January 21, 2015 | Rosemarie Day

The Latest On Expanding Coverage Through Medicaid

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Beyond health insurance exchanges, the option to expand the Medicaid program has proven to be a significant component of the Affordable Care Act’s coverage expansion provisions.  In fact, 5.7 million (57%) of the 10 million newly insured in 2014 qualified for the expanded Medicaid program.1

As of December 2014, 27 states had opted to expand Medicaid (covering people with incomes up to 138% of the federal poverty level).  But there are 7 more states considering Medicaid expansion through initiatives that are being led by their governors.  As shown in the map above (click to enlarge) these states include Alaska, Indiana, Montana, Tennessee, Utah, Virginia, and Wyoming.

Some fun facts about Medicaid expansion:

  • If all of the seven states that are considering Medicaid expansion actually do it, over two-thirds of states will have opted in.  This could increase the number of insured people by another 666,000.  (While exciting, it is unlikely, due to expected legislative opposition in three of the states:  Alaska, Montana, and Virginia.  A more realistic number is 420,000.)2
  • There is no deadline to implement Medicaid expansion.
  • There is no initial cost to states for implementing Medicaid expansion (states will have to start paying 5% in 2017, 6% in 2018, 7% in 2019, and by 2020, and all subsequent years after, the federal government will pay 90% of the costs).3
  • Medicaid expansion can take many forms.  States can submit a federal waiver request if they want to design their own program.  For example, Wyoming is proposing to charge monthly premiums and copayments to new participants.  Arkansas already has a waiver to operate its Medicaid expansion through its exchange/marketplace, and is currently waiting for CMS to approve their waiver amendment for changes required by state legislation to be effective in February 2015.
  • Having a state-based marketplace (SBM, also known as a health insurance exchange) is not a criteria for Medicaid expansion.  Just a little over half of the states (15 of 27) that have already expanded Medicaid have their own state-based marketplace.  Only one state with an SBM has not expanded Medicaid (Idaho).
  • There is some private sector support for expanding Medicaid.  Hospitals are in one segment that stands to gain from the expansion. The Advisory Board (a consulting firm) projects that hospitals in non-expansion states will have lower bottom lines by a few percentage points by 2021.  As they point out, “that could be the difference between being profitable and being in the red.”

Without Medicaid expansion, states have a gap in health coverage for people whose incomes are at the current Medicaid cutoffs (this could be as low as 16% of the federal poverty level), and the exchange cutoff of 138% of FPL.  This is challenging for those who’ve heard about health reform’s new coverage options but fall into this gap.  It’s also challenging for people who’ve gained exchange coverage but whose incomes hover at the cutoff for this coverage, since they can lose coverage if their incomes fluctuate just slightly below the cutoff.  As 2015 unfolds, we’ll continue to monitor the changes in this area.

1. Heritage Foundation and Urban Institute Health Reform Monitoring Survey

2. Kaiser Family Foundation, State Profiles of the Uninsured

3. Center on Budget and Policy Priorities.