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Monday, December 17, 2012

Five Myths about the Medicaid Expansion

The Supreme Court's June 2012 Affordable Care Act ruling was decisive about the implications of the individual mandate; however, it was less decisive about the ACA's Medicaid expansion. The court gave flexibility to each state to decide whether to expand Medicaid to its low income uninsured (below 138% FPL) residents. This flexibility has caused some confusion (some legitimate and some purposeful) about the implications of the Supreme Court decision. Below we address some of the myths vs. realities of the Medicaid Expansion and what it means for Illinois residents:

Medicaid Myth #1: Few states will expand their Medicaid programs.
Reality:
As of 12/12/12, according to health care experts Avalere Health, 18 states have signaled that they will expand, 10 have said that they won't and 23 are undecided. Another health care expert, the Advisory Board Company, shows 14 states in the "not participating" or "leaning toward not participating" group while 18 states are in the participating or leaning toward participating group. Notably, this week, Nevada's Republican Governor and GOP leaders just signaled that they will opt in.

Medicaid Myth #2: Many low-income residents would be eligible for federal subsidies on the exchange if a state does not expand Medicaid. Expanding Medicaid takes away their opportunity to purchase private insurance.
Reality:
The reality is that people living under 100% FPL WILL NOT qualify for subsidies to buy health insurance on the Exchanges and will be the only ones (besides undocumented immigrants) left out in the cold if Illinois doesn't expand Medicaid. Without the new Medicaid eligibility category, these individuals are in a new “donut hole” and will likely be priced out of affordable health insurance through the Exchange because they won’t qualify for the federal financial help. The Urban Institute estimates that of the newly eligible population, approximately 431,000 Illinoisans with household incomes less than 100% FPL will be left in the cold if Illinois does not implement the new Medicaid eligibility category. They will have to continue to access safety-net providers and emergency rooms for care, driving up costs for these providers and showing up sicker. In addition, we all pay more when others are uninsured: according to a study conducted by Millman, Inc., an independent actuarial consulting firm, every family with health insurance pays an additional $1,000 per year to pay for care for the uninsured.

The only "low-income" residents that are either eligible for subsidies on the Exchange OR can participate in Medicaid if Illinois expands Medicaid are people living between 100% -138% FPL. This is a small number of people. Even among those small numbers who DO qualify for exchange subsidies and take up that coverage, the greater cost-sharing requirements for exchange coverage than in Medicaid means that these adults will experience greater financial burdens associated with meeting their health care needs.
 
Medicaid Myth #3: The state will pay for the Medicaid expansion but will not pay for federal insurance subsidies.
Reality
: Not true. The state will not pay for Medicaid Expansion from 2014 through 2016. The federal government pays 100% of the expansion. From 2017
through 2020, the state will slowly start picking up a very small percentage that will slowly increase from 5% to 10% by 2020. In 2020 and beyond, the state will only be responsible for 10% of the cost of the Expansion population.

Medicaid Myth #4: The federal government is already trying to shift more Medicaid expansion costs to the states as a major part of the fiscal year 2013 budget.
Reality:
We have no reason to believe that this will happen and the reality is that President Obama is committed to ensur
ing full implementation of the Medicaid Expansion by states. On December 10, the Obama administration backed away from roughly $100 billion in Medicaid savings it had proposed during deficit-reduction talks earlier this year. In its December 10, 2012 FAQ to states, CMS notes: "The Supreme Court decision has made the higher matching rates available in the Affordable Care Act for the new groups covered even more important to incentivize states to expand Medicaid coverage. The Administration is focused on implementing the Affordable Care Act and providing assistance to states in their efforts to expand Medicaid to these new groups." We have no reason to believe that the federal government will change its mind about the 90% match in the year 2020 and beyond for the Expansion population.

Medicaid Myth #5: Overloading a broken Medicaid program hurts the most vulnerable. Adding so many more people to the Medicaid program will only make these problems worse. 
Reality: The poor who are also uninsured right now still get sick and use health care services. They just don't receive care when they need in the appropriate setting because they end up waiting until their conditions worsens or becomes an emergency. The Medicaid Expansion will allow this group for the first time to have health insurance, and therefore greater access to care at the right time, in the right setting. In addition, in a report released by the GAO (Government Accountability Office) last month, the GAO found that "in calendar years 2008 and 2009, less than 4 percent of beneficiaries who had Medicaid coverage for a full year reported difficulty obtaining medical care, which was similar to individuals with full-year private insurance." In fact, IL received a bonus payment of over $15 million last year for meeting quality and other standards in the CHIP program

The current Illinois Medicaid program is not broken; it is efficiently run. Nationally, the per enrollee cost growth in Medicaid (6.1%) is lower than the per enrollee cost growth in comparable coverage under Medicare (6.9%), private health insurance (10.6%), and monthly premiums for employer-sponsored coverage (12.6%). Illinois’ average annual growth in Medicaid spending for FY2007-FY2010 was 6.6%. While it is true that Medicaid in Illinois pays providers less than they typically receive from private insurance (and therefore fewer providers accept patients with Medicaid), to address this issue, beginning January 2013, the Affordable Care Act will be increasing Medicaid payments for primary care doctors.

These aren't the only myths about the Medicaid expansion; the opponents are so bereft of data that they have to result to myth-making. The reality is that the Medicaid expansion makes good fiscal sense and will make a huge difference in the lives of literally hundreds of thousands of Illinois residents. The reality is that the Medicaid expansion is an excellent deal for the state of Illinois.


Health & Disability Advocates
Heartland Alliance for Human Needs and Human Rights
Sargent Shriver National Center on Poverty Law

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