One of the key components of the Affordable Care Act is the expansion of Medicaid. As of January 1, 2014, people aged 19-64 who fall below the threshold of 138 percent of the federal poverty limit (approximately $27,000 for a family of three) can get health coverage. The bill required states to expand coverage under Medicaid and the federal government would cover the costs of hospitals and doctors taking on new patients. However, when the Supreme Court upheld the ACA in 2012, it also said that states had the right to opt out of the expansion. In all 25 (mainly Republican) states did exactly that.
While the refusal may have won some political points with the base, states are already beginning to see fallout from their political ploy. Many of those that opted out are also having the highest rate of uninsured. This is causing residents to fall into a coverage gap – meaning they don’t qualify for a federal subsidy to purchase private insurance, but make too much to qualify for Medicaid. The hardest hit are those in rural areas, where providers are limited. Rural hospitals are also suffering because they are not getting the extra subsidies provided under the ACA to treat indigent patients.
Politicians are facing political fallout as many of these hospitals and clinics face closing their doors. Some are looking to doing anything but adopt the ACA. One option is to reimburse Medicare costs – but instead of using the money from the federal government, they are going into state funds.
In other words, they are looking at bailouts.
South Carolina has already agreed to reimburse some hospitals 100 percent of the Medicaid costs for troubled hospitals, at the cost of $90 million dollars (more than half paid by state taxes). In Georgia, estimates for Grady Memorial Hospital in Atlanta estimates that federal Medicaid cuts will cost it $141 million dollars. Republican Governor Nathan Deal has rejected the Medicaid expansion, but is facing an election year in which the Democratic opponent is state Sen. Jason Carter, grandson of Georgia’s favorite son President Jimmy Carter. With about 60 percent of Grady Memorial’s patients on Medicaid, the legislature is considering measures costing in the “tens of millions” of dollars to help.
Mississippi Gov. Phil Bryant has been pressured by state lawmakers to agree to an expansion but has thus far refused. His reasoning is that the federal government might run out of money and not be able to keep up its end of the bargain of reimbursing states. Instead, he is seeking an additional $4.4 million dollars to make up for the Medicaid cuts.
It is difficult to say if the states are saving money by doing this, but most agree that this can only be a stop gap measure and not a long term solution. Under the ACA, states have to cover 10 percent of the initial cost of implementation, and then they are reimbursed for the Medicaid expansion costs at 100 percent during the first three years, after which they cover 90 percent of the costs. Furthermore, by participating in the ACA the state’s residents would also be eligible for federal subsidies to purchase private insurance, further lowering costs. Experts say that participating in the ACA’s Medicaid expansion is hard to compete with from a financial perspective due to the generous reimbursements.
Some states are beginning to understand this.
Five states that initially refused are reconsidering their participation in the ACA and the Medicaid expansion. Missouri, New Hampshire, Pennsylvania, and Utah have all begun to developing plans. Newly elected Democratic Gov. Terry McAuliffe has said that he will move forward with a plan in Virginia, which had previously opted out under the previous Republican governor. All of these plans are in various stages of development and still require passage through the legislature, after which they will also need federal approval. Should all of these plans go forward, it would mean that more than half the states in the nation would have expanded access to affordable health insurance under the Affordable Care Act.
Only time will tell if the remaining ones will choose good governance or stringent ideology.