Medicaid Expansion Will Be Important Issue in State-level Elections
The Supreme Court’s decision upholding nearly all of the Affordable Care Act (ACA) makes the health care reform law a very important part of the presidential and congressional election campaigns over the coming months. The Court’s decision to strike down one portion of the law makes the ACA a very important issue in state-level elections.
The Court protected portions of the law enabling states to expand Medicaid coverage to almost everyone in a household with income below 138% of the federal poverty level; however, the ruling made the expansion an option rather than a requirement. The Urban Institute estimates that there are about 22 million people below that income level who would be Medicaid eligible, including about 274,000 in Wisconsin. (See the interactive map at the bottom of this online article from Governing. However, those numbers include people who are already eligible. Better figures on the newly eligible adults can be found in a new Urban Institute analysis.)
An editorial in today’s New York Times explains that making the expansion optional for states has the potential to create large gaps in the matrix of coverage that Congress intended to provide through the ACA. Beginning in 2014, the expanded Medicaid coverage was supposed to dovetail with coverage through the new health insurance exchanges, which will offer significant subsidies to make that coverage affordable for people between 100% and 400% of the federal poverty level. But as the editorial describes, “the bill’s drafters made no provision to provide subsidies for anyone below the poverty line because they assumed that those people would be covered by expanded Medicaid.”
The NY Times editors failed to mention a related point regarding how the hole in Medicaid coverage could hurt hospitals and their patients with insurance. Another part of the ACA that starts in 2014 phases down federal funding for “Disproportionate Share Hospitals” (DSH), which treat a larger share of people without insurance. Those hospitals experience a disproportionate share of the cost for uncompensated care – much of which is passed along to other patients in the hospital. According to estimates from the American Hospital Association, uncompensated care cost U.S. hospitals $39.3 billion in 2010.
Congress assumed the DSH funding would no longer be as important because Medicaid and exchanges would substantially lower the number of uninsured families. Even without the Medicaid expansion, there should be a large drop in uncompensated care, but far less than in states that do expand Medicaid eligibility. In states that don’t implement the expansion option (which will be financed almost entirely from federal funds), there will be much higher rates of uninsured adults below the poverty level, but substantially less DSH funding to soften the negative impact for the hospitals there.
The editorial notes that it would be “offensive and unfair for the poorest people to get no help while people with somewhat higher incomes get tax subsidies.” However, that inequitable and unanticipated result can be avoided if the state officials accept federal subsidies that will cover virtually all the cost of expanding Medicaid eligibility.
In the coming weeks and months, we’ll take a closer look at what this debate means in Wisconsin for tens of thousands of uninsured adults who aren’t custodial parents and are on the growing waiting list for the BadgerCare Core plan.
Jon Peacock
