States Seek a Middle Ground on Medicaid

NCPA September 28, 2012

After the Supreme Court's ruling on the Affordable Care Act, many states were quick to signal their unwillingness to expand their Medicaid programs. Now, in an interesting interpretation of the Supreme Court's ruling on the law, states are looking into partially expanding their Medicaid programs to receive federal subsidies, says the Wall Street Journal.

• The Supreme Court struck down the requirement that states include all people up to 133 percent of the poverty level in Medicaid.
• Since that portion of the bill was struck down, states are asking to just include people up to 100 percent of the poverty level in Medicaid and allow the rest to buy federally subsidized private insurance through exchanges.
• This would mean that states won't have to contribute to the costs of the subsidies to purchase private insurance.
• States such as Indiana would have to pay about $1.1 billion to enroll all adults with incomes up to the poverty level in Medicaid. However, to fully expand coverage of Medicaid to those up to 133 percent of the poverty level would cost another $326.5 million.
• But, the Congressional Budget Office found that the federal government would have to pay $9,000 for each person enrolled in exchanges rather than the $6,000 to be enrolled in Medicaid.

Federal officials are hoping to keep states from opting out of the Medicaid expansion. One main reason uninsured Americans are going to get coverage under the new health care law is through Medicaid expansion. Hospitals are also hoping states expand Medicaid because otherwise they will be left with a large number of nonpaying customers while dealing with federal payment cuts.

Proponents of partial coverage, such as Governor Walker of Indiana, argue that health providers would be attracted to partial coverage because the number of uninsured patients gets reduced while still getting reimbursed by private insurers. The Department of Health and Human Services has yet to say whether it would allow states the option to give partial coverage.

Source: Louise Radnofsky and Christopher Weaver, "States Seek a Middle Ground on Medicaid," Wall Street Journal, September 18, 2012.