The per-member-per-month (pmpm) cost baseline is $467 the first year of the expansion (2023), based on cost forecasts for Medicaid Temporary Assistance for Needy Families (TANF) Adults, with pregnancy costs removed. The baseline costs for subsequent years are increased following the HHSC 2020 Legislative Appropriation Request (LAR) forecast trends. The baseline cost for 2025 is $492 pmpm.
The user may input a different pmpm cost for the first year (subsequent years will be calculated using the same forecasted trend as above). The range for user selection is from $425 – $600. There is more room on the upside estimate to account for potentially increased costs should provider rates need to be increased in order to ensure adequate provider participation for the newly covered.
The pent-up demand for the first year is set at 16 percent, based information from Centers for Medicare and Medicaid Services, Office of the Actuary, Actuarial Reports 2016, 2017. States show varying levels of increase for pent-up demand.. Pent-up demand could go as high as 27 percent in some states, but given the cost containment policies in Texas, a lower demand was assumed.
The user may choose a range for the pent-up demand from 10 percent to 25 percent for the first year. The initial pent-up demand percentage will reduce by half each of the next two years, and stabilizes to the rate 4% in year three (2025). Stabilizing increased demand at 4.0 percent for the period of the estimate is done to provide an overall balance based on data reported by Avalere Health showing that health care needs of the expansion population may be growing over time as the population shifts to more acute clients.
For the cohort of individuals who are currently covered by ACA plans, the pent-up demand factor was adjusted downward to reflect that those individuals currently have better access to care than the uninsured.