10 Steps to Medicaid Expansion

In National Federation of Independent Business v. Sebelius, the Supreme Court decided that the ACA provision requiring states to expand their Medicaid programs to individuals with incomes below 138% of the federal poverty level was unduly coercive on the states. The Court remedied the problem by prohibiting the Secretary of Health and Human Services from exercising her authority to terminate all federal funding to a state that does not implement the expansion. As a result, some states? elected officials have said they may ignore the Medicaid Expansion requirement.

Fully implemented, the Medicaid Expansion will extend much-needed health insurance coverage to 17 million uninsured individuals. Advocates must develop strong arguments to support their states implementing the expansion. In some states with recalcitrant Governors or leadership, this will mean being prepared with an informed and convincing message. Here are ten important ways you can advocate for your state to take up the Medicaid Expansion.

For most Medicaid categories, the federal government pays an average of 57% of the bill, meaning states pay the remaining 43%.1 In the Medicaid expansion, however, the federal government pays 100% of the costs in 2014, 2015, and 2016.2 This means it is free for your state to provide coverage to individuals who are below 138% of the federal poverty limit.

Advocacy should focus on getting the state to take up the Expansion in 2014. You can argue that it?s free money from 2014 to 2016. (Remember: if people are covered in 2014 and see how good the program is, it will be much harder for the state to take away the program later.) So the emphasis should be on making it clear in your state what an easy decision this should be for any responsible politician:

Some state leaders are saying things like, ?sure, it?s free in the first years, but then it costs the state a lot.? Well, here?s the truth: instead of paying the average 43% of Medicaid costs, under the Medicaid Expansion category, the state will pay only 5% in 2017, 6% in 2018, 7% in 2019, and then 10% in 2020 and beyond.3 So the most the state ever pays for the new category is 10% of the cost ? far below the 43% states pay on average for existing categories. Every state currently participates in Medicaid and voluntarily pays 43% (on average) of the cost for Medicaid, so clearly paying 10% of the costs for the expansion category is reasonable:

Some state leaders will try and throw out big numbers instead of talking about the small percentage. So instead of saying ?our state will only pay 10%,? they?ll say something like: ?this will cost the state $10 billion dollars over the next decade.? That number sounds big, but it doesn?t tell you how much money that is compared to the overall budget. For example, $10 billion over a decade is only $ 1 billion a year. And if the state?s Medicaid budget is $20 billion a year, than $1 billion would only be a 5% increase. You can then compare that percentage to the percentage of people who stand to gain coverage. You simply need to figure out how many people in your state are currently covered, and how many stand to gain coverage with the Medicaid Expansion. (Nationally, there are about 52.6 million people in Medicaid, and about 17 million more would get covered through the Medicaid Expansion ? a 32% increase.)4

It is true that the Medicaid Expansion, by covering new people, will create some new costs to states. However, a lot of conservative state leaders are using fuzzy math to exaggerate the cost. For example, one they are doing is counting people who are already eligible for Medicaid in the Medicaid Expansion number. Any time a new program starts, it generates attention, and some people who are already eligible but somehow weren?t enrolled for existing programs may try and enroll. This is not a cost of the Medicaid Expansion ? it?s the result of the state under-enrolling the existing Medicaid program to begin with! And note: no matter what, the state Exchanges will also be starting up in 2014, so all of these lost individuals will be identified at that time and end up entering the Medicaid program even if the state doesn?t take the Medicaid Expansion.

While the state will have some new Medicaid costs when it implements the Medicaid Expansion, it will also have some important new savings because the uninsured population will be drastically reduced. This will reduce state dollars needed for programs currently used by the uninsured, and in particular it will save money for local county and municipal governments which pay for many safety net services for uninsured individuals. Identify all of the state and local programs which stand to save money from the Medicaid Expansion, and explain how the Expansion will help offset the costs of those programs.

A workforce that has health insurance gets more medical attention, lives in better health and is more productive.5 Covering the uninsured through the Medicaid Expansion will help your state and local economies. Employers, for example, won?t have to worry about employees who lack coverage. In addition, more people accessing medical care means more business for doctors, clinics, health systems, and insurers ? and this helps the state and local economy.

Medicaid isn?t just one way to cover the Medicaid Expansion population, it?s the best way. This is because Medicaid benefits have been specifically designed to meet the needs of low-income individuals. For example, Medicaid coverage in the Medicaid Expansion will have more benefits helpful to low-income individuals than insurance offered in the Exchange.6 In addition, the Medicaid Expansion includes special protection that gets the most vulnerable populations (such as medically frail individuals or individuals with disabilities) access to an even broader set of Medicaid benefits.7

Medicaid coverage is designed for low-income people. Therefore, Medicaid includes numerous protections to limit the premiums, deductibles, copays, and cost-sharing that otherwise make insurance too expensive for low-income people.8 Low-income people can afford to be enrolled in Medicaid and they can afford to see the doctor when they get sick. In contrast, for example, the Exchange was not designed with people below the poverty line in mind, so the costs to Exchange coverage (even if subsidies were available) would be a barrier to care for low-income individuals.

