Pent-up demand in newly-insured Medicaid patients causes temporary rise in ER usage

A surge in ER visits and hospitalization rates on the part of newly-insured Medicaid patients is a mostly temporary phenomenon created by pent-up demand, according to a report by UCLA’s Center for Health Policy Research (HPR).

The study, released October 21, eases fears that large numbers of new Medicaid patients would overwhelm the system and strain budgets.

As of July 2014, California had logged 1.5 million new Medicaid enrollees due to the state’s decision to expand Medicaid as part of the Affordable Care Act.  That number includes 650,000 who were transitioned from the state’s Low-Income Health Program (LIHP).

The study looked at claims data from two consecutive Medicaid-voucher programs in California, the Health Care Coverage Initiative (HCCI), which ran from September 2007 to October 2010, and LIHP, which ran from July 2011 to December 2013.

Both provided coverage to individuals who were not eligible for Medi-Cal or other low-income programs at the time, and who would have been eligible for Medicaid under Medicaid expansion.

Results were that those individuals with the highest pent-up demand initially had 600 emergency room visits for 1,000 enrollees, but the rate quickly dropped and then remained relatively constant, eventually falling to 183 out of 1,000 individuals during the second year of analysis.

The next highest-demand group showed a significantly smaller initial number of visits that then remained constant, and the lowest-demand group had a had a smaller number of initial visits that remained constant.

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Hospitalization rates among those with the highest pent-up demand followed a similar trend, spiking at first and then rapidly declining.

Outpatient visits among all enrollees – those with the highest and lowest pent-up demand – remained fairly constant over the two-year study period.

The report notes that ER use and hospitalization rates fell to numbers comparable to previously insured populations with access to comprehensive care.

"We believe Medicaid expansion is sustainable because the initial high cost of newly enrolled beneficiaries does not persist beyond the first year of enrollment for the vast majority of new enrollees," Gerald F. Kominski, Ph.D., director of the HPR, told Managed Healthcare Exective.

The report, “suggest that the higher costs and utilization among newly enrolled Medicaid beneficiaries is a temporary rather than permanent phenomenon.” Authors note that policymakers and service providers can expect a reduction in demand for high-cost services after the first year of Medicaid enrollment.”