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Doubts about Medicaid Expansion: Practical or Political? (Part one)

September 25, 2012
by Alison Knopf, Contributing Writer
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No matter who wins the presidential election in November, state decisions about Medicaid expansion under the Affordable Care Act (ACA) will remain firmly in state hands. But which hands? There are governors and there are state legislatures. Sometimes, they agree on their decision—pro or con—but often they do not.

While there appears to be a distinctly political, anti-Obamacare sentiment among many opponents, some opposition is also quite practical in nature. Some states are so different, so limited, or so far behind others in the ways that they manage Medicaid benefits and limits today that they can see that expanding Medicaid per the ACA—even with the federal government footing nearly all of the bill—will be a major undertaking.

And, while opponents continue to make short-term political hay with like-minded voters, state behavioral health directors know that there’s no way for governors, legislators, or voters to avoid the consequences of a state’s decision about expansion for long. States that support expansion will take on a new set of responsibilities and resources, with the goal of creating a nearly even level of Medicaid support across like-minded states.

States who oppose the expansion will face more of the status quo:  Poor citizens with untreated medical, mental health, and substance use disorders will get some care, but much of it in the least appropriate and most expensive settings. They will continue to find care as they do (or do not) today: in crowded hospital emergency departments, repeated short-term psychiatric hospital admissions, or through costly cycles of homelessness, arrest, trial, and incarceration.

This much is clear: the states which already have extremely low Medicaid coverage are the ones in which the governors are rejecting expansion outright: Mississippi, Florida, South Carolina, Louisiana, and Texas. Many other states have governors and legislatures that are not sure, waiting to see what will happen, and who will emerge victorious as national and state leaders after November’s elections.

 

Expansion decisions in state hands

The Supreme Court ruling upheld the individual mandate of the ACA. That is requirement that all citizens who make more than 133 percent of the federal poverty level (FPL) must purchase health insurance coverage. But, it also gave states the option to refuse the other key portion of the ACA bargain: the Medicaid expansion. 

Essentially, the expansion would ask all states to expand the scope of their Medicaid programs from their current income/qualification levels to encompass all citizens who earn up to 133 percent of the FPL.  For the first time, this would create a roughly equal level of benefits across participating states and include even those without dependent children—a population that is often uninsured and excluded from traditional state Medicaid programs.

 

The shape of health insurance to come

 Under the Affordable Care Act (ACA), health insurance coverage will be expanded in two ways. First, all those with incomes up to 133% of the Federal Poverty Limit (FPL) will become eligible for Medicaid under the Medicaid Expansion, provided their states elect to participate. Those whose incomes are above 133% of FPL may opt to purchase insurance through state insurance exchanges. A sliding federal subsidy will assist those whose incomes are at 400% or less of the FPL with the expense of paying for health insurance.

Why would states turn down a 100 percent contribution from the federal government to expand healthcare through 2016—and 90 percent thereafter? The most generous interpretation – and one that is likely true in some cases—is that some governors are concerned about their states being trapped by cost increases, enrollment increases, or the inability of the federal government to live up to its end of the bargain. Kathleen Sebelius, Secretary of the Department of Health and Human Services, addressed those fears early in August when she assured states that they could delay their entry into or drop out of Medicaid expansion whenever they wish.

In the text of a communiqué from the HHS press office to Behavioral Healthcare, Sebelius said: “The expansion of Medicaid eligibility to low-income adults as provided in the Affordable Care Act is voluntary for states. A state may choose whether and when to expand, and, if a state covers the expansion group, it may decide later to drop the coverage. The federal financial support for this coverage established under the Affordable Care Act is 100 percent in 2014, 2015 and 2016, and no less than 90 percent thereafter."

Another consideration may be the impact on the state, based on the sheer number of new individuals who would need to be served under Medicaid, or the increased financial impact of those services on hard-pressed state budgets. To explore these considerations, Behavioral Healthcare sought out numbers on the “absolute” impact of both enrollment growth and state spending growth associated with the Medicaid expansion in the period 2014-19.

While the absolute numbers of new recipients vary widely based on the relative size of the states, the percentages make clear that enrollment increases in the states that would expand their Medicaid programs most will have a significant impact, both systemically and on providers. Providers will, presumably, be seeing more people and, for the first time, there will be incentives for “seeing” them in preventive/primary care settings instead of high-cost emergency room, hospital, or criminal-justice settings.  

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