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State Fiscal Considerations and Research Opportunities Emerging from the Affordable Care Act's Medicaid Expansion

Published online by Cambridge University Press:  06 January 2021

Jean C. Sullivan  and
Rachel Gershon
Jean C. Sullivan
Affiliation:
Center for Health Law and Economics, Commonwealth Medicine, University of Massachusetts Medical School
Rachel Gershon
Affiliation:
Center for Health Law and Economics
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Extract

As enacted, the Affordable Care Act (ACA) directed states to provide Medicaid coverage to most nonelderly adults with incomes up to 138% of the Federal Poverty Level (the “Medicaid expansion group”) beginning in 2014. The Medicaid expansion provision of the ACA is an integral component of fulfilling the ACA’s primary objective to achieve near-universal health insurance coverage rates across the United States.

Title XIX of the Social Security Act (Title XIX) is Medicaid’s enabling statute. Medicaid is a medical assistance program for certain low-income individuals, jointly funded and administered by federal and state governments. Certain features of the Medicaid program provide a framework within which the ACA and subsequent Supreme Court decision National Federation of Independent Business (NFIB) v. Sebelius can be understood.

Type
Article
Information
American Journal of Law & Medicine , Volume 40 , Issue 2-3 , June 2014 , pp. 237 - 252
Copyright
Copyright © American Society of Law, Medicine and Ethics and Boston University 2014

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References

1 The ACA refers to the Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education Reconciliation Act of 2010. Patient Protection and Affordable Care Act of 2010, Pub. L. No. 111-148, 124 Stat. 119, amended by Health Care and Education Reconciliation Act of 2010, Pub. L. No. 111-152, 124 Stat. 1029 (codified as amended in scattered sections of 21, 25, 26, 29, and 42 U.S.C.). The Medicaid expansion provision can be found at 42 U.S.C. § 1396a(a)(10)(A)(i)(VIII) (2012). The ACA expands Medicaid to all citizens (1) under 65 years of age; (2) not pregnant; (3) not entitled to Medicare A; and (4) not enrolled in Medicare B. Income is counted with a 5% disregard. Id. § 1396a(e)(14)(I). Assets are generally not counted, with the exception of individuals eligible because of other aid or assistance, elderly individual, medically needy individuals, and individuals eligible for Medicare cost-sharing. Id. § 1396a(e)(14)(C).

2 Prior to the enactment of the ACA, only where a state sought and obtained approval to implement new coverage groups under a “waiver” of pertinent provisions of Title XIX (Medicaid) of the Federal Social Security Act would there be any ability to extend coverage to other nonelderly adults. See 42 U.S.C. § 1396a(a)(10). To obtain this “waiver” approval, the state must demonstrate budget neutrality and, even if approved, no enhanced federal funding would be paid. See id. § 1315.

3 42 U.S.C. § 1396d(y).

4 See id. § 1396c.

5 Id. § 1396b.

6 Medicaid's Federal Medical Assistance Percentage (FMAP), FY2014, KAISER FAMILY FOUND. (Jan. 30, 2013), http://kff.org/medicaid/state-indicator/federal-matching-rate-and-multiplier/.

7 See 42 U.S.C. §§ 1396b, 1396d(b).

8 Id. § 1396d(y).

9 NFIB v. Sebelius, 132 S. Ct. 2566, 2608 (2012) (Roberts, C.J.).

10 Id.

11 See Sheryl Gay Stolberg & Robert Pear, Obama Signs Health Care Overhaul Bill, with a Flourish, N.Y. TIMES (Mar. 23, 2010), http://www.nytimes.com/2010/03/24/health/policy/24health.html?_r=0.

12 See CARMEN DENAVAS-WALT ET AL., U.S. CENSUS BUREAU, INCOME, POVERTY, AND HEALTH INSURANCE COVERAGE IN THE UNITED STATES: 2010 (2011), http://www.census.gov/prod/2011pubs/p60-239.pdf (compiling statistics of uninsured Americans).

