The Patient Protection and Affordable Care Act (PPACA) relied on the twin pillars of Medicaid expansion and the introduction of the online Exchanges to solve the now 50-year problem of chronic uninsuredness in America. The Exchange rollout debacle deflated participation in the Exchanges, but policy-makers are hopeful that many more Americans will sign up for year two.
The unanswered question, though, remains on the Medicaid front. While PPACA purports to cover 100% of the costs of expansion for states in the near-term, many Governors and state Legislatures failed to act on expansion due to fears of the hidden “woodworking” costs. The dividing line in terms of state expansion was largely political, with Southern and Rocky Mountain states controlled by Republicans passing on expansion, and Northeast, Midwest and West Coast states controlled by Democrats opting in.
In the end, about 9 million people were added to the Medicaid rolls, the vast majority of which were in expansion states. This has meaningfully impacted uninsured rates in these states. But 23 states held strong and in essence created a deeper divide in the country’s largest social service safety net program. Before the expansions, “opt-in” states tended to have much more generous Medicaid benefits than the “opt outs.” Today, the expansion states have Medicaid eligibility that goes to a minimum of 133% for adults and spans as high as 300% for children. Many of the “opt out” states remain at the mandatory minimum levels in the federal Medicaid act.
With the political focus less post the November election, some Republican states may be reassessing their opposition to expansion. Notably, the business communities of several states (e.g., Tennessee and Florida) are mobilizing to lobby for at least some expansion. Hospital lobbyists are also turning up the heat due to the imminent loss of safety net dollars that kicks in shortly.
Previously, the federal government took an all or nothing view of expansion, telling states that they must expand all the way to 133% to get 100% of the cost covered. A wiser move might be to compromise at say a 100% level to allow states to test the waters. This would end the coverage gap in states as the Exchange law (at least for now and until the Supreme Court litigates the latest Obamacare case) covers those at 100% of poverty and above. Right now, an uninsured person at 90% of poverty in a non-expansion state is ineligible for any coverage, while those at 101% qualify for a 98% premium subsidy in the Exchanges.
Other states are working with the federal government on waiver programs or negotiating flexibility that may get fiscally conservative lawmakers over the hump and reduce state exposure.
So look to the next few months as state Legislatures begin meeting again to see if the federal government shows any flexibility and if GOP states soften their opposition.