Medicaid Expansion: An Important Part Of State’s Decision Making

Medicaid expansion is a significant aspect of the decision making as well as that of the policy-making the US government embarks on and therefore it remains on the priority list of all the news outlets within the US too as they often have news pieces and debates on it.

Medicaid has been increased in several states to cover all people with family earnings below a specific threshold. Others, on the other hand, haven’t.

Whether or not you are eligible for Medicaid relies in part on whether or not your state has extended its programme.

In all states, you may be eligible for Medicaid based on your income, family size, disability, and other considerations. The conditions for eligibility vary by state.

In states where Medicaid has been expanded, you can qualify solely on the basis of your income.

You are eligible if your household income is less than 133 percent of the federal poverty threshold. (Because of the method used, it comes out to 138 percent of the federal poverty threshold). A few states have varied income thresholds).

According to a Health Affairs analysis, Medicaid expansion had no effect on overall administrative spending, although states with big expansions saw moderate decreases in spending while states with smaller expansions experienced minor increases.

Administrative expense includes costs for eligibility and enrollment assessments and processes, as well as interagency costs, claims processing, and information technology systems.

States were not reimbursed for administrative expenditures after Medicaid expansion, and there is little evidence that expansion had an influence on this spending.

Indiana University researchers gathered data from all fifty states and focused on two outcomes in each: the proportion of total spending that was administrative and the amount spent per enrollee.

Various CMS and Kaiser Family Foundation (KFF) publications were used to acquire statistics on state expansion, spending, and enrollment from 2007 to 2017.

The analysis by Health Affairs examines the disparities in administrative spending between states that have expanded Medicaid and states that have not.

Furthermore, the researchers examined major and small expansion states, as well as states that expanded Medicaid through the Affordable Care Act with those that used Section 1115 waivers to expand their programme.

The median uninsurance rate among nonelderly people with earnings below 100 percent of the federal poverty threshold in the year before the expansion was used to classify expansions as major or minor. Expansions were regarded as large if the uninsurance rate was high.

In 2014, states were given the option of expanding Medicaid. Since then, 38 states and the District of Columbia have expanded Medicaid.

Prior to 2014, expansion and non expansion states had similar levels of administrative cost, but researchers discovered that after extending their programmes, most expansion states witnessed a higher unadjusted drop in per enrollee administrative spending.

Before 2014, the average yearly administrative expense per enrollee in non-expansion states was little more than $444. Between 2014 and 2017, it dropped to just over $408, a $35.60 decrease.

States that undertook major expansions reported a $106 yearly decrease in administrative spending per enrollee, from an average of $507 per enrollee before 2014 to $401 between 2014 and 2017. States that saw minor expansions saw a $20.99 drop.

What is Medicaid?

Everyone benefits from good health. If you can’t afford medical treatment right now, Medicaid may be able to help you get the care you need to get and stay healthy.

Medicaid is only available to specific low-income individuals and families who fall into a federally and state-defined eligibility group. Medicaid does not give you money; instead, it pays your health-care providers directly.

You may also be requested to pay a tiny portion of the cost (co-payment) for various medical services, depending on your state’s requirements. If you have a restricted income and resources, you should apply for Medicaid. You must match one of the following descriptions:

Women who are pregnant

If you believe you are pregnant, apply for Medicaid. If you are married or single, you may be eligible. Both you and your child will be covered if you are on Medicaid when your child is born.

Children and adolescents

If you are the parent or guardian of a kid under the age of 18 and your family’s income is limited, or if your child is sick enough to require nursing home care but could be cared for at home with good quality care, apply for Medicaid.

If you are a teenager living alone, the state may enable you to apply for Medicaid on your own behalf, or you may have an adult apply on your behalf. Many states additionally provide coverage for children up to the age of 21.

Persons who are elderly, blind, or disabled

If you are above the age of 65, blind, or crippled, and have limited income and resources, apply. If you are terminally ill and need hospice care, fill out the application. If you are above the age of 65, blind, or crippled, live in a nursing home, and have little income and resources, you should apply.

If you are elderly, blind, or disabled and require nursing home care but can remain at home with the help of special community services, apply. If you are qualified for Medicare but have limited money and resources, you should apply.

