The Medicaid “Wrinkle”
In yesterday'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.