Seeking Answers on Medicaid Expansion

The success of the health reform in reducing the uninsured population hinges on a broad Medicaid expansion, with roughly 16 million Americans projected to gain coverage through the program. Many state officials have significant questions as they prepare implementation timelines and financial projections.

About 60 million Americans were enrolled in Medicaid in 2009 at a cost of $380 billion. States shoulder more than 40% of this cost, on average.

By 2014, the health reform law establishes a new national floor of Medicaid eligibility: 133% of the poverty level, or roughly $14,400 for an individual in 2009 and about $29,326 for a family of four. The law also permits states to extend Medicaid coverage to childless adults, a category previously excluded from the program, unless states obtained a waiver to do so or funded such coverage using only state money.

There are wide variations in states’ current eligibility rules, and some states already cover populations with annual incomes higher than 133% of the poverty level. However, the new eligibility baseline may effectively double Medicaid enrollment in a handful of states that currently have lower eligibility limits, namely Florida, Nevada and Texas, according to Stateline.org.

Estimates on states’ cost to foot this expansion wildly diverge, and Ann Kohler, health director for the American Public Human Services Association, notes that “each state has to do its own math.”

That calculus depends on whether the state qualifies as an “expansion state” — essentially, if it already expanded Medicaid coverage to childless adults. For so-called expansion states, the federal government would shoulder only a fraction of the cost of their expansion in 2014 but increase its share of the cost in 2020. Non-expansion states like California, meanwhile, would receive more federal funding upfront, though the money would taper off by 2020.

States also have questions about whether Medicaid changes will abrogate the need for safety-net programs that sprang up to fill coverage gaps. In California, the expansion casts doubt on the future of Healthy San Francisco — a near-universal care program that covers about 51,000 of the city’s uninsured residents — although officials say they are committed to the initiative, given that thousands of enrollees are undocumented immigrants who will not qualify for coverage under the health reform law.

Despite the questions, consensus has emerged on several implications for California:

  • Medi-Cal is slated to cover about two million more beneficiaries: Under the new law, the federal government will cover the full cost of new Medi-Cal beneficiaries for the first three years, gradually reducing its share to 90% by 2020. However, California officials say the state ultimately will spend $2 billion to $3 billion more per year to cover new Medi-Cal beneficiaries.
  • Medi-Cal can immediately enroll residents who meet income qualification requirements: According to a letter to state Medicaid directors from Cindy Mann, CMS’ director of the Center for Medicaid and State Operations, states can now set the income eligibility standard for residents at any level up to 133% of the federal poverty level and begin to receive higher federal payments to cover the group. Mann also said that “taking up the optional early expansion does not preclude or in any way affect receipt of the increased matching rate” in 2014.
  • Talked-about cuts to Medi-Cal and Healthy Families are likely off the table: Through its “maintenance of effort” provisions, the reform law likely prevents Gov. Arnold Schwarzenegger (R) from enacting proposed cuts to state health insurance programs to rein in California’s mounting $20 billion budget deficit.

On the Hill

  • The Senate on Monday passed a bill, which will now go to President Obama for his signature, affirming that certain Defense Department health programs meet the standards of “minimum coverage” under the new health reform law. The health reform law establishes new standards for “minimum essential coverage” and requires all U.S. residents to obtain that minimum coverage or incur a penalty (Lesniewski, CQ Today, 4/12).

National Reactions

  • Georgia Insurance Commissioner John Oxendine announced on Monday that his state will not participate in the high-risk insurance pool created under the new health reform law, because of uncertainty over whether the state would eventually become responsible for the cost of the program, the AP/Atlanta Journal-Constitution reports (McCaffrey, AP/Atlanta Journal-Constitution, 4/12). In a recent letter to HHS Secretary Kathleen Sebelius, which was obtained by the Associated Press, Oxendine said that he had “no confidence” that the program would not be a burden on taxpayers.
  • Florida House Republicans on Friday approved the addition of an amendment to a bill (HB 885), which would declare the individual insurance coverage mandate under the new health reform law invalid in the state, before advancing the bill to the House floor, the Miami Herald reports. The amendment — which is attached to a bill regarding life insurance — states that “every person within [Florida] is and shall be free from governmental intrusion” in selecting health insurance coverage. A second portion of the amendment would authorize Attorney General Bill McCollum (R) to file a lawsuit against the federal government on behalf of the state’s residents deeming the individual mandate unconstitutional. The lawsuit would be consolidated with a similar lawsuit that McCollum and 17 other state officials have filed against the federal government (Frank, Miami Herald, 4/10).            
  • The Maryland Senate on April 6 voted 27-20 to reject a proposal that would have invalidated in Maryland the individual mandate in the new health reform law, the Baltimore Sun reports. Similar proposals have been adopted in Idaho and Virginia and are under consideration in dozens of other states. All 14 state Republican senators and six Democrats voted for the proposal, which was added as an amendment to an otherwise noncontroversial bill, according to the Sun (Dresser, Baltimore Sun, 4/7).
  • There is “acrimonious debate” over whether the new health reform law will help U.S. residents avoid bankruptcy caused by medical bills, CQ Today reports. In the lead up to the passage of the health reform bill and the days after its enactment, President Obama and congressional Democrats frequently said one of its benefits would be to lower the rate of medical bankruptcies. However, opinions vary on whether that actually will happen, with experts citing significantly different perspectives and research findings, according to CQ Today (Norman, CQ Today, 4/9).

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