Medicaid Expansion - A Costly Experiment

If the proponents of Medicaid Expansion get what they want, and if the SHARE Plan developed by the Wyoming Department of Health is enacted, we can - the report says - expect approximately 17,600 Wyomingites to enroll at an annual cost of $110 million.

There was a point in time, namely 7-8 years ago, when you could stiill insure a family for that money. Not in all states, and certainly not in Wyoming. But in some states you could get good, basic health insurance for a family for $500-600 per month.

Again, Wyoming has been a high insurance cost state for a very long time. Our population is, plain and simple, not big enough to provide the kind of large risk pool needed for a fully functioning health insurance market. While it is hard to find consistent evidence on the size of an optimal health insurance risk pool, but there seems to be some consensus that it has to be larger than 700,000 people. This precludes Wyoming right off the bat, explaining why we have some of the highest insurance premiums in the country.

With this in mind, is it not reasonable that Medicaid Expansion would cost more than $6,000 per enrollee?

Actually, no. It is not. There is a way to insure all these people for quite a bit less money: let them buy insurance from out of state. Today, that is not possible - an insurance plan sold in Wyoming must be tailored to Wyoming mandates, which isolates our state as a sub-optimal risk pool with artificially inflated insurance premiums.

So let us assume that Medicaid Expansion was passed, but that we also gave enrollees access to insurance plans from all over the country. Here is a little sample of what they would have access to (assuming a single male, 34 years of age, non-smoker, $25,000 annual income):

• In Montgomery County, Maryland, a "gold" plan from Care First Blue Choice for $262.66 per month; adjusted to $346/month including a $1,000 deductible;
• In Fairfax County, Virginia, a "silver" plan from Kaiser Permanente for $241.71 per month including a $1,300 deductible;
• In Ventura County, California, a "gold PPO" plan from Blue Cross of California for $271.52.

(All data from eHealthInsurance.com)

If we enrolled all 17,600 of Wyoming's prospective Medicaid Expansion enrollees into the most expensive plan here, the one from Maryland, it would add up to $4,152 per enrollee or $73.1 million per year. With everyone on the Virginia plan the annual cost would stop at $51.1 million - less than half of what the Wyoming Department of Health estimates that Medicaid Expansion will cost.

Admittedly, this is a hypothetical example - it would take quite a bit of legal work before part of the Wyoming Medicaid program would allow enrollees access to a national insurance market. However, the difference in costs should be enough of a motivator for lawmakers and our governor to try make it happen. Their motivation will perhaps grow stronger if we take into account the not-insignificant risk that the federal government will reduce or entirely eliminate its support for Medicaid Expansion. If that happened, the state would have to either default on the expansion or take over the cost itself. In that event, surely it would be easier to sell the program to taxpayers if it cost half as much as is currently predicted?