Medicaid expansion is in the eye of the beholder

To supporters of the Affordable Care Act, legislative expansion of the Medicaid program is a welcome financial and health care bonanza for states and uninsured patients. To the ACA's detractors, Medicaid expansion is a hostile government takeover that must be opposed in principle, regardless of potential benefits of an infusion of federal dollars. The stage for these state-level clashes was set by a surprising Supreme Court decision last summer that upheld most major provisions of the Affordable Care Act, but declared unconstitutional the mandatory Medicaid eligibility expansion that the law's authors had expected would extend coverage to millions of currently uninsured Americans. Instead, the Court gave individual states the option to accept or decline the expansion, which, though far more generous with federal matching funds than the existing program, would still require states to spend more within already strapped budgets.

Medicaid Expansion map courtesy of Avalere Health via The Washington Post Wonkblog 5/5/13

In last month's Georgetown University Health Policy seminar, we discussed the complex role of the Medicaid state-federal partnership (which currently provides health insurance to 1 in every 5 Americans) in improving access to care and health outcomes. In fiscal year 2011, Medicaid spending totaled $414 billion, with two-thirds going to services for disabled elderly persons. Long-term care services (nursing homes, mental health, home health care) accounted for 3 in every 10 dollars that the program spent.

Currently, to qualify for Medicaid coverage, individuals must be not only poor, but belong to one of several "core eligibility groups" defined by federal law: children, pregnant women, people with disabilities, seniors, and adults with dependent children. Income thresholds vary widely across states, especially for working parents, who might find themselves eligible for coverage in more generous states but not in others. Few states provide significant coverage for non-disabled adults without dependent children, whose services were generally excluded from federal matching funds prior to the ACA.

In 2014, states that accept the ACA's Medicaid expansion will be required to extend eligibility to all adults (parents or not) earning less than or equal to 138 percent of the federal poverty level, which works out to annual incomes of $15,856 for an individual and $26,951 for a family of three. According to the Kaiser Family Foundation, more than half of today's 48 million uninsured have incomes below the new Medicaid threshold. In states that decline Medicaid expansion, there appear to be few feasible alternatives to leaving these persons without affordable coverage, except for those earning more than 100 percent of the federal poverty level who may be able to purchase subsidized private plans in state or federal health insurance exchanges. For example, in Florida, whose legislature rejected the Medicaid expansion against the wishes of Republican governor Rick Scott, only one quarter of the 1.3 million low-income residents who would have been covered by the expansion will be eligible for tax subsidies toward private coverage in the federal insurance exchange.

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The above post first appeared on The Health Policy Exchange.