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Explosion of Digital Health Empowers More Efficient Medicaid Expansion-The HSB Blog 2/14/22

Our Take:

The striking growth in demand and acceptance for digital health technology presents a way to improve the access and quality of care for the uninsured by further expanding Medicaid with lower administrative costs or expenses. Accumulating data suggests that nationwide Medicaid expansion as part of the ACA would benefit non-expansion states and their patients at lower costs than many opponents have argued. In addition, the increased adoption of healthtech has provided or strengthened the number and types of tools that Medicaid officials have at their disposal to help increase enrollment.

Key Takeaways:

  • An estimated 4.1 million individuals would gain health insurance coverage if all states adopt Medicaid expansion, according to the Urban Institute.

  • A recent article in the Archives of Public Health found that digital nudging, similar to that used by employer benefit plans, increased Medicaid enrollment by anywhere from 10%-23%.

  • One study in JAMA found that Medicaid expansion can have a hidden economic stimulus effect with every $100,000 of additional federal Medicaid spending creating employment for 2 workers per year.

  • According to the Journal of Economics, there was a reduction in collection balances of approximately $1,140 for those who gain Medicaid coverage due to the ACA

The Problem:

According to The Commonwealth Fund Biennial Health Insurance Survey, approximately 12.5% of the U.S. population was uninsured and an additional 21.3% of the U.S. population was underinsured (please see the backdrop for how underinsured is defined). Early on in the pandemic, millions lost their jobs, and consequently, their employer-provided health insurance or their ability to afford other subsidized coverage. While many in this situation who lived in certain states became eligible for Medicaid under their state’s Medicaid expansion, many did not, why?

A total of thirty-nine states have adopted Medicaid expansion that became available as part of The Affordable Care Act, however, twelve states including Texas, Florida, Wisconsin, Georgia, and Mississippi decided not to expand their Medicaid programs. As a result, approximately 4.1 million individuals currently lack coverage that they would be able to obtain if all states adopted Medicaid expansion, according to the Urban Institute. In addition, as more data has become available to assess Medicaid expansion, studies have indicated that it both improves outcomes and saves costs where it has been passed. In addition, a number of studies have indicated that digital tools can be used to effectively and efficiently increase enrollment, helping to improve the cost outcomes. For example, according to an article entitled, “Health-Related Outcomes among the Poor: Medicaid Expansion vs. Non-Expansion States”, low-income populations in Medicaid non-expansions states had worse access to care, less preventative care utilization, less medical expenditures, and more out-of-pocket costs compared to those in expanding states. In addition, states like Missouri have employed integrated, online decision support systems to “help individuals purchase private insurance in the marketplace by simplifying information and graphics, developed interactive activities to assess understanding of health insurance, and provided [an] individualized report to ease the selection of a plan that met their financial and healthcare needs”

In terms of costs, not only are patients in non-expanding states suffering from the lack of coverage, hospital and state budgets are being strained by costs (which are written off as “uncompensated care” by providers. For example, an article in the Journal of Economics noted that there was a reduction in collection balances of approximately $1140 among those who gain Medicaid coverage due to the ACA”. Correspondingly a JAMA insight article found that “there are spillover benefits for economic well-being” from Medicaid expansion and “for every $100,000 of additional federal Medicaid spending, 2 workers gained a year of employment.”

The Backdrop:

In 2010 approximately 18% of the U.S. population was uninsured and a large portion was underinsured, leading to the passage of the Affordable Care Act. Underinsurance often impacted the so-called working poor, who often made too much to qualify for Medicaid but too little to be able to pay for health insurance. Many of these were often referred to as underinsured (where their out-of-pocket costs equal 10 percent or more of household income or 5% or more of household income less than 200% of the Federal poverty level ($52,400 for a family of four) not including what they paid in premiums or deductibles. As a result, one key element of the initial design of the Affordable Care Act (ACA) was to effectively require states to increase Medicaid coverage to all U.S. residents with family income at or below 138% of the federal poverty level via the expansion of Medicaid eligibility limits.

Following challenges to a significant portion of the law and a variety of lower court rulings, in 2012, the Supreme court ruled that states could not be compelled to expand Medicaid and that Medicaid expansion under the ACA must be voluntary. The Court ruled that it was within states’ rights to decline to participate in the expansion. There were a number of other aspects of the ACA that have been subject to legal challenges but the law remained largely intact. As a result, the ACA includes the private insurance expansion (in part by eliminating pre-existing condition clauses), allows for income-based tax credits for those eligible, depending on federal poverty level, and provides subsidized premiums for the purchase of insurance on state exchanges. Additionally, the dependent provision of the ACA allows children to remain on their parents’ insurance coverage until age 26. While there are multiple parts of the ACA that have contributed to the increase in access to health insurance coverage, expansion of Medicaid led to significantly increased health coverage and reduced racial and ethnic disparities in coverage and access to care for low-income individuals.


Healthcare has increasingly been shown to be an essential good at an individual, local, and federal level. As the COVID-19 pandemic has made clear, individual choices can have broad impacts on the health of their local communities, which in turn can have dramatic effects on the broader economy. Increased healthcare coverage within societies has clear positive impacts on the quality, equity, and efficacy of care and subsequent health outcomes. Accumulating studies show improved access to medical care translates to better health and lower mortality, a benefit for both patients and hospitals alike.

Moreover, given the striking increase in the use of telehealth and other healthtech tools during COVID, facilitating more effective and efficient Medicaid expansion goes hand-in-hand with digital health adoption. While efforts to bridge the digital divide and broadband access will have to continue full force, many lower income patients (those who would benefit most from Medicaid expansion) have been shown to embrace digital health tools. For example, two studies cited in a recent Archives of Public Health article found that nudging, similar to that used by employer benefit plans, increased Medicaid enrollment by anywhere from 10-23%. These types of digital nudges can be a very inexpensive and convenient method of outreach for Medicaid plans looking to increase enrollment, “with relatively little expense or administrative burden.” Moreover, with many potential Medicaid beneficiaries likely to be among the working poor who may have difficulty accessing transportation to clinicians or to be unable to take time off work to see providers they are more likely to attempt to avail themselves of technological tools should they be available. However, these tools should not require substantial investment or design by Medicaid authorities, as noted in one study, “simply improving the design and implementation of standard outreach efforts produced durable increases in enrollment that were sometimes even larger than the increases from these more-intensive interventions.”

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