Other circumstances

If you’re leaving welfare and need health insurance, apply. If you have children under the age of 18 and a restricted income and resources, apply. (You don’t have to be on welfare to apply.)

If you have a lot of medical bills that you can’t pay, apply (and you are pregnant, under age 18 or over age 65, blind, or disabled).

Medicaid is a state-run programme, and each state establishes its own eligibility and service requirements. Visit http://www.medicaid.gov/ for further information.

What is Medicaid expansion?

The Affordable Care Act (ACA) included a clause that called for the expansion of Medicaid eligibility to cover more low-income Americans. Adults up to the age of 64 with incomes up to 138 percent of the federal poverty level would be eligible for Medicaid under the expansion (133 percent plus a 5 percent income disregard).

Prior to the Affordable Care Act, Medicaid was rarely offered to non-disabled people under the age of 65 unless they had little children.

Even back then, the income thresholds for qualifying as a parent or carer were quite low. The Affordable Care Act (ACA) offered a feasible path to coverage for millions of low-income adults by expanding Medicaid.

Why have some states refused to participate in Medicaid expansion?

Medicaid expansion was mandated by the Affordable Care Act (ACA). However, the Supreme Court ruled in June 2012 that states could not be forced to expand their Medicaid programmes, leaving each state to decide whether or not to join.

Medicaid expansion was only accessible in 26 states and the District of Columbia when it began in 2014. In the years thereafter, the number of states that have implemented Medicaid expansion has steadily increased.

Medicaid coverage had been increased in 38 states and the District of Columbia as of 2021. (see list below). Oklahoma and Missouri are the most recent states to expand Medicaid, doing so in 2021 in both cases.

Wisconsin, on the other hand, is not included in the Medicaid expansion states.Because Medicaid is available to low-income people with income below the poverty level, it has adopted what amounts to a partial expansion of Medicaid and has no coverage gap (explained below)

Wisconsin, on the other hand, does not receive the enhanced federal Medicaid funding that it would receive if it fully expanded Medicaid as required by the Affordable Care Act (i.e., Medicaid is not available in Wisconsin to adults with incomes between 100 percent and 138 percent of the poverty level).

What are the sources of funding for Medicaid expansion?

The majority of the expense of expanding Medicaid is covered by the federal government, with only a minor percentage covered by participating states.

Until the end of 2016, the federal government reimbursed 100% of the costs for members who were newly qualified under the revised rules. The states subsequently began to contribute a fraction of the cost, eventually reaching 10% by 2020.

Going forward, the financing will be split 90/10, with the federal government always paying 90% of the cost of covering the population that became newly eligible as a result of Medicaid expansion.

States that refuse to expand Medicaid receive only their regular federal Medicaid funds, not the additional 90 percent funding that they would receive if they did expand coverage (in the Medicaid expansion states, the normal federal funding still applies for the populations that were already eligible pre-expansion).

The federal government will not provide this cash unless a state completely extends Medicaid, as previously stated.

As a result, Wisconsin continues to get its normal federal Medicaid match, whereas Utah has been unable to secure Medicaid expansion funding until the programme is fully implemented (Utah initially underwent an implementation of a partial expansion of Medicaid, but did not receive the enhanced federal funding for it).

How many people have gained coverage as a result of Medicaid expansion?

Due to the ACA’s enhanced eligibility guidelines, around 10 million people had become newly eligible for Medicaid as of 2019.

The COVID pandemic, on the other hand, drove up enrolment significantly: By 2021, around 14.8 million Medicaid participants had gained eligibility as a result of Medicaid expansion, with another 4 million who were already eligible for Medicaid under pre-ACA standards but had enrolled as a result of outreach and enrollment assistance activities since the ACA was established.

Since 2013, total Medicaid/CHIP membership has climbed by 44%, including the dozen states that continue to refuse federal assistance to expand Medicaid.

What is the Medicaid coverage gap, and how does it affect you?

There is a coverage vacuum in states that have not expanded Medicaid, leaving nearly 2.2 million individuals without access to affordable health care.

According to US Census data, the percentage of people living below the poverty line who are uninsured in states that haven’t expanded Medicaid is more than twice as high as in states that have.