You will probably hear complaints that providing Medicaid Expansion coverage is too expensive. But, know the facts. Fact: Medicaid is the least expensive health insurance program in the country.9 Fact: Medicaid is by far the least expensive way to cover low income individuals, and is far less expensive than providing coverage in the Exchange.10 Your state may argue for expanded Exchange coverage, since the cost of that coverage is entirely paid for by the federal government. But that is fiscally irresponsible, since Exchange coverage is as much as three times more expensive for the health care system as a whole. The CBO estimates that covering an individual through Medicaid costs the federal government $1,826 as opposed to $5,926 to cover someone in the Exchange. Using these numbers, a state arguing for Exchange coverage instead of a Medicaid Expansion would effectively be arguing that the federal government should pay $5,926 per person, to save the state from paying $182.60 ? the state?s 10% share of the $1,826 Medicaid cost. That leaves the government paying $5,926 instead of $1,643.40 ? the federal government?s 90% share of the Medicaid cost. This is not fiscally responsible. Nor does it reflect well on notions of ?shared responsibility.?

Local hospital associations, community health centers, and public health workers have a strong interest in your state taking the Medicaid Expansion ? they will be the ones who continue to provide free care to uninsured individuals while at the same time the ACA actually reduces separate government payments hospitals get for uninsured people (on the assumption they would be getting payments from Medicaid).11 Managed Care Organizations may have a lot of political clout in your state, and the new Medicaid Expansion population represents new business for them, so they are likely to support your effort. At the same time, groups who sometimes opposed the ACA (for example, a local chamber of commerce group), may be neutral about the Medicaid Expansion, or even support it, since it represents coverage for their employees that they don?t have to pay for and jobs for the community. A coordinated effort should be able to identify a range of stakeholders, some of whom may be very politically powerful, that can influence a state?s decision to take up the Medicaid Expansion.

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1 Depending on the state, the federal government pays between 50% and 74% of the costs in normal Medicaid categories. State by state data is available at: http://aspe.hhs.gov/health/fmap12.shtml. The national average has the federal government paying about 57% of the costs. For more details, see a report from the National Association of Medicaid Directors at: http://medicaiddirectors.org/node/228.

2 42 U.S.C. 1396d(y)(1).

3 Id.

4 See Henry J. Kaiser Family Foundation, Medicaid Enrollment: June 2011 Data Snapshot (June 2012), available at http://www.kff.org/medicaid/upload/8050-05.pdf), and Congressional Budget Office, CBO?s Analysis of the Major Health Care Legislation Enacted in March 2010 (March 30, 2011), available at  http://www.cbo.gov/publication/22077).

5 See Kaiser Comm?n on Medicaid and the Uninsured, The Uninsured: A Primer (2011), available at  http://www.kff.org/uninsured/upload/7451-07.pdf, and Kaiser Comm?n on Medicaid and the Uninsured, Sicker and Poorer: The Consequences of Being Uninsured 12 (2003), available at  http://www.kff.org/uninsured/upload/Sicker-and-Poorer-The Consequences-of-Being-Uninsured-  Executive-Summary.pdf.

6 By law, Medicaid Expansion benefits are required to have at least all the benefits offered in the Exchange. 42 U.S.C. § 1396u-7(b)(5). Furthermore, states have less flexibility to offer a weak benefit plan in the Medicaid Expansion and more flexibility to add extra benefits.

7 42 U.S.C. § 1996u-7(a)(2)(B) requires that the following vulnerable populations be provided the full Medicaid state plan of benefits: mandatorily covered pregnant women, individuals with blindness or disabilities, individuals entitled for Medicare, terminally ill hospice patients, institutionalization, medically frail and special medical needs individuals, individuals eligible for long-term care services, many children in foster care, some parents in low income families, and women in the breast or cervical cancer program, among others.

8 For example, default Medicaid rules limit the total cost sharing that low income families can pay and prohibit premiums in most categories of Medicaid (with some exceptions). 42 U.S.C. §§ 1396o(a) and (e).
9 Medicaid costs per person have risen only 6.1%, while private health insurance has risen at 10.6% and premiums for employer sponsored coverage at 12.6%. Medicaid is even more efficient than Medicare, which has risen at 6.9%. Kaiser Comm?n on Medicaid and the Uninsured, Ten Myths About Medicaid 2 (2005), available at  http://www.kff.org/medicaid/upload/7306%20Ten%20Myths%20about%20Medicaid_Final-3.pdf.

10 Sara Rosenbaum, Medicaid and National Health Care Reform, 361 New Eng. J. Med. 2009, 2011 (2009), noting that the CBO estimated that covering an individual through Medicaid cost the federal government $1,826 as opposed to costs of $5,926 to cover someone in the Exchange. Using these numbers, a state arguing for Exchange coverage instead of a Medicaid Expansion would effectively be arguing that the federal government should pay $5,926 per person, to save the state from paying $182.60 ? the state?s 10% share of the $1,826 Medicaid cost. That leaves the government paying $5,926 instead of $1,643.40 ? the federal government?s 90% share of the Medicaid cost. This should allow you to make your own arguments about ?fiscal responsibility? and ?shared responsibility?!

11 42. U.S.C. § 1396r-4(f)(7). For additional information, see Corey Davis, National Health Law Program, DSH Payments and Medicaid Expansion (July 2012), available at www.www.healthlaw.org.