Medicaid Expansions

The ACA gives states the option to implement a Basic Health Program (BHP) that covers low-income residents through state-contracting plans outside the health insurance marketplace, rather than qualified health plans (QHPs). BHP offers the prospect of improved affordability for low-income residents, fiscal gains for some states, and reduced churning. However, it also poses financial risks for states and has implications for state marketplaces. This paper summarizes the federal policies on BHP, including the requirements for BHP as well as the methodology for determining federal BHP payments. It also analyzes the key trade-offs facing states as they decide whether and, if so, how to implement BHP, with a particular focus on the impact of BHP on state budgets and the size, stability, and risk level of state marketplaces.
 

To increase support for physicians providing primary care for Medicaid beneficiaries, and to improve access to primary care as Medicaid coverage expands, the ACA increased Medicaid payment rates for many primary care services to Medicare fee levels in 2013 and 2014. The rate increase applies only to physicians serving Medicaid beneficiaries in both fee-for-service and managed care. The federal government funded 100% of the primary care fee increase relative to the rates states were paying as of July 1, 2009. This report assesses states’ plans to extend the primary care rate increase beyond December 31, 2014.
 

Financial incentives offer a new tool for Medicaid programs to encourage beneficiaries to choose healthy behaviors. Programs serving non-Medicaid populations have demonstrated that financial incentives can help influence healthy behaviors, enhance long-term health outcomes, and reduce health care costs. Several states are considering incentive strategies within new Medicaid expansion programs. This brief explores how financial incentives can be used to influence healthy behaviors. It reports on findings from past Medicaid healthy behavior incentive programs; highlights current Medicaid incentive approaches, including New Mexico’s model; and offers recommendations for states that are establishing or modifying programs to encourage healthy behaviors in Medicaid.
 

One major concern about the Medicaid expansion is that a high level of need among the newly eligible may lead to runaway costs, which could overwhelm state budgets when federal subsidies no longer cover 100 percent of the expansion population's costs in 2017. Although cost increases as a result of the newly eligible are likely, an important question is whether these increases will be temporary or permanent. Evidence from California's Low Income Health Program suggests that cost and utilization increases among newly eligible Medicaid beneficiaries will be mostly temporary.

For more than a decade, economic conditions, including two major recessions, were the primary driver of changes in Medicaid spending and enrollment. In FY 2014 and in budgets adopted for FY 2015, enrollment and spending have grown with implementation of the major coverage provisions in the ACA, including the federally financed Medicaid expansion. This report provides an overview of Medicaid spending and enrollment growth with a focus on state fiscal years 2014 and 2015 (FY 2014 and FY 2015) and an overview of Medicaid financing. Findings examine changes in overall enrollment and spending growth and compare expansion and non-expansion states.