Inquiry J Health Car
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Inquiry J Health Car · Jan 2013
States' commitment to Medicaid before the Affordable Care Act: trends and implications.
Medicaid insures more than 65 million low-income people, and the Affordable Care Act of 2010 gives states the option to enroll millions more. Historical trends in state Medicaid effort possess important implications for health policy going forward. Nearly all states steadily ratcheted up their Medicaid effort in the period from 1992 to 2009, holding out promise that most will sustain their programs and ultimately participate in the expansion authorized by the Affordable Care Act. But the growth in Medicaid over this period did not appreciably curtail vast geographic disparities in program benefits that threaten to undermine the goals of health reform.
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The minimum medical loss ratio (MLR) regulations in the Affordable Care Act guarantee that a specific percentage of health insurance premiums is spent on medical care and specified activities to improve health care quality. This paper analyzes the regulations' potential unintended consequences and incentive effects, including: higher medical costs and premiums for some insurers; less innovation to align consumer, provider, and health plan incentives, less consumer choice and increased market concentration; and the risk that insurers will pay rebates if claim costs are lower than projected when premiums are established, despite the regulations' permitted "credibility adjustments." The paper discusses modifications and alternatives to the MLR regulations to help achieve their stated goals with less potential for adverse effects.