The Patient Protection and Affordable Care Act has spurred people who were already eligible for Medicaid before expansion but not enrolled to sign up, creating cost concerns for state officials, according to an Associated Press report.
The PPACA gives states the option of expanding Medicaid to people earning as much as 138 percent of the federal poverty level. The federal government will pay 100 percent of the costs for this newly eligible group through 2016 and then scale back funding gradually to 90 percent in the following years.
However, states are still anticipating spending more on Medicaid because of increased enrollment due to the "woodwork effect" — when people who were previously eligible but not enrolled sign up because of increased outreach and awareness. The federal government pays about 60 percent of the costs on average nationally for the "woodwork" enrollees, meaning states must foot a considerable share of the bill, according to the report. In California, for instance, Democratic Gov. Jerry Brown recently released a budget containing an additional $1.2 billion in spending for Medi-Cal, the state's Medicaid program.
The woodwork effect is also a concern for states that haven't expanded their Medicaid programs under the PPACA. Seventeen non-expansion states experienced Medicaid enrollment growth during the first three months of 2014, according to an analysis from healthcare business advisory company Avalere Health. Montana, for example, saw enrollment rise 10.1 percent during the first quarter, even though the state did not extend Medicaid eligibility.
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