13 Patient Protection and Affordable Care Act of 2010, Pub. L. No. 111-148, 124 Stat. 119, amended by Health Care and Education Reconciliation Act of 2010, Pub. L. No. 111-152, 124 Stat. 1029.

14 Total Medicaid Enrollment, FY2010, KAISER FAMILY FOUND., http://kff.org/medicaid/stateindicator/total-medicaid-enrollment/ (last visited Mar. 10, 2014). The Kaiser Family Foundation and Urban Institute estimates based on data from FY 2010 Medicaid Statistical Information System.

15 JOHN HOLAHAN ET AL., KAISER FAMILY FOUND., THE COST AND COVERAGE IMPLICATIONS OF THE ACA MEDICAID EXPANSION: NATIONAL AND STATE-BY-STATE ANALYSIS 6 (2012), http://kaiserfamilyfoundation.files.wordpress.com/2013/01/8384.pdf (“Without the expansion, the ACA would reduce the number of uninsured by 15.1 million (or 28%), due to other provisions in the legislation, including the provision allowing individuals with incomes between 100 and 138% of the FPL to enroll in Exchanges if Medicaid is not available. By contrast, the number of uninsured would decline by 25.3 million people, or 48%, if all states expanded Medicaid.”).

16 42 U.S.C. § 1396a.

17 Id. § 1396b.

18 See Id. § 1396a(a)(2); 42 C.F.R. § 433.50-74 (2013); KAISER FAMILY FOUND., MEDICAID: A PRIMER 5 (2013), http://kaiserfamilyfoundation.files.wordpress.com/2010/06/7334-05.pdf.

19 KAISER FAMILY FOUND., supra note 18, at 5.

20 Id. at 6; see also 42 U.S.C. § 1396-1 (“For the purpose of enabling each State, as far as practicable under the conditions in such State, to furnish … medical assistance … .” (emphasis added)).

21 42 U.S.C. § 1396a(a)(10)

22 See Adult Income Eligibility Limits at Application as a Percent of the Federal Poverty Level (FPL), January 2013, KAISER FAMILY FOUND., http://kff.org/medicaid/state-indicator/incomeeligibility-low-income-adults/ (last visited Mar. 10, 2014).

In order to participate in Medicaid before the ACA, a state had to cover, at minimum: Limited-income families with children, as described in section 1931 of the Social Security Act, [which] are generally eligible for Medicaid if they meet the requirements for the Aid to Families with Dependent Children (AFDC) program that were in effect in their state on July 16, 1996[;] Children under age 6 whose family income is at or below 133 percent of the FPL[;] Pregnant women whose family income is below 133 percent of the FPL[;] Infants born to Medicaid-eligible women, for the first year of life with certain restrictions[;] Supplemental Security Income (SSI) recipients in most states (or aged, blind, and disabled individuals in states using more restrictive Medicaid eligibility requirements that pre-date SSI)[;] Recipients of adoption or foster care assistance under Title IV-E of the Social Security Act[;] Special protected groups (typically individuals who lose their cash assistance under Title IV-A or SSI because of earnings from work or from increased Social Security benefits, but who may keep Medicaid for a period of time)[;] All children under age 19, in families with incomes at or below the FPL[; and] [c]ertain Medicare beneficiaries … .

Annual Statistical Supplement, 2011, Medicaid Program Description and Legislative History , U.S. SOCIAL SEC. ADMIN., OFFICE OF RETIREMENT AND DISABILITY POLICY, http://www.ssa.gov/policy/docs/statcomps/supplement/2011/medicaid.html (last visited Mar. 21, 2014).

24 This income level is based on the 2014 Federal Poverty Level guidelines for the continental United States. Annual Update of the HHS Poverty Guidelines Notice, 79 Fed. Reg. 3593 (Jan. 22, 2014).

25 See generally 42 U.S.C. § 1396 et seq (enumerating the federal requirements for state Medicaid programs); 42 C.F.R. § 435 (listing the Medicaid financial eligibility rules).

