In a new report, the White House Council of Economic Advisers, Department of Health and Human Services (HHS) and the Centers for Medicare and Medicaid Services (CMS) are pushing again for legislative action at the state level to expand Medicaid under the Patient Protection and Affordable Care Act (PPACA, ACA or Affordable Care Act). The timing is strange as most state legislatures have adjourned sine die, except for some large states who likely have already expanded the state-federal healthcare partnership program.
Nonetheless, the White House report is compelling (actually it is an update to a previous July 2014 one). It states that unreimbursed care at hospitals would be about $4.5 billion lower if all states expanded to the recommended 133 percent of the federal poverty level (FPL) for Medicaid. Roughly the same amount will be reduced in those states who have expanded coverage. In addition, the report notes that consumers in non-expansion states face higher costs for their private insurance because of the cost-shifting that occurs to make up for the losses at hospitals and other providers. Last, there are the access to health care, lower mortality and morbidity, and quality of life impacts of providing all citizens with consistent and reliable healthcare coverage.
The real ugliness to the story is the fact that certain citizens who are very poor in non-Medicaid expansion states are left with no options at all. Under a quirk in PPACA, those just over 100% of the FPL can get on the Exchange and receive subsidies, but theoretically those just under 100% cannot and are not eligible for Medicaid (as income standards for Medicaid are even lower). In essence, the haves and have nots increased in America when some Northeast, Western and Midwest states expanded Medicaid and Southern states and some others did not. Non-expansion states complained of the implicit short-term “wood-working costs” that would not be reimbursed as well as the explicit costs when the federal government begins to devolve some Medicaid expansion costs under the ACA to the states beginning in 2017.
Solving for this complex political issue is not easy. The potential solution: The federal government should abandon its all or nothing approach to Medicaid expansion under the ACA. A number of states have floated the idea of wanting to expand to 100% of the FPL vs. 133%. This would allow all citizens in those states access to health care either through Medicaid or the Exchange. The federal government would get its Medicaid expansion and reluctant states could test the waters as well.