Cheryl Clark, for HealthLeaders Media , August 9, 2012
The federal announcement this week that states may choose to expand their Medicaid programs to 138% of the federal poverty level for some period of time, and then later drop out, could provoke some states deeply opposed or on the fence to reconsider.
But the news doesn’t answer many of the big questions that remain, says Matt Salo, executive director of the National Association of Medicaid Directors.
Earlier this week, Cindy Mann, director of the Centers for Medicare & Medicaid Services’ Center for Medicaid and the Children’s Health Insurance Program (CHIP) spoke in Chicago at the National Conference of State Legislatures in an effort to clarify the issue.
“A state can decide when to come in, if to come in and also, if a state does adopt the expansion and determines at a later time, for whatever reason, that it does not want to maintain the expansion, it could also decide, because it’s a voluntary program, to drop the expansion,” Mann told the American Hospital Association, which included the statement in a news briefing late Tuesday.
“The ability to opt out is certainly better than no option,” Salo says, adding that “some states have been reluctant because “they had felt trapped by the permanency of it. But I don’t think that in and of itself is enough to say that states will feel better about adopting the Medicaid expansion.”
Too many other questions about how the Medicaid expansion would work need to be answered soon, says Salo, whose organization last month sent a list of 47 questions about the protocols for the expansion programs to CMS.
Questions about the Medicaid expansion provisions of the Affordable Care Act emerged June 28 after the U.S. Supreme Court ruled on a provision of the law that said if states did not expand their Medicaid programs to 138% of the federal poverty level, the point at which subsidies for the federal exchanges would kick in, would not lose all their federal Medicaid funding match, which ranges around 50%. The court declared that invalid, saying that states could opt out of the expansion to 138% without losing all their funding.
Some 30 states, including many that challenged the constitutionality of the Patient Protection and Affordable Care Act, such as Texas and Florida, have said they don’t intend to expand, while others are await further clarifications before announcing their decisions.
The issue is a hot button one for hospitals, whose leaders worry that in states that don’t expand their Medicaid programs, millions of patients will remain uninsured, as if the PPACA had never existed. That would require hospitals to shoulder the costs of care when patients need it emergently.
Meanwhile, these hospitals are shouldering billions in reimbursement cuts and reduction in disproportionate share funds that they agreed to in anticipation that all states would expand their Medicaid programs.
Joy Wilson, health policy director at the National Conference of State Legislatures, the group holding the meeting where Mann spoke, said lawmakers in attendance seemed interested in the new option. “There was some comfort in that if they were if their states decided to do the expansion, and for whatever reason it didn’t work out fiscally, they would have an option to reverse that course,” she says. “There was some feeling that was a good thing.”
Wilson adds that many states “just don’t know what they’re going to do yet because they don’t have all their facts in front of them.”
One particular sticking point remains in what Salo and others call “the moving parts.”
States may now have a patchwork of programs to deal with the welfare or healthcare needs of the uninsured, provided they have no other source of coverage. If a state expands its Medicaid program, the need for those patchwork programs—providing food, medicines, housing—would go away, or at least be greatly reduced, and much harder to start up again. It could mean saying no to other sources of federal or state or philanthropic funds that the states could never get back.
Compounding the problem is that while federal funds pledge to pay for 100% of the Medicaid expansion for the first three years, after that the funding begins to drop to 90%, forcing states to pick up the tab for a large number of patients it didn’t have to pay for before.
Salo says that while he’s glad CMS has clarified this issue, there are dozens of remaining questions about how the expansion programs will work. “The question that remains unanswered, which is still the most important one, is whether states can expand to a federal poverty level to a partial level below 138%?” he asks.
Take a hypothetical state that covers citizens with Medicaid up to an income level of 70% of the federal poverty level.
“If a state says no, we’re not expanding, the exchange subsidies will kick in at 100% of the federal poverty level, but there will still be a gap for people who earn incomes below 100%, and they will have nothing,” he says. In this example, anyone earning between 71% and 99% of the federal poverty level will have no coverage and will not be eligible for health insurance exchange subsidies.
Cheryl Clark is a senior editor and California correspondent for HealthLeaders Media Online.