26 42 U.S.C. §§ 1315, 1396 et seq

27 STEPHANIE ANTHONY ET AL., MASS. MEDICAID POLICY INST., THE MASSHEALTH WAIVER: 2009-2011 … AND BEYOND 9 (2009), http://masshealthpolicyforum.brandeis.edu/forums/Documents/MassHealth-waiver-2009-Issue%20Brief%20Final.pdf. Section 1115 waivers are subject to certain cost requirements. See KAISER FAMILY FOUND., FIVE KEY QUESTIONS AND ANSWERS ABOUT SECTION 1115 MEDICAID DEMONSTRATION WAIVERS (2011), http://kaiserfamilyfoundation.files.wordpress.com/2013/01/8196.pdf.

28 42 U.S.C. § 1396a(a)(10)(A)(i)(VIII).

29 See The Coverage Gap: Uninsured Poor Adults in States that Do Not Expand Medicaid, KAISER FAMILY FOUND. (Oct. 23, 2013), http://kff.org/health-reform/issue-brief/the-coverage-gapuninsured-poor-adults-in-states-that-do-not-expand-medicaid/.

30 42 U.S.C. § 1396d(y).

31 Federal Medical Assistance Percentage (FMAP) for Medicaid and Multiplier, HENRY J. KAISER FAMILY FOUND., http://kff.org/medicaid/state-indicator/federal-matching-rate-and-multiplier (last visited Mar. 13, 2014).

32 42 U.S.C. § 1396d(y). Some states that had small newly eligible populations because they expanded early received additional enhancements. KAISER FAMILY FOUND., FINANCING NEW MEDICAID COVERAGE UNDER HEALTH REFORM (2010), available at http://ccf.georgetown.edu/wpcontent/uploads/2012/03/Health-reform_financing-medicaid-under-health-reform.pdf.

33 42 U.S.C. § 1396c.

34 See generally NFIB v. Sebelius, 132 S. Ct. 2566 (2012). The ruling does not affect the ACA provision expanding Medicaid for children age 6-18 up to 138% of FPL. Implementing the ACA's Medicaid-Related Health Reform Provisions after the Supreme Court's Decision, KAISER FAMILY FOUND. (Aug. 1, 2012), http://kff.org/health-reform/issue-brief/implementing-the-acas-medicaidrelated-health-reform/.

35 See Rosenbaum, Sara & Westmoreland, Timothy M., The Supreme Court's Surprising Decision on the Medicaid Expansion: How Will the Federal Government and States Proceed?, 31 HEALTH AFF. 1663, 1663 (2012)CrossRefGoogle ScholarPubMed.

36 NFIB, 132 S. Ct. at 2630 (Ginsburg, J., concurring in part, concurring in the judgment in part, and dissenting in part).

37 Id. at 2608.

38 The Roberts bloc consisted of Justices Roberts, Breyer, and Kagan. The Ginsburg bloc consisted of Justices Ginsburg and Sotomayor. The Scalia bloc consisted of Justices Scalia, Kennedy, Thomas, and Alito. Justice Thomas wrote an additional short opinion on the Commerce Clause.

39 See Summary of Supreme Court Affordable Care Act Opinion, FOLEY HOAG (June 28, 2012), http://www.foleyhoag.com/publications/alerts-and-updates/2012/june/summary-of-supreme-courtaffordable-care-act-opinion-062812.

40 See NFIB, 132 S. Ct. passim.

41 See generally DEP't OF HEALTH & HUMAN SERVS., CTRS. FOR MEDICARE & MEDICAID SERVS., Frequently Asked Questions on Exchanges, Market Reforms and Medicaid (Dec. 10, 2012), http://www.cms.gov/CCIIO/Resources/Files/Downloads/exchanges-faqs-12-10-2012.pdf.

42 Id. at 11.

43 Id. at 12.

44 Id.

45 Sam Dickman et al., Opting Out of Medicaid Expansion: The Health and Financial Impacts, HEALTH AFF. BLOG (Jan. 30, 2014, 10:00 AM), http://healthaffairs.org/blog/2014/01/30/opting-out-ofmedicaid-expansion-the-health-and-financial-impacts/.

