Tuesday, October 29, 2013

The ACA: Medicaid Expansion

Medicaid expansion leaves out the majority of America's uninsured.

Where the States Stand
Via: The Advisory Board Company

One of the primary mechanisms to insure low income Americans under the ACA is the expansion of Medicaid.  Currently households earning up to 100% of the Federal poverty limit can enroll in Medicaid, the public health insurance program jointly administered by the individual states and the Federal government.  The ACA seeks to expand Medicaid to cover households earning up to 134% of the Federal poverty limit (FPL).

When the US Supreme Court upheld the constitutionality of the ACA as a tax, the Court's decision ruled that expanding Medicaid was optional for the states.  As a result, most of the states with Republican governors have chosen to not expand Medicaid -citing fears of the program busting state budgets.  The Federal government pays 100% of the costs of expansion for the first several years and then pays 90% of the costs after the first several years.

The results create a number of consequences.  More than half of America's uninsured live in the red states opting not to expand Medicaid.  Texas and Florida especially contain large numbers of uninsured Americans. Consequences:

a. Many or even most of the uninsured poor will not be covered by Medicaid as planned.

b. In 2014 all Americans -with a handful of exceptions- must show they have health insurance coverage.  For households earning 101-134% or so of the Federal poverty limit and who live in one of these non-expansion states, they currently will not get Medicaid or the subsidies designed for households earning 135% or higher of the FPL.  So unless this "insurance donut" is fixed, these working poor will have the additional burden of non-subsidized health premiums or a fine for not having health insurance.  Or they will have to move to a state that has expanded Medicaid.

c. Hospitals -especially those rural and inner city ones treating large numbers of uninsured- currently can dip into a Federal fund to offset the costs of treating uninsured patients.  The ACA expected the vast majority of these uninsured patients to be covered by Medicaid or another type of private insurance by 2014 and moved half of this fund to paying for the ACA.  Now the Federal government is delaying the reductions in this hospital pool.  Starting in 2016, however, the pool for offsetting the costs of treating the uninsured will be halved.  For those hospitals in non-expansion states, they must still treat or stabilize any patient entering their doors -at least if the hospital receives any government funding such as Medicare or Medicaid patients.  Without the expansion they have only one way to offset their costs:  raising premiums on insured patients.  Thus, the choice to not expand Medicaid may lead to higher premiums for the insured in these states or the closure/bankruptcy of hospitals.

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