Case might pivot on studies relating to state costs and savings
Is it unconstitutional for Congress to enact a law expanding Medicaid coverage to everyone below 133% of the federal poverty level? About half the states (via their Attorneys General or Governors) contend that making them participate in a large expansion of Medicaid, which is slated to be part of health care reform in 2014, amounts to an unconstitutional coercion of state governments. The U.S. Supreme Court surprised many people early this week when it announced that its review of the federal health care reform law will include consideration of the constitutionality of compelling states to participate in the broadening of Medicaid coverage.
That expansion, which is expected to add about 17 million people to the Medicaid rolls, is probably the single most important component of the Affordable Care Act’s strategies to make quality, affordable health insurance accessible for nearly all Americans. That’s one of the reasons why advocates are very concerned that the Walker Administration is seeking waivers that would harm Wisconsin’s Medicaid coverage (especially BadgerCare and Family Care), and why many people are worried that the Supreme Court is entertaining the argument that the Medicaid expansion violates states’ rights. A very good article in the Washington Post on Thursday reports on the surprise announcement by the Court that its review of the ACA will include the Medicaid expansion. The article quotes Ron Pollack, executive director of Families USA, who said “The decision on this issue is probably the most important the Supreme Court will be making on the Affordable Care Act.”
The states’ concerns are rooted in the fact that they help pay for Medicaid – with state match rates currently between 20% and 50% of total costs (40% in WI). However, from 2014 through 2016 the ACA will reimburse states for the entire cost of newly eligible Medicaid recipients. Beginning in 2017, the 100% federal reimbursement rate for the newly eligible will slowly decline until it becomes 90% in 2020 and thereafter. The ACA also provides other direct and indirect fiscal relief for states.
A study last December by Stan Dorn of the Urban Institute concluded that the ACA would yield total net savings for states in the range of $40.6 billion to $131.9 billion (depending on different assumptions about Medicaid growth) from 2014 through 2019, after one takes into account reduced government spending for uncompensated care and for mental health services.
Some states come out ahead even if one doesn’t look at the less direct savings. Wisconsin is likely to be one such entity because the ACA offers a carrot to states that have fewer newly eligible adults to cover. For states that already provide Medicaid coverage to at least a portion of the childless adult population, the ACA will provide an 80% reimbursement rate in 2014 for the already eligible childless adults below 133% of FPL (compared to the 60% match rate in WI now), and that rate will gradually increase to 90% in 2020. A paper by the Legislative Fiscal Bureau summarizes an analysis last fall by the Doyle Administration, which concluded the ACA would save Wisconsin between $745 million and $940 million between 2014 and 2019. (See also WCCF’s Feb. 7 blog post.)
The constitutional challenge to the Medicaid expansion seems like a long shot, considering that states aren’t forced to participate in Medicaid. Nevertheless, advocates will continue to worry because the Medicaid expansion is such a crucial part of the ACA, and because the Court might also directly or indirectly undermine the law’s maintenance of effort requirements. If so, that wouldn’t merely negate the potential gains in insurance coverage through the ACA; it could unleash an onslaught against current Medicaid coverage.
Jon Peacock
