Medicaid expansion could create challenges, reduce discrepancies

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The proposed Medicaid expansion is characterized as the largest public administration challenge that states have ever faced, but with adequate support from government and private philanthropies, the program has the potential to become a national leader in effective, high-quality care over the next five years, according to a recent article in Health Affairs.

Approximately 55 million people currently obtain coverage for healthcare related needs under Medicaid, wrote John K. Iglehart, founding editor of Health Affairs. If reform legislation recently passed by the U.S. House and Senate is adopted into law, the program would expand. An estimated 75 million people – approximately one-quarter of all nonelderly Americans – would ultimately obtain coverage through Medicaid, he wrote.

Under current law, the federal government pays on average 57 percent of Medicaid’s costs, with states paying the remainder. Each state generally sets its own guidelines regarding eligibility and services, Iglehart wrote. “Because of the variability among and within states, several hundred different versions of Medicaid exist throughout the country. Depending on a given state’s rules, people may or may not be covered if they are pregnant, disabled, blind, or aged; have varying levels of income or assets; or are not lawfully admitted immigrants.”

According to Iglehart, the reform bills passed by the House and Senate seek to expand coverage to single adults without dependent children, the largest group of poor people currently ineligible for Medicaid unless they are pregnant, elderly, or severely and permanently disabled, as well as other ineligible populations. Both bills would create a new national eligibility standard for income based on the federal poverty level, Iglehart wrote.

“In the House bill, the new income threshold as of 2013 would be 150 percent of poverty; however, because the bill allows expenses such as child care costs to be deducted from the definition of ‘income,’ the actual eligibility threshold may come closer to 170 percent of poverty (in effect, more than $37,000 for a family of four),” Iglehart wrote. “In the Senate bill, the new threshold as of 2014 would be 133 percent of poverty ($14,404 for a one-person household or $29,327 for a family of four), without as many income ‘disregards’ as in the House bill."

These new federal Medicaid eligibility thresholds would have the effect of eliminating many of the state-by-state variations in Medicaid eligibility by income, Iglehart claimed.

According to Iglehart, both bills would also require coverage for an array of clinical preventive services, such as recommended immunizations for children and tobacco cessation services for pregnant women, and would eliminate patient cost-sharing requirements for these services.

Congress has proposed that the federal government contribute far more to coverage than its current average 57 percent match, Iglehart noted. “For example, the federal government would pay all of the costs of covering newly eligible enrollees for the first three years of the program beginning in 2013 or 2014. After that, the federal share would cover 90 percent of coverage costs for the expansion populations, while the federal share of payments for covering those eligible under current rules would vary based on existing arrangements.

“In effect, these provisions would divide states into ‘haves' and ‘have-nots.’ Many small states, depending on their financial health, would have 95 percent of their additional Medicaid costs covered in 2019, while 20 other states, including California and New York, would have only 82 percent of their additional program costs covered.”

According to Iglehart, states are also concerned that other aspects of health reform, such as the proposed individual mandate, will result in more people signing up for Medicaid who are currently eligible but not enrolled. “No provision of health reform legislation has as yet been proposed to help states meet their financial burden of enrolling millions more currently eligible people in Medicaid,” Iglehart reported.

Democratic leaders began meeting in early January to reconcile the differences between the two competing versions of reform legislation. According to Iglehart, the most important was agreeing on the national income threshold that would establish eligibility for the program’s benefits. “In the end, the issue of how liberally to set the income threshold is likely to be determined by the total