To be clear, this is due to decisions made by their states rather than a problem in the ACA itself. At any point, states could accept federal assistance to expand Medicaid, bridging the coverage gap.

Five states — Texas, North Carolina, Florida, Georgia, and Tennessee — account for the majority of the uninsured, and they are among the 12 states where Medicaid expansion remains a divisive subject, with the legislature and/or governors adamantly opposed to accepting federal funds.

The American Rescue Plan provided premium subsidies to those in the coverage gap who received unemployment compensation for at least one week in 2021. However, this was just a provision in place until 2021.

Build Back Better Act

The Build Back Better Act, which will be debated in Congress in the fall of 2021, includes a provision to prolong the unemployment-based subsidy benefit for another year, through 2022.

Furthermore, it would provide government subsidies to persons in the coverage gap for four years, allowing them to obtain premium-free coverage with increased benefits with very low out-of-pocket expenditures.

The bill has been amended multiple times over the drafting and debating process, but if passed as written in October 2021, this clause would go into effect in 2022, closing the coverage gap temporarily.

Which states have enacted Medicaid expansion?

Medicaid has been expanded in 38 states and the District of Columbia as of 2021.

Alaska

Arizona

Arkansas

California

Colorado \Connecticut

Delaware

Hawaii

Idaho

Illinois

Indiana

Iowa

Kentucky

Louisiana

Maine

Maryland

Massachusetts

Michigan

Minnesota

Missouri

Montana

Nebraska

Nevada

New Hampshire

New Jersey

New Mexico

New York

North Dakota

Ohio

Oklahoma

Oregon

Pennsylvania

Rhode Island

Utah \Vermont

Virginia

Washington

West Virginia

Which states have resisted Medicaid expansion?

The following states have yet to accept federal assistance to expand Medicaid as of 2021:

Alabama

Florida

Georgia

Kansas

Mississippi

North Carolina

South Carolina

South Dakota

Tennessee

Texas

Wisconsin (There is no coverage gap)

Wyoming

Affordable Care Act Medicaid expansion summary

States are debating whether to expand Medicaid coverage to the full extent envisioned in the Affordable Care Act in the aftermath of a 2012 Supreme Court ruling (ACA, commonly referred to as Obamacare).

States must make value judgements based on each state’s particular fiscal constraints, the needs of its uninsured population, and the incentives created by interactions among the ACA’s provisions now that the federal government can no longer coerce expansion.

Through the pre-existing Medicaid programme, the ACA aims to increase health insurance coverage for the previously uninsured poor.

FPL and FMAP

State Medicaid plans must now cover childless adults with incomes of up to 138 percent of the federal poverty level, according to the new law (FPL).

The law also provided states with a financial incentive in the form of an enhanced Federal Medical Assistance Percentage (FMAP), which covered 100% of the costs for newly qualified people for the first three years before gradually dropping to 90% after that. In the past, the federal government has covered on average 57 percent of Medicaid spending.

Medicaid expansion pros and cons

Benefits of Medicaid expansion

Not everyone who is low-income qualifies for Medicaid

The qualification levels for Medicaid are set by the states, so each one is a little different. Individuals with impairments who earn more than the threshold levels may face rejection of their application. A family of four must have a monthly income of $4,172 or an annual income of less than $50,058 to qualify in Texas. More people would be eligible for Medicaid if it were expanded.

Local economies would benefit from expansion

Medicaid may have a favourable impact on state economies, especially if the local structure allows for some flexibility. According to Health Affairs, the multiplier effect for Medicaid expansion might be as high as 2.0. That means that every $0.80 spent on federal Medicaid funds generates up to $1.60 in economic activity in the state.

It provides people with a measure of financial security

Medicaid allows low-income people to focus on other things because their medical care is covered by the programme. Individuals with impairments may be eligible for compensation to assist them in meeting their basic requirements.

Medicaid may also cover the costs of long-term care, job training, and other needs that certain people may have in order to achieve their own version of the American Dream.

Medicaid expansion reduces the number of people who are uninsured

Employer-provided health insurance covers more than half of all Americans. In the United States, low-income, self-employed workers make up the largest category of uninsured people.

