When it comes to the issue of Medicaid expansion, two things are certain: more questions than answers will remain for the foreseeable future; and many final decisions will most likely not come until after the presidential and congressional elections in November.
During the week of July 23rd, the Congressional Budget Office scored or provided an updated cost estimate of the health reform law in the wake of last month's Supreme Court ruling. In its score, CBO estimates that the reform law will cost slightly less because some states will opt either not to expand Medicaid or to expand it shy of the 133 percent (138 percent after considering the statute's 5 percent income disregard) FPL limit established under the Patient Protection and Affordable Care Act. The latter assumption by CBO is interesting because while governors and others have been asking if a partial expansion would be permissible, CMS has yet to say whether or not it will permit such a middle-ground expansion.
According to the CBO, Medicaid and the Children's Health Insurance Program (CHIP) will cover about six million fewer persons as the result of the court ruling, with about half of these persons obtaining coverage in the exchange, making the government's cost of subsidies for exchange participants increase while Medicaid costs drop. CBO estimates further that about two thirds of persons previously estimated to be eligible for Medicaid under the PPACA expansion will not qualify for exchange subsidies because their incomes are too low, meaning they will be uninsured and reliant on charity and other uncompensated care programs.
As of July 27, 2012, governors of seven states have said they will not participate in expanding Medicaid, and a number of others have been silent while conducting further analysis and review. The trade group that represents public and safety net hospitals estimates the number of states that reject expansion could be as high as 30. Major concerns expressed by governors are skepticism that Washington will make good on its pledge of covering the full costs of expansion for the first three years (2014 – 2016) and then up to 90 percent from 2020 onward, as well as the impact expansion will have on states whose budgets are already being strained by current Medicaid costs. Other PPACA provisions requiring increased payments for primary care providers treating Medicaid patients and a proposal from the White House in its FY 13 budget that would lower federal Medicaid payments by blending the rate for Medicaid and CHIP give cause for concern.
A number of organizations, including the National Association of Medicaid Directors and the Republican Governor's Association , have presented detailed sets of questions to the Administration on issues such as partial expansion, the Maintenance of Effort (MOE) provision and confirmation that those persons between 100 to 133 percent FPL are eligible for exchange subsides. In responses , the Administration maintains that all other provisions, including the MOE one, remain in place, though some challenge that assertion in light of the Supreme Court ruling. The Administration also says states face no deadlines as to when they must inform CMS about their expansion plans.
Another topic of interest is the impact PPACA reductions in Disproportionate Share Hospital (DSH) payments will have in either encouraging or discouraging states from expanding eligibility. While provider stakeholders would desire smaller or no DSH cuts in states that do not expand eligibility, HHS would need to consider whether such a policy might encourage states to forego expanding eligibility.