46 See generally HOLOHAN ET AL., supra note 16.

47 Id.

48 Where the States Stand on Medicaid Expansion, ADVISORY BD. CO. (Feb. 7, 2014), http://www.advisory.com/daily-briefing/resources/primers/medicaidmap.

49 See id., Rick Lyman, Tennessee Governor Hesitates on Medicaid Expansion, Frustrating Many, N.Y. TIMES (Nov. 16, 2013), http://www.nytimes.com/2013/11/17/us/politics/tennesseegovernor-hesitates-on-medicaid-expansion-frustrating-many.html?_r=0.

50 See Sarah Mimms, Republicans Push Plan to Renege on Medicaid Promise, NAT’L J. DAILY (Nov. 17, 2013), http://www.nationaljournal.com/daily/republicans-push-plan-to-renege-on-medicaidpromise-20131117.

51 U.S. SOCIAL SEC. ADMIN., .supra note 23.

52 For example, the costs of state employees who are considered “skilled medical professionals” are matched at 75% and enhancements to software systems for claims processing are matched at 90%. 42 U.S.C. § 1396b(a) (2012).

53 MARYBETH MUSUMECI, KAISER FAMILY FOUND., IMPLEMENTING THE ACA's MEDICAIDRELATED HEALTH REFORM PROVISIONS AFTER THE SUPREME COURT's DECISION (2012), http://kaiserfamilyfoundation.files.wordpress.com/2013/01/8348.pdf.

54 DEP't OF HEALTH & HUMAN SERVS., MEDICAID AND THE AFFORDABLE CARE ACT: PREMIUM ASSISTANCE (2013), http://medicaid.gov/Federal-Policy-Guidance/Downloads/FAQ-03-29-13-Premium-Assistance.pdf.

55 Id.

56 Id.

57 Id.

58 Sarah Kliff, The Feds Sign Off on Expanding Medicaid to 100,000 Iowans , WASH. POST WONKBLOG (Dec. 10, 2013), http://www.washingtonpost.com/blogs/wonkblog/wp/2013/12/10/the-feds-sign-off-on-expanding-medicaid-to-72000-iowans/.

59 See KAISER FAMILY FOUND., THE COVERAGE GAP: UNINSURED POOR ADULTS IN STATES THAT DO NOT EXPAND MEDICAID, http://kaiserfamilyfoundation.files.wordpress.com/2013/10/8505-thecoverage-gap-uninsured-poor-adults8.pdf (last updated Oct. 23, 2013).

60 42 U.S.C. § 1396a(a)(10)(VIII) (2012).

61 26 U.S.C. § 36B(c)(1)(A) (in general, only individuals at or above 100% and below 400% FPL are eligible for federal tax subsidies). Certain lawfully present immigrants with incomes below 100% FPL are eligible for federal tax subsidies if they are ineligible for Medicaid based on their alien status. Id. § 36B(c)(1)(B).

62 See generally NFIB v. Sebelius, 132 S. Ct. 2566 (2012).

63 KAISER FAMILY FOUND., supra note 60.

64 The ACA offers a number of exemptions from the individual mandate penalty, including an exemption that is under the discretion of HHS. These exemptions include: (1) an exemption for individuals who have to pay more than 8% of their income towards health insurance coverage available via employment and the Exchange; (2) an exemption for households with income under the IRS filing threshold; and (3) an exemption at the discretion of HHS. Together, these exemptions likely cover almost all households under the poverty level. According to Congressional Budget Office estimates, the lowest-cost bronze plan on an Exchange will range from $4,500-5,000 per year in 2016, well above 8% of the income of a household below the poverty line. The Internal Revenue Service (IRS) filing threshold hovers around the poverty line, though it is possible to be under the poverty line and still need to file taxes. Thus, only individuals with generous employer -sponsored plans whose income puts them right under the poverty line may be subject to the mandate, and they may be exempted under HHS’ discretion. Letter from Douglas W. Elmendorf, Dir., Cong. Budget Office, to Olympia Snowe, Sen. (Jan. 11, 2010), available at http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/108xx/doc10884/01-11-premiums_for_bronze_plan.pdf.

