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Thursday, June 23, 2011

Stop Right There: “Medicaid Glitch” Not a State Budget Problem

Earlier this week, the Associated Press reported an alleged “glitch” in the new health care law, proclaiming it would allow some early retirees with Social Security benefits and other income to qualify for Medicaid in 2014. While we may agree or disagree with expanding Medicaid for a small population of 62-65 year olds with Social Security benefits we need to agree on one thing: this glitch is not a state budget problem.

What’s alarming about this reported glitch is that it will be used as ammunition – yet another example of a federal burden put on states that must be lifted through a radical restructuring of Medicaid itself. The call to action will be to convert Medicaid to a block grant and eliminate current requirements that states not restrict Medicaid eligibility through 2014, known as “maintenance of effort.”  

You can see it starting to surface: in the AP article, the former governor of Utah characterizes this as adding “fuel to the fire” and references Washington rules that don’t make sense. The article also mentions governors “clamoring” for change.  One can easily be left with the impression that Medicaid expansion in 2014 will lead to collapsing state budgets everywhere.  Yet the pending expansion will have no impact on states’ bottom line at first, and very little thereafter.  

So, let’s put this “state budget” issue to rest right now with actual facts:

Under current Medicaid, federal government and states share the costs of the program.  Today, states pay anywhere from just over 25% to 50% of the cost.  In 2014, funding for the Medicaid expansion will work very differently than the current funding formula: the expansion will be entirely paid for by the federal government for the first few years; states will pay a small percentage of the costs thereafter. 

State Share of Cost for Newly Eligible Medicaid

State Share
2020 and beyond

It is disingenuous to pretend the 2014 Medicaid expansion will be an additional burden to states, or that the size or scope of state obligations will be at all similar.  Addressing this “glitch” simply cannot be addressed by abandoning states’ obligation to Americans who rely on Medicaid as a health care safety net until health care reform through the Affordable Care Act is complete.

John V. Coburn
Health & Disability Advocates

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