Expanding Medicaid can help lower Obamacare marketplace premiums by 7 percent, according to a federal report that is the latest to push back against headlines of high premiums for the health law.
The Obama administration report looked at 2015 data and found that Medicaid expansion affects the risk pool of enrollees in the Obamacare marketplace. That means that states that did expand Medicaid have more enrollees who are healthy and therefore pay lower premiums than states that didn't expand.
The report comes as more states have finalized major premium increases for Obamacare in 2017. For instance, on Wednesday Illinois issued final Obamacare rates that included higher premiums by up to 50 percent for some plans.
The report notes that states that expand Medicaid allow lower-income consumers to get healthcare through the government program and not on the exchanges.
"Because lower-income individuals on average have poorer health status than those with higher incomes, a state's decision not to expand Medicaid affects the marketplace risk pool, and ultimately, marketplace premiums," according to the Department of Health and Human Services, which conducted the analysis.
So far 31 states and the District of Columbia have expanded Medicaid.
HHS found states that expanded Medicaid had marketplace risk pools mainly comprised of people who had incomes above 138 percent of the federal poverty level. Meanwhile, non-expansion states have risk pools with more individuals below 138 percent.
The agency looked at 2015 data on marketplace plans and enrollment to assess the affect of the expansion.
"In 2015, marketplace premiums for the second-lowest cost silver plan were, on average, about 8 percent lower in expansion states than non-expansion states among states that used healthcare.gov," the study said. Residents in 38 states use the website to sign up for Obamacare.
There are caveats to the study, as HHS doesn't account for other factors that could affect premiums such as policy decisions, insurer networks or demographics.
The report is the latest attempt by the administration to counter a slew of bad news for Obamacare, which included major defections from insurers such as Aetna and UnitedHealth.
On Wednesday, the administration issued a report that said nearly three in four Obamacare customers can still pay less than $75 a month for a plan, even if all insurance plans increased by 25 percent last year.