Obamacare Says No To Partial Medicaid Expansion

By  //  December 11, 2012

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Healthcare Policy

BREVARD COUNTY, FLORIDA–In a sweeping memorandum from its Secretary, Kathleen Sebelius, the Department of Health and Human Services (HHS) provided details to states on Medicaid expansion, saying “the law does not provide for a phased-in or partial expansion.” Yesterday, the nation’s governors were told that states that don’t expand their Medicaid rolls to include residents at 133% of the federal poverty level (FPL) won’t get 100% of the matching federal funds made available in 2014 through 2016 under the Patient Protection and Affordable Care Act (PPACA).

Administration Raises Stakes On Medicaid Expansion Participation

Obama administration says states must be “all in” on Medicaid expansion to qualify for federal Medicaid expansion funding under the PPACA.

Since the Supreme Court’s judgement on the challenges to the PPACA in June gave states the right to opt out of the expansion, several Republican governors have opted out or voiced interest in a partial expansion, citing strained budgets. Monday’s ruling makes it clear that, although states are free to expand however they’d like, the only way to get all of the PPACA funding is to extend eligibility to adults at or below 133% of FPL.

With this decision effectively ruling out federal funds for partial expansion, the Obama administration has raised the stakes for the states debating whether to participate in a part of Obamacare that is ultimately crucial to the success of the law.

Medicaid Expansion Projected To Cost State An Extra $330 Million By 1220

Governor Rick Scott and Florida legislative leaders have been skeptical of the Medicaid expansion, at least in part because of potential long-term costs, siting that the roughly $21 billion Medicaid program absorbs too much of the state’s budget.  The federal government already pays more than half the costs of Florida’s Medicaid program. Covering the full cost of the expanded eligibility is designed as an incentive for Florida and other states to extend coverage to more people.

Governor Rick Scott (above) and Florida legislators are gravely concerned about their state’s fiscal burden under full Medicaid expansion.

Florida has one of the highest rates of uninsured residents and some of the most stringent eligibility requirements in the country for Medicaid. A family of three with an income of $11,000 a year makes too much and single residents are not covered. The PPACA expansion would include single residents and for one person, 133% of FPL is an annual income of $14,856. For a family of four it is $30,657.

In Florida the federal government would be expected to spend $863 million during the 2013-14 fiscal year on expanded Medicaid eligibility, with that growing to about $3.1 billion during the 2015-16 fiscal year. The state’s costs are estimated to start at $79 million during the 2016-17 fiscal year, and state economic analysts project close to 900,000 more residents could be covered under expanded Medicaid rolls by fiscal year 2020-2021, costing the state $330 million.

Florida Opts Out Of 2014 Health Insurance Exchange

The HHS memorandum also addressed the state healthcare insurance exchanges, re-establishing the December 14 deadline for states to commit to how they plan to structure and manage their exchange.  If states don’t establish exchanges, the federal government will do it for them. Another option is for states and the federal government to form partnerships to operate exchanges.

Although a definite decision has not yet been made regarding Medicaid expansion, Florida House and Senate leaders have already announced that the state would not meet the deadline and will not run a health insurance exchange in 2014 because a decision could not be made until the 2013 legislative session.


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