Medicaid Expansions

Born as an afterthought to Medicare five decades ago, Medicaid has evolved from an adjunct to state welfare programs to the nation’s largest health insurer. The occasion of Medicaid’s 50th birthday is a fitting time to consider that evolution, not to reminisce, but to help chart the path forward. Medicaid is a complex program with a complex history, and understanding its role in the U.S. health system is essential to ensuring that it is performing at optimal levels for its beneficiaries, as well as for states, taxpayers, and the myriad health care providers, health plans, and others touched by the program. In this four-part series, Cindy Mann and Deborah Bachrach of Manatt Health Solutions examine Medicaid’s evolution and consider its role in the new coverage paradigm established by the ACA.

Because eligibility for Medicaid is determined by current monthly income, many beneficiaries temporarily lose coverage when their seasonal employment or overtime pay increases, and later requalify when their income dips. This churning can result in disruptions in care for the beneficiaries, and places administrative burdens on states and Medicaid managed care plans. This study reviews four policy options for addressing the problem and simulated their impact on churning and enrollment. The options include: 1) extending coverage to the end of the calendar year; 2) granting coverage for 12 continuous months, regardless of changes in income or life circumstances; 3) basing eligibility on an estimate of annual income; and 4) extending coverage by three months when a change in income or life circumstances causes a loss of eligibility.

Eighteen states are currently participating in the Medicaid Balancing Incentive Program (BIP) to increase access to home and community-based services (HCBS) as an alternative to institutional care. Established by the ACA, BIP authorizes $3 billion in enhanced federal funding from October 2011 through September 2015. During the summer of 2014, the Kaiser Family Foundation’s Commission on Medicaid and the Uninsured surveyed BIP states about basic program information, progress with implementing the BIP structural requirements, stakeholder engagement, evaluation activities, and the use of enhanced federal funds in support of other Medicaid LTSS rebalancing efforts. This report documents the key findings.

Since implementation of the ACA, the 30 states that have expanded Medicaid have enrolled more than 10 million people in Medicaid or the Children’s Health Insurance Program and the collective rate of uninsured individuals in these states has fallen from 18 percent to less than 11 percent. This paper examines early data on expansion-related decreases in uncompensated care costs and related state budget implications, including impending reductions in federal support for Medicaid Disproportionate Share (DSH) payments and waiver pools made available to support hospital uncompensated care costs prior to the Medicaid expansion authorized and funded under the ACA.

Ever since the Supreme Court effectively ruled in June 2012 that states could choose whether or not to expand Medicaid to nonelderly adults under the ACA, that choice has been one of the most prominent and often one of the most contentious issues for states. This report describes the six states (Arkansas, New Hampshire, Indiana, Iowa, Michigan and Pennsylvania) that requested and received approval from the federal government to experiment with coverage approaches that are modelled on private insurance concepts and not permitted in a standard Medicaid expansion.