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Medicaid: Will The Cost Of Expanding Eligibility Be Overwhelming?

Medicaid has been front and center this week as President Obama addressed the National Governors Association, and several governors testified before the House Energy and Commerce Committee. Obama told the governors that he supports the Wyden-Brown bill, which would accelerate the availability of waivers under the Affordable Care Act (ACA), so that states would not have to first create health insurance exchanges under the law, and then have the right to dismantle them and replace them with other mechanisms to achieve coverage goals of the law without additional cost to the federales. (See Wyden-Brown fact sheet.) The sponsors’ home states, Oregon and Massachusetts would otherwise have to dismantle parts of their own health reform efforts in order to align with the federal mandates. (Wyden has been a longer-term proponent of experimentation and innovation in health reform.) 

The mini-med waivers granted to states (in addition to those granted to corporations and unions) are just one example of interim steps needed to harmonize federal and state health reform. When in 2014 mini-med plans will no longer be permitted at all under the federal health reform law, there will either need to be a significant dislocation of the underinsured “Young Invincibles” in Massachusetts and underinsured employees in capped health plans elsewhere in the country, or a change in the law.

Similar difficulties await state Medicaid programs, which will be faced with expanded eligibility, and other state agencies, which will need to set up exchanges per the ACA. The cost associated with eligibility expansion will be overwhelming — or maybe it won’t. There are, of course, expert opinions across the board on the financial impact of health reform on state budgets. As the saying goes, “Where you stand depends on where you sit.” Some reports inflate state expenses by not accounting for the fact that the federal share of Medicaid expansion covers 92 percent of the total. Read more »

*This blog post was originally published at HealthBlawg :: David Harlow's Health Care Law Blog*

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