Medicaid Expansion: Out of the Woodwork or Onto the Welcome Mat

By Lynn Blewett, SHADAC Director

(Editor’s Note:  This blog originally appeared on the SHADAC blog.  )

The Woodwork Effect

In health policy terms, the “woodwork effect” is a phenomenon that occurs when an expansion of public program eligibility takes place (whether through federal action or a state-level initiative), and individuals who were already eligible for coverage but who had previously not enrolled choose to sign up—thereby “coming out of the woodwork.”

There is currently concern among policymakers and planners about how to predict the number of people who are eligible but not enrolled that will sign up for Medicaid in 2014—in part because of increased awareness of their eligibility and in part because of the mandate to obtain coverage under the ACA.  This possibility raises a number of planning concerns having to do with anticipated costs and system capacity and exists even in states that choose not to expand Medicaid beyond current eligibility levels.

Why Don’t People Enroll?
People who are eligible for public programs frequently do not participate in them, and Medicaid is no exception.  There are a variety of reasons that eligible individuals might not sign up for coverage: They might not be aware of their eligibility, they might be averse to government programs, they might not feel like they need assistance, or they might not know where or how to apply.  This chart from the new RWJF DataHub, based on analysis from the Urban Institute, shows Medicaid participation rates among adults by state– from a high of 93.5 percent in Massachusetts to a low of 54.4 percent in Nevada.The recent experience of the Children’s Health Insurance Program (CHIP) provides a prime example of the woodwork effect.  Because of extensive outreach and enrollment activities triggered by incentives in the Children’s Health Insurance Program Reauthorization Act (CHIPRA) of 2009, many children showed up to enroll in CHIP who were unaware that they were actually eligible for the Medicaid program, which has lower income thresholds than CHIP.  The program’s efforts worked to insure 42 million children in Fiscal Year 2010 through enrollment in CHIP (7.7 million) but also in the Medicaid program (34.4 million children), which actually saw a larger enrollment jump than did CHIP.

Re-Thinking Our Language

As a concept, the woodwork effect is important and must be considered when thinking about enrollment and state costs.  However, it might be time for a new phrase to describe this phenomenon.

The Oxford English Dictionary defines the phrase “to come or crawl out of the woodwork” as “to come out of hiding” or “to emerge from obscurity,”[2] with the connotation that those who come out of the woodwork have been lying in wait, poised for the opportunity to take advantage of a situation.  As a result, the phrase “woodwork effect” has negative connotations, which can undermine the coverage goals of the ACA by stigmatizing public coverage or suggesting that enrollment of people who are eligible is somehow undesirable.  A more appropriate—and less derogatory—phrase than the woodwork effect might be something along the lines of the “welcome mat” effect, a term suggested by the Center for Children and Families at the Georgetown University Health Policy Institute.  This phrase would signal that the eligible-but-unenrolled will in 2014 feel more welcome by the Medicaid program as it opens to a wider range of applicants in many states and as it becomes more normative as a coverage option due to state expansions, the individual mandate to carry coverage, and intensive outreach campaigns by public and private organizations.

Certainly, there is reason for being concerned at the state level about a potential wave of applicants from the eligible-but-unenrolled population—the most significant being that this group will not garner the ACA’s enhanced Federal Medical Assistance Percentage (FMAP) and may therefore have a significant impact on state budgets.  However, cost concerns and other logistical issues should be held apart from the phenomenon of improved Medicaid participation.