According to Keiser Health News, due to improvements in the healthcare industry and Medicaid expansion, uninsured rates fell to 8.8% in 2016, the lowest level in U.S. history since rates have been tracked.

For the states, the expense of enlargement is negligible

Medicaid expansion aimed to cover adults earning less than 133 percent of the federal poverty level. The Supreme Court of the United States ruled that each state might opt for or against enlargement.

According to the Kaiser Foundation, Mississippi would have the highest implementation costs, at 0.44 percent of GDP in 2011. Four states would save money as a result of the expansion. The state of Delaware would see a net increase of $3 million in spending. In comparison, federal spending would be 20 times – or more – than private spending. In Mississippi, federal funding would account for 10.09 percent of the state’s GDP in 2011.

Cons of Medicaid expansion

Those who require free health insurance are frequently able to obtain it

If someone requires medical attention, hospitals are compelled to provide it. It’s possible that this will necessitate a trip to the emergency room for routine care.

To keep expenses down, medical providers offer sliding scale fees depending on income for those who do not have formal health insurance. Many people who would qualify for Medicaid expansion would already have low-cost or no-cost coverage.

It may cause delays in getting to a doctor’s office

Wait times increased across the United States when the Affordable Care Act first went into force. In rural areas, general care appointments were scheduled 30 days in advance to 180 days in advance, and occasionally much longer.

Despite the fact that doctors set aside time for urgent care, insurance growth revealed a nationwide deficit of care providers. Expanding Medicaid would create even more chasms in the health-care system, resulting in lengthier wait times for a professional visit.

Doctors are not obligated to accept Medicaid patients

According to Slate, many doctors refuse to accept Medicaid patients because of the way the compensation programme works. In the United States, almost one-third of doctors refuse to take on new Medicaid patients. It’s all about the cash and cents.

When treating someone with private insurance or no insurance, doctors make more money than when treating someone on Medicaid. More people may struggle to find the care they require if Medicaid is expanded.

It is only beneficial to certain groups of people

In general, those with greater wealth prefer to support the Republican Party, while those with less wealth tend to support the Democratic Party in the United States.

Of course, there are exceptions to this generalisation, but Medicaid expansion falls under this category. Democratic-leaning districts and states benefit the most from growth. That means that, even if Republicans approved the expansion, it would almost certainly result in Democratic votes in the following election.

Expansion would put an end to the advantages of private insurance

In order to acquire precise costs for treatments, private insurance frequently negotiates with medical providers.

Because the provider has previously agreed to accept patients with that specific private insurance, covered persons cannot be charged the maximum amount for a treatment. Because the government sets the conditions for remuneration under Medicaid, doctors try to maximise services — potentially by ordering unnecessary diagnoses.

Conclusion

Under the Affordable Care Act, 39 states (including Washington, D.C.) have expanded Medicaid coverage to low-income individuals (ACA). According to a growing body of evidence, Medicaid expansion has enormous benefits for persons who obtain coverage, their families, and their communities.

States began contributing a portion of the cost of expansion in 2017 and will be responsible for 10% of the cost starting in 2020. Expansion states will pay more than $7 billion in 2020, based on current spending levels. Expansion will cost more than $100 million in the median expansion state.

The Affordable Care Act’s Medicaid expansion was created to address historically high uninsured rates among low-income adults by offering a coverage alternative for those who don’t have access to employer coverage and don’t have enough money to buy insurance on their own.

John Otero

John Otero

John Otero is an industry practitioner with more than 15 years of experience in the insurance industry. He has held various senior management roles both in the insurance companies and insurance brokers during this span of time. He began his insurance career in 2004 as an office assistant at an agency in her hometown of Duluth, MN. He got licensed as a producer while working at that agency and progressed to serve as an office manager. Working in the agency is how he fell in love with the industry. He saw firsthand the good that insurance consumers experienced by having the proper protection. John has diverse experience in corporate & consumer insurance services, across a range of vocations. His specialties include Major Corporate risk management and insurance programs, and Financial Lines He has been instrumental in making his firm as one of the leading organizations in the country in generating sustainable rapid growth of the company while maintaining service excellence to clients.