States Face Medicaid Decisions

States are beginning to grapple with questions coming out the last year’s Affordable Care Ace (ACA) Supreme Court decision on. While the Court upheld the majority of the law, it struck down the mandatory expansion of the Medicaid program. As a result, each individual stare must now contemplate to costs and rewards associated with expanding their state program with help from the federal government. The ACA set new standards for enrollment eligibility, opening the program to many who did not previously qualify. New enrollees that came in under this expansion, however, face different standards from those currently enrolled, essentially creating two broad groups. This is according to a CQ article.

Under the expansion, states can charge newly eligible beneficiaries more than the minimal amounts allowed in the traditional program —“up to 20 percent of the cost of services for people with incomes above the federal poverty level, which is $11,490 for an individual in 2013.” States and the federal government then pay for the remaining service costs. Even though Medicaid is a state by state program, CQ reports that the federal government, via the Centers for Medicare and Medicaid Services (CMS), reimburses states for 57 percent of the Medicaid treatment costs on average.

To the states, expansion means that the program will be open to more members because of new enrollment criteria, bringing the state on the hook for more costs. On the other side, however, expansion also means a lot of funding from the federal government. The ACA provides full finding for all new enrollees during the first three years of the expanded program in any state, and only phases back up to 10 percent after that, ending up at 90 percent of funding by 2020.

States also have to weigh the costs of creating new plans, as they cannot just have new enrollees chose from existing Medicaid plans if these plans do not include 10 essential benefit categories that are require to be eligible for funding under the ACA. The decision is a balancing act between the costs of new enrollees and plans verses the amount of federal dollars that are associated with expansion. For the time being, CQ reports that most states are waiting for CMS to issue more final guidance rules before making a decision. CMS currently has a draft guidance rule published for comments.