Medicaid Expansions

Behavioral health parity refers to requirements for health insurers to cover mental health and substance use disorder services on terms that are equal to those offered for medical and surgical services.  This issue brief explains how behavioral health parity applies in the Medicaid program, including the major provisions of the Centers for Medicare and Medicaid Services’ April 10, 2015 proposed regulations, and identifies key policy issues at the intersection of behavioral health parity and Medicaid.

In the short time since states have been able to expand Medicaid to low-income adults under health reform, a clear divide has emerged between states that have expanded Medicaid and those that have not. Since the major coverage provisions of the ACA took effect in 2014, insurance coverage rates have improved across the country, but the gains are far greater in the states that have expanded Medicaid. As a result, hospitals in expansion states are treating fewer uninsured patients, and the amount of uncompensated care they are providing is declining steeply. Moreover, contrary to critics' claims that Medicaid expansion is financially unsustainable for states, there is increasing evidence that expansion has saved states money, and these savings are expected to grow over time.

This proposed rule would extend enhanced funding for Medicaid eligibility systems as part of a state’s mechanized claims processing system, and would update conditions and standards for such systems, including adding to and updating current Medicaid Management Information Systems (MMIS) conditions and standards. These changes would allow states to improve customer service and support the dynamic nature of Medicaid eligibility, enrollment, and delivery systems. Comments on this proposed rule are due by June 15, 2015.

The ACA gives states the option of providing less-generous Medicaid coverage to adults who become eligible through the law’s expansion of the program. Based on a review of the benefit design choices made by states that had expanded Medicaid by the end of 2014, this brief finds that states have chosen to offer more generous coverage than what is required under federal law, either narrowing or eliminating the distinction between coverage levels for newly eligible adults and those for traditional adult beneficiaries, such as pregnant women, parents and guardians, or beneficiaries with disabilities. This suggests that states view the newly eligible beneficiaries as having the elevated health and health care needs that are common among low-income populations.

Ever since the Supreme Court ruled in June 2012 that states could effectively choose whether or not to accept the ACA’s expansion of Medicaid eligibility, that choice has been one of the most prominent and often one of the most contentious issues for states. This report provides state-level estimates of Medicaid enrollment and the number of uninsured in 2016 for the 21 states that have not expanded eligibility. It also provides estimates of Medicaid and uncompensated care spending for the period 2015 to 2024.