The Medicaid "Wrinkle"
Editor's Note: This is a guest blog from Jill Glomstad, an editor at ADVANCE.
In last week's Supreme Court ruling, seven of the nine Justices agreed that it would be unconstitutional for the federal government to force states to participate in the Affordable Care Act's expansion of the Medicaid program. The expansion had been expected to cover roughly 17 million uninsured Americans, mostly low-income adults. The federal government will foot the full bill for the expansion for the first three years; after that the federal share will slowly decline, but it would still be 90 percent in 2020.
The Court's decision basically renders the expansion a separate animal from the current Medicaid program. If states don't participate in the expansion, they can keep their existing programs (and existing federal money) without consequence. The question now is, what will the states choose to do?
So far seven states and the District of Columbia are already offering expanded coverage, paying for it with state funds until the federal payments via the ACA kick in in 2014, according to CBS News.
However, 26 were plaintiffs in the case the Court heard; the governors of some of them, including Texas, Mississippi and Wisconsin, have already hinted that they will not implement the expansion, while others have refused to say what they're willing to do. Virginia Governor Bob McDonnell isn't saying, but told Politico.com that the expansion would cost his state $2.2 billion over 10 years, even with the federal funds.
It's unsurprising that few want to commit to a decision, given the political hot potato that the Affordable Care Act has become and the huge financial burdens states are already facing due to Medicaid. But if states opt out of the expansion, what's going to happen to their residents?
If all 26 states who were parties to the suit opt out, that's more than half - roughly 9 million people - of those expected to be covered by the expansion who will still be without insurance. What's more, they will be some of the poorest Americans.
"We will have a really strange doughnut hole in this country," said Kevin Outterson, associate professor of law and associate professor of health law, bioethics and human rights at Boston University, during an Association of Health Care Journalists webcast on the Supreme Court decision today. Individuals making up to the federal poverty level (FPL, currently $15,415 for an individual; $26,344 for a family of three in 2012) will have some level of coverage under existing programs. Those making 133 percent of the FPL or more will be able to participate in the state health insurance exchanges that the ACA established, with subsidies to help them purchase affordable coverage. But the people who fall in between are not eligible to participate in the exchanges - the ACA did not include them because it was assumed they would be covered by the Medicaid expansion.
Public and safety-net hospitals in states that opt out could also suffer. Currently hospitals that treat a large number of low-income, uninsured or vulnerable patients receive "disproportionate share" funding to help pay for that uncompensated care. Under the ACA, those hospitals are scheduled to lose about half that funding, on the premise that the expansion of coverage through both the individual mandate and the Medicaid expansion would offset what hospitals will lose. If a state chooses not to participate in the Medicaid expansion, its hospitals will still have to provide care to those populations but with much less funding than they have now to do so.
Providers could lose out too, though that is uncertain. The ACA raises rates for primary care providers in Medicaid up to Medicare levels. It's unclear, based on the Supreme Court ruling, whether providers in states who don't participate in the expansion will get that increase in payments.
Another issue is that "there is nothing out there to give states any sense of when they have to make a decision, because no one thought they would have to," said Alan Weil, executive director of the National Academy for State Health Policy, during the webcast. In states that don't decide, Medicaid programs could be caught in a holding pattern.
Martin Salo, executive director of the National Association of Medicaid Directors, told the New York Times in an article today that his initial sense is that many states will participate in the expansion. Many Republican governors may be waiting until after the November election to decide, hoping that Mitt Romney will win and make good on his promise to dismantle the entire law - Wisconsin Governor Scott Walker said on Thursday that was his position, CNBC reported. However, governors don't necessarily hold all the cards here. Much of Medicaid is regulated by the legislature, and when state legislatures come back into session in January they may take some or all of this decision out of the governors' hands, said Weil. It's also possible that Congress or HHS could act in the way of new legislation or new regulations to encourage states to participate.
By way of analogy, several Republican governors initially said they would not take federal stimulus money from the American Recovery and Reinvestment Act of 2009, said webcast moderator AHCJ President Charles Ornstein. Eventually, they all did. Americans - especially the poorest - will just have to wait and see if they do the same with the Medicaid expansion.