65 See Levy, Helen & Meltzer, David, The Impact of Health Insurance on Health, 29 ANN. REV. PUB. HEALTH 399, 399-400 (2008)CrossRefGoogle ScholarPubMed.

66 Id.

67 Sommers, Benjamin et al., Mortality and Access to Care Among Adults After State Medicaid Expansion, 367 NEW ENG. J. MED. 1025, 1025 (2012)CrossRefGoogle Scholar.

68 Baicker, Katherine et al., The Oregon Experiment–Effect of Medicaid on Clinical Outcomes, 368 NEW ENG. J. MED. 1713, 1713 (2013)CrossRefGoogle Scholar [hereinafter Baicker et al., The Oregon Experiment]; see Finkelstein, Amy et al., The Oregon Health Insurance Experiment: Evidence from the First Year, 127 Q. J. ECON. 1057 (2012)CrossRefGoogle Scholar.

69 Baicker et al., The Oregon Experiment , supra note 69, at 1713.

70 Id.

71 Kronick, Richard & Bindman, Andrew, Editorial, Protecting Finances and Improving Access to Care with Medicaid, 368 NEW ENG. J. MED. 1744, 1744-45 (2013)CrossRefGoogle ScholarPubMed.

72 See Baicker, Katherine & Finkelstein, Amy, The Effects of Medicaid Coverage–Learning from the Oregon Experiment, 365 NEW ENG. J. MED. 683 (2011)CrossRefGoogle ScholarPubMed.

73 Steven Pizer et al., The Effect of Health Reform on Public and Private Insurance in the Long Run 20-21 (Health Care Fin. & Econ., Working Paper No. 2011-03), available at http://ssrn.com/abstract=1782210.

74 See Stan Dorn et al., The Financial Benefit to Hospitals from State Expansion of Medicaid, URBAN INST. 1-2 (Mar. 2013), available at http://www.rwjf.org/content/dam/farm/reports/issue_briefs/2013/rwjf405040.

75 42 U.S.C. §§ 1395ww(r), 1396r-4(f)(7)(B) (2012).

76 See Dorn, supra note 75.

77 See id.

78 Hospitals in States that Nixed Medicaid Expansion Could Get ‘Bailouts,’ ADVISORY BD. CO. (Feb. 10, 2014), http://www.advisory.com/daily-briefing/2014/02/10/hospitals-in-states-that-nixedmedicaid-expansion-could-get-bailouts.

79 John Lynch & George Kaplan, Socioeconomic Position, in SOCIAL EPIDEMIOLOGY 13 (Lisa Berkman and Ichiro Kawachi eds., 2000) (“[D]ifferences in morbidity and mortality between socioeconomic groups have been observed in many studies and constitute one of the most consistent findings in epidemiologic research.”).

80 See id.

81 The medical loss ratio provisions can be found at 42 U.S.C. § 300gg-18 (2012).

82 Administrative costs are reimbursed at the same level for all states regardless of the relative wealth of each state. This is in contrast to the reimbursement formulas for federal funding of medical care costs for beneficiaries, which increases with relatively lower per capita income levels in each state. See ALISON MITCHELL & EVELYNE BAUMRUCKER, CONG. RESEARCH SERV., MEDICAID's FEDERAL MEDICAID ASSISTANCE PERCENTAGE (FMAP), FY2014 (2013), available at https://www.fas.org/sgp/crs/misc/R42941.pdf.

83 See HOLAHAN ET AL., supra note 15 (noting that “[s]tates with the largest coverage gains will see relatively small increases in their own spending compared to increases in federal funds”).

84 See supra Part II.C.

85 See generally Stan Dorn et al., Medicaid Expansion Under the ACA: How States Analyze the Fiscal and Economic Trade-Offs, URBAN INST. (June 2013), http://www.urban.org/UploadedPDF/412840-Medicaid-Expansion-Under-the-ACA.pdf; John Holahan et. al., supra note 87.