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October 2013 St@teside

State Medicaid Expansion Update

While much of the focus over the past few weeks has been on the health insurance marketplaces, there have been some recent developments related to another important component of the Affordable Care Act (ACA) – Medicaid expansion.

The ACA expands Medicaid coverage to 138 percent of the Federal Poverty Level (FPL) with 100 percent federal match funding for the newly eligible Medicaid enrollees for 2014-2016. The federal match will gradually decrease to 90 percent by 2020. While the ACA originally required all states to expand Medicaid, the Supreme Court’s ruling in June 2012 made Medicaid expansion optional for the states, with no effective deadline by which they have to make this decision. Thus, even with January 2014 rapidly approaching, the Medicaid expansion debate is continuing in a number of states. The most recent addition to the contingency of states who have decided to expand Medicaid for 2014 is Ohio. Ohio Governor John Kasich has long been in favor of expanding Medicaid, but the legislature has blocked any attempts to do so. On October 21, Ohio’s Controlling Board, a committee that manages minor adjustments to the state’s budget throughout the year, voted 5-2 to accept federal funds to implement Medicaid expansion. This brings the total number of states pursuing Medicaid expansion to 25, plus the District of Columbia.

Additional states continuing to explore their options for expanding Medicaid include:

  • Alaska: Governor Sean Parnell originally rejected Medicaid expansion for Alaska, but has since continued to review policy options and spending implications. While his official stance remains unclear, Governor Parnell is considering including expansion in the budget he will be submitting in December.
  • Florida: Despite Governor Rick Scott’s support of expansion, Florida’s legislature had rejected federal funds to do so. The legislature is now requesting federal funds to expand Florida’s Low Income Pool program, a program intended to improve care for low-income and uninsured individuals. The additional funds would be used to offer premium support and help hospitals cover the costs of charity care.
  • New Hampshire: New Hampshire convened a commission to study Medicaid expansion, and the committee has submitted its recommendation to expand Medicaid to Governor Maggie Hassan and the legislature. Governor Hassan, a proponent of expansion, has scheduled a special session for November 7 to vote on the commission’s recommendation.
  • Pennsylvania: Governor Tom Corbett is another governor who has revised his initial opposition to Medicaid expansion, and is exploring a plan in which newly eligible individuals would receive subsidized coverage through the health insurance marketplace.
  • Utah: Governor Gary Herbert remains undecided on Medicaid expansion as Utah continues to explore their policy options and review cost-benefit analyses. Governor Herbert has said that Utah will make its official decision in 2014.
  • Virginia: The Virginia General Assembly has convened a special commission, Medicaid Innovation and Reform Commission (MIRC), which is tasked with implementing a series of reforms to Virginia’s Medicaid program in order to help control costs. If these reform measures are successfully implemented, Virginia will move forward with Medicaid expansion. The Commission held a series of meetings and public hearings to review the reform proposals, their cost-saving potential, and different approaches to Medicaid expansion.

In addition to these states, a handful of states are seeking to expand Medicaid in their own way using waivers. Waivers have been approved in:

  • Arkansas, which will expand coverage up to 138 percent FPL by using Medicaid funds to purchase QHPs in their marketplace; and
  • Indiana, which submitted a waiver to extend the Healthy Indiana Plan, a program offering adults with incomes between 100 percent and 200 percent FPL subsidized coverage that makes use of a health savings account. Indiana will use Medicaid expansion funds to allow additional individuals into the program who had been previously denied due to limited funds.

Waivers are pending in:

  • Iowa, which, similar to Arkansas, has submitted a waiver to expand Medicaid through premium assistance.
  • Wisconsin, which is not expanding coverage through the ACA, but does have a waiver pending to make adjustments to a previous coverage expansion that covered individuals up to 200 percent FPL. Wisconsin plans to scale back coverage to 100 percent FPL, add premiums for some enrollees, and eliminate the limitation on the number of individuals who can be covered through the program.

Regardless of states’ decisions to expand Medicaid, all states are expected to see an increase in 2014 in Medicaid enrollment of those currently eligible for Medicaid due to increased outreach activities associated with the ACA. According to Kaiser Family Foundation’s recent report, “Medicaid in a Historic Time of Transformation,” all states are also expected to see an increase of 10 percent in Medicaid spending, on average, in FY 2014. However, states opting for Medicaid expansion are projected to see less growth in the state general fund costs attributed to Medicaid than states that are not expanding (4.4 percent versus 6.1 percent) due to the 100 percent federal match rate for the newly eligible enrollees.

For the complete list of states’ Medicaid expansion decisions, including governors’ positions and legislative activity, check out the Kaiser Family Foundation’s website.