Growing Pains – a Brief Introduction to Medicaid Expansion
The Affordable Care Act, in theory, allows uninsured Americans the opportunity to obtain reasonably priced health insurance. Unfortunately, not only have there been issues with the health insurance exchange, millions of Americans have been left uninsured and cannot afford the health insurance plans offered to them. One proposed solution to this dilemma is the expansion of states’ Medicaid/Child Health Insurance Programs. The Affordable Care Act expanded Medicaid eligibility to cover more people who can’t afford health insurance. Contradictory to the ‘universal’ intentions of the ACA, the U.S. Supreme Court later decided that it was up to individual states to decide whether or not to expand Medicaid.
Despite trying to extend health insurance coverage, and thus minimizing a huge source of economic insecurity in many parts of the county, a little over half of states have opted to expand eligibility for Medicaid as the Affordable Care Act called for – the provision that was supposed to achieve half of the law’s coverage expansion, with the other half coming via subsidies for people earning about 133% of the poverty level to buy private plans on the exchange.
Shortly after the Supreme Court ruled that states can choose whether to adopt the health reform law’s Medicaid expansion to cover low-income parents and other adults, some governors declared that they will forgo the expansion, claiming it would place a heavy financial burden on their states. Claims that states will bear a substantial share of the costs of expanding Medicaid, however, and that the expansion would drain state budgets do not hold up under scrutiny.
Congressional Budget Office (CBO) estimates show that the federal government will bear nearly 93 percent of the costs of the Medicaid expansion over its first nine years (2014-2022). The federal government will pick up 100 percent of the cost of covering people made newly eligible for Medicaid for the first three years (2014-2016) and no less than 90 percent on a permanent basis. The additional cost to the states represents a 2.8 percent increase in what they would have spent on Medicaid from 2014 to 2022 in the absence of health reform, the CBO estimates indicate. This 2.8 percent figure significantly overstates the net impact on state budgets because it does not reflect the savings that state and local governments will realize in other health care spending for the uninsured.
A state’s decision not to go ahead with the Medicaid expansion, despite this extremely favorable financing, would have adverse consequences for many poor individuals and families without health insurance.
- In the typical (or median) state today, a working-poor parent loses eligibility for Medicaid when his or her income reaches only 63 percent of the poverty line (about $12,000 for a family of three in 2012). An unemployed parent must have income below 37 percent of the poverty line (about $7,100 in 2012) in the typical state in order to qualify for the program. Only a handful of states provide coverage to any low-income adults without dependent children, regardless of how poor they are.
- Only individuals with incomes between 100 and 400 percent of the federal poverty line will be eligible for premium and cost-sharing subsidies to buy coverage through health reform’s new health insurance exchanges.
- In states forgoing the Medicaid expansion, therefore, working people with incomes above the Medicaid eligibility limit but below the poverty line would have neither Medicaid nor subsidized exchange coverage. Due to the low wages they earn, many working-poor parents would have incomes too high to qualify for Medicaid but too low to qualify for subsidies to buy coverage in the exchanges. Many would likely remain uninsured and go without needed care leaving them at risk of remaining uninsured if their states do not move forward and expand Medicaid.
Nevada was one of the first states to expand Medicaid coverage. Please check and see if your state has elected to expand this coverage or not and feel free to comment.
Thank You for Reading!