study will contribute important evidence regarding pent-up demand, as claims data provide more details over a broader set of health care interactions (e.g. primary care visits, diagnostic tests, prescriptions) than does hospital discharge or survey data.  These findings will inform state agencies, insurers, and providers about the costs and health care needs of the newly insured under the ACA.