Can States Limit Existing Medicaid Programs as "the Uninsured Come Out of the Woodwork?"

Will the Affordable Care Act, as treated by the Supreme Court “bring the uninsured out of the woodwork?” That’s what states are really concerned about.  Politics of whether a state chooses to expand its program as anticipated under the ACA aside – what about all of those currently eligible but not enrolled under state Medicaid plans right now? This we learn from NPR’s Julie Rovner in “Will Medicaid Bring the Uninsured Out of the Woodwork?” (July 11, 2012).

So we here at NAHAM News will be looking for answers to the question - can states limit their current Medicaid programs as a way to manage costs? - not what the law anticipated, and not what the Supreme Court took clear aim at.

Find her article here: http://www.npr.org/blogs/health/2012/07/11/156568678/will-medicaid-bring-the-uninsured-out-of-the-woodwork

And we see that the question now is not what the Court spoke to rather clearly – that states have the option to expand their programs without losing the funding they already receive from the federal government, but whether states can cut back on the eligibility of their current program as more uninsured show up to sign up.

Rovner reports that since the Supreme Court decided last month that an expansion of Medicaid under the Affordable Care Act should be optional, quite a few Republican governors have been vowing to take a pass. All eyes are on how many states choose to do so – declining to offer (expand) Medicaid to people with incomes up to 133 percent of the poverty line. This year that's just under $15,000 a year for an individual, or a little over $25,000 for a family of three.

One analysis is to consider what states leave on the table by not expanding Medicaid as anticipated under the health care law. The law provided 100 percent coverage for people newly eligible for Medicaid by the federal government, and 90 percent in the out years. Compare this offer to the existing the Medicaid program, where the federal government pays an average of just under 60 percent.

But it's not just those newly eligible people states are worried about.

Here’s the thinking of Dennis Smith, secretary of the Wisconsin Department of Health Services and former head of the federal Medicaid program under President George W. Bush:

"Folks don't really understand the struggle states are in," says Dennis Smith, Smith says this year his state put more than a billion dollars into its existing Medicaid program. "And that took up literally almost the entire new revenues available to the state — meaning revenues not just for health care, but also intended for education, transportation, law enforcement and everything else," he says.

Even so, Wisconsin had a $600 million budget shortfall. "So states just don't have the dollars, even with those enhanced federal match rates," Smith says.

But what really has many state leaders worried is something called the "woodwork effect."

When big parts of the health law go into force in 2014, they worry it will bring out of the woodwork the millions of people who are already eligible for Medicaid but aren't already enrolled.

Put another way, here’s how it could play out – When some people look to see if they can get health insurance through one of the health exchanges, they may discover a cheaper option – their eligibility for Medicaid – the existing program.

So here’s the problem with Medicaid that the state’s newly found option under the Supreme Court ruling might not be able to prevent – many of those people signing up for Medicaid won't be members of the newly eligible expansion group, whose bills will be largely paid by the federal government. “They'll be regular old Medicaid beneficiaries, and states will have to pay up to half their costs.

Rovner reports that this has some states looking at cutting back their Medicaid programs even now.

So look for a new question - can states cut back eligibility of the existing programs?

Wisconsin's Dennis Smith, who used to run the federal Medicaid program, says he reads the Supreme Court decision as allowing that.

NPR reports that the Obama administration disagrees. Last night it sent a letter to all the nation's governors, noting that "the Court's decision did not affect other provisions of the law." An administration official confirmed that included the requirement that states maintain current eligibility levels until the year 2014.

Health advocate Lesley, a former Capitol Hill staffer, agrees with the administration. "Our reading of the Supreme Court ruling is [that] the opinion by Justice Roberts ... cites basically a specific section of the law and basically changed the idea that the Medicaid expansion can no longer be a mandatory thing, but now is optional," Lesley says. "However, what it didn't touch on was this idea of requiring states to maintain coverage. So we believe that that is absolutely still in place."

You should also check out this article: See also Who’s in and who’s out: http://www.npr.org/blogs/health/2012/07/05/156312388/medicaid-expansion-whos-in-whos-out