While speaking at a professional society meeting recently, Richard Foster, Medicare’s chief actuary, revealed that early retirees would have access to Medicaid under the health reform law as it is currently written. This glitch would enable a married couple with an annual income of $64,000 to apply and receive Medicaid. Under new rules effective in 2014, Social Security benefits will be discounted toward income thresholds when individuals apply for Medicaid, which would allow middle-class people to enroll. Currently, retirees can begin accessing Social Security at age 62, but are not able to enroll in Medicare until they reach age 65, leaving three years where they may be without coverage.
The loophole could mean up to 3 million additional individuals eligible for Medicaid beginning in 2014 than originally thought; this is in addition to the already estimated 16 to 20 million new enrollees who will qualify with the expansion of eligibility up-to 133 percent of the federal poverty level. Current Medicaid enrollment is at approximately 50 million Americans. There is no current estimate on how much it would cost to cover the retirees presuming the law remains unchanged.
Until this public statement by Mr. Foster, this issue was getting relatively little attention. The Obama administration did indicate earlier this week that they agree this anomaly is a problem as Medicaid is really designed that serve the poorest Americans. They have pledged to explore this issue further to develop ideas to address the issue. Initially though, the Administration and other Democratic lawmakers denied this hiccup was unintended and insisted it was truly a well-meaning provision envisioned to bring uniformity for laws governing eligibility under health reform.
The discovery of this glitch comes at a time when states are looking for innovative means to save money. Expansion of Medicaid to this population has the potential to eventually drive up costs and limit eligibility rules governing state enrollment. However, under health reform, the federal government would initially bear the full cost of providing coverage for these individuals.
Critics of the health reform law are seizing the opportunity to chide the administration for being caught off-guard, leaving them to wonder what other unintended policy changes are included in legislation. As provisions become effective, it is possible that other abnormalities may come to light. That is not surprising with legislation of this magnitude, especially when prime sponsors at the time admit it may not actually have been read by lawmakers before its passage. It will be interesting to watch the give and take over this and other issues that arise. The Obama administration has been steadfast in defending the law. For Obama, navigating these types of changes as Republicans attempt to repeal all or significant portions of the law will make great theater in the months to come.