UNMC Study Could Influence Legislature on Medicaid Expansio

Details: 28 September 2012

When the U.S. Supreme Court ruled June 28 on legal challenges made against the Affordable Care Act, federal health-care-reform legislation of significance and notoriety, most of the reaction focused on the individual-insurance mandate. That was understandable. The ruling that such a mandate survives constitutional scrutiny under the government’s taxing authority was surprising and intriguing; pretty much a "wow" result.

But another component of the ruling packs some wallop as well, especially for policy making by the states. The Court ruled that expanding eligibility for health-care coverage through Medicaid must be optional for state governments, rather than mandatory as called for by the ACA.

The Act makes non-elderly persons with household income less than 133 percent of the Federal Poverty Line eligible for Medicaid. (In effect, it’s actually 138 percent of the FPL, because in most circumstances the law disregards five percent of income.) That’s quite a bit higher than current eligibility ceilings, thus expanding this means of access to health care.

Another prong of the ACA will provide subsidies—in the form of refundable tax credits—to enable persons to purchase health insurance through exchanges. But this assistance won’t be available to most people who would be eligible for Medicaid pursuant to the expansion. Thus, states that opt not to adopt expanded Medicaid eligibility will have a coverage gap for some who are poor and uninsured. Some say this exemplifies the "house of cards" construction of the ACA, which relies upon an intricate connectivity of provisions.

Expanded Medicaid eligibility would primarily impact previously uninsured adults (age 19 to 64). This is because Medicaid and the Children’s Health Insurance Program (CHIP) already provide a strong base of coverage for children. Most states have previously expanded eligibility for children and pregnant women beyond the federal minimum, as allowed by pre-ACA Medicaid law.

In Nebraska, for example, the income-eligibility limit for infants--birth to age one—is 150 percent FPL for purposes of Medicaid funding and 200 percent for CHIP funding. For children ages one through five, the eligibility limits are 133 percent and 200 percent respectively; and for children ages six through 18, the eligibility limits are 100 percent and 200 percent. For pregnant women, the Medicaid income-eligibility limit in Nebraska is 185 percent FPL ($34,280 for a family of three).

The ACA prohibits these already expanded eligibility limits from being lowered.

On the other hand, for most adults (other than pregnant women) the ceiling on Medicaid eligibility is much lower. For Nebraska, it’s 46 percent for these adults when they are jobless and 57 percent when employed. What’s more, prior to the ACA, states were prohibited from covering childless, non-disabled adults under Medicaid.

It is likely, if not a foregone conclusion, that expanding Medicaid eligibility, as in essence presupposed by the ACA, but made optional by the Supreme Court’s ruling, will be a major issue for the Nebraska Legislature in 2013. And it could be a donnybrook.

Even though the ACA has the federal government paying 100 percent of the cost of expansion through 2016 and ratcheting that down to no less than 90 percent in 2020 and beyond, the reliability of this fiscal participation is being doubted. The Governor in particular—and numerous legislators will agree—will argue the likelihood that at some point the state will be left holding the bag of costs.

Undoubtedly, the debate in the Legislature will give considerable attention—and rightfully so—to a recently released policy brief by Jim P. Stimpson from the Center for Health Policy at the University of Nebraska Medical Center. Its purpose is to provide some evidence of the impact of expanding Medicaid in Nebraska as anticipated by the ACA. As a contribution to the public debate it is worthwhile and provocative. Opponents of expansion will have a tough time challenging it.

Visit www.unmc.edu/publichealth/chp.htm.

Among the evidence it sets forth are these considerations: the estimated number of new Medicaid enrollees from expansion in Nebraska through 2020 ranges from 90,021 to 108,025; the estimated cost of Medicaid expansion for Nebraska ranges from $140 million to $168 million; on the other hand, the estimated revenue coming from the federal government to Nebraska for the Medicaid expansion ranges from $2.9 billion to $3.5 billion through 2020; without the Medicaid expansion, more than $1 billion in uncompensated care would be incurred in Nebraska through 2019; if Medicaid eligibility is expanded, health care providers would save at least $163 million and as much as $ 325 million in costs associated with uncompensated care; spending by the federal government on Medicaid expansion would generate at least $700 million annually in new economic activity in Nebraska, which could finance over 10,000 jobs each year through 2020.

All this analysis, of course, stems from and is related to underlying policy objectives, which seek to provide access to affordable health-care for a significant number of Nebraskans who are now uninsured.