Whether you love it or hate it, the Affordable Care Act (aka “Obamacare”) looks like it’s going to be around for a little while longer, despite attempts by House Republicans to repeal the law. One of the key components of the health reform law is the expansion of Medicaid, which the Supreme Court deemed optional when it reviewed the law in 2012.
There is some confusion about what Medicaid actually is and what “expanded” Medicaid means. Medicaid is a state-federal partnership that provides health insurance to low income Americans. The federal government funds a portion of Medicaid and in exchange, requires states to have a set of minimum eligibility criteria. States have the option of expanding above the federal minimum to enroll more people (most states did for children) but could not make the requirements stricter. So for example, pregnant, low income women are eligible for Medicaid but low income single men would not be. The Affordable Care Act is essentially changing those minimum eligibility criteria. Here’s a quick primer:
- to be eligibile for Medicaid under the Affordable Care Act, individuals under the age of 65 must be living at or below 133% of the federal poverty limit. (100% of the federal poverty limit for a family of four is $23,550 in 2013.)
- The other restrictions have largely been removed.
- Beginning in 2014, the federal government will pay for 100% of the difference between a state’s current Medicaid eligibility level and the ACA minimum.
- Federal contributions to the expansion will drop to 95% in 2017 and remain at 90% after 2020. Meaning states will be on the hook for only 10%.
As the ACA was originally written, states would lose all Medicaid funding if they refused to expand their program to the ACA minimum, but again, the Supremer Court made that optional.
Many states have decided to not expand Medicaid eligibility (see the map here) much to the chagrin of many health policy experts as well as hospitals. But evidence is mounting that forgoing the expansion may not only be bad for health, but bad for a state’s bottom line. A study published in Health Affairs shows that not only will these states not cover as many individuals as states that opt to expand Medicaid, but they will spend more money on uncompensated care and will lose out on billions in federal dollars.