Medicaid Expansion: What to expect in 2014

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January 24th, 2014

MedicaidOn Jan 1st, Medicaid expanded its coverage eligibility across 25 states and DC. The expansion has reformed the program from a last-resort healthcare option towards providing broad based access to a new and more diverse set of individuals. However, the expansion will bring with it multiple obstacles for healthcare professionals throughout the near future.

Why Expand?

Since its introduction, Medicaid has traditionally been associated with the lower class, disabled individuals, and single parents. It’s new eligibility criteria – earning a household income less than 138% of the poverty level – has opened the program for the first time to multiple new social groups including the homeless, former convicts, minimum wage employees, recent college grads, retirees not eligible for Medicare, and the unemployed.

Medicaid has provided coverage to almost 16% of the US population throughout its tenure and has funded child births, HIV and AIDS treatment, while remaining as a major contributor towards elderly care.

The expansion was deemed optional in the Supreme Court despite being seen as a cheaper alternative to providing federal subsidies to low-income individuals seeking health insurance. The states that have rejected the expansion felt federal funding for the program would be insufficient along with citing other issues such as doctors refusing to accept the program’s low reimbursement rates.

Despite only half of the states accepting its expansion, approximately 3.9 million individuals have signed up for Medicaid – including those newly eligible. However, state officials remain cautious over the obstacles they may face in the near future.

Medicaid Expansion and State Officials

A recent survey gauged officials’ expectations of the expansion and provided insight into how they plan to address enrollments issues, cost containment, and accessibility. Overall, Medicaid’s expansion has been met with optimism, however many concerns have been raised regarding state budgets and barriers to care.

Of the officials interviewed, over three quarters estimate 50-75% of newly eligible uninsured adults will sign up for coverage. Many of the newly eligible likely to enroll will come be non-disabled adults. As a result, all of state officials surveyed have invested in new eligibility systems and IT programs to facilitate the expansions.

Most of the concern revolved around the impact that the Medicaid expansion will have on state budgets. While the majority of state officials expect the expansion to result in savings, however 33% believe costs may rise as the Federal Match Rate (Figure 1) is likely to decrease with time or be affected by federal spending in the ACA.

Figure 1.

Medicaid Expansion

In terms of the individual, the Medicaid expansion was unanimously seen by state officials as a way to help pay medical bills, improve access to care, improve health, and reduce uncompensated care for providers. The question still remains if more or less medical providers will accept Medicaid reimbursements after the expansions.

The expansion has already allowed millions of individuals to gain access to care for the first time. It is only with time that the US public will truly be able to see its success as the healthcare landscape continues to change. There is a possibility that the large role of the federal government in both the Medicaid expansion and the ACA could increase state and federal spending. As of now, we should be focusing on providing healthcare access to those who’ve never had it and building an efficient healthcare system where costs of care can easily be contained.

To learn more about the effect the healthcare reform is having on cost containment and access to care, or to keep up to date with the latest involving the Medicaid expansion subscribe to our monthly Health Insights newsletter here.