States That Opt Out of Medicaid Expansion Might Face Pitfalls

States that reject the Affordable Care Act's Medicaid expansion could face several unintended consequences, AP/U-T San Diego reports.

The U.S. Supreme Court's ruling on the ACA last year made participation in the law's Medicaid expansion optional.

More than two dozen states and the District of Columbia have agreed to expand Medicaid, and more than a dozen mostly Republican-led states have declined to do so. The remaining states likely are considering three possible "side effects" should they decline to participate in the expansion, according to some observers.

For example, states that decline to participate in the Medicaid expansion could expose businesses to tax penalties that could top $1 billion, according to Jackson Hewitt Tax Services.

Under the "shared responsibility" provision of the ACA, businesses with 50 or more employees must pay a fine for each employee who does not have access to affordable health coverage through the company and in turn qualifies for the law's health insurance exchanges.

According to AP/U-T San Diego, this potential consequence spurred lawmakers in Arkansas last week to approve an alternate Medicaid expansion plan that would shift low-income, Medicaid-eligible residents into a "private option" in the state's health insurance exchange.

Meanwhile, observers have noted an oddity in the ACA that requires U.S. citizens below the poverty line to obtain health coverage only through the Medicaid expansion, but documented immigrants who also are below the poverty line are eligible for subsidized private coverage. Arizona Gov. Jan Brewer (R) highlighted the issue when she announced her state's participation in the expansion.