States in Medicaid Limbo After Court's Ruling

Questions and uncertainty abound as state governments begin deciding whether they will participate in the expansion of Medicaid called for by the Affordable Care Act. In light of the Supreme Court’s decision that the federal government cannot penalize states that don’t participate, the governors of Texas, South Carolina, Nebraska, Iowa, Louisiana, Mississippi, and Florida have said that their states will opt out.

Leaders in other states say they need more information.

"The original act was very punitive for states that didn’t expand Medicaid. [The Supreme Court decision] now gives some options which, honestly, I don’t think a lot of us expected," Gov. Bob McDonnell (R-Va.) said at a press conference held at the National Governors Association annual meeting. "I don’t think it’s responsible fully for my state to make a decision now, because there’s still more information I need."

Gov. Jack Markell (D-Del.) said he sees the expansion as a "good deal for Delaware taxpayers," but agreed that most states will need more guidance from the federal government before making a decision.

As the ruling allows states to opt out of Medicaid expansion without losing existing federal monies, health care reform likely will look very different from state to state, said Sheila Burke of Harvard University, Cambridge, Mass.

"These states are going to respond to this very differently, and they are very different in terms of their preparation and their capacity to take on these changes. Governors, state legislators, exchange directors, and insurance commissioners all may have a different view," Ms. Burke said at a briefing held by the Alliance for Health Reform. She pointed out that many states legislatures won’t meet again until next year, so meaningful decision making may be on hold until then.

Prior to passage of the ACA, Medicaid provided health care coverage for the indigent, especially those who were dependent children, pregnant women, disabled, or elderly. Under the expansion, Medicaid would also cover anyone younger than age 65 years with an annual income less than 133% of the federal poverty level. The law also provides tax credits for people with incomes between 100% and 400% of the federal poverty level to purchase insurance.

If a state decides to opt out of Medicaid expansion, people whose income is above the federal poverty level, those who are single, childless, or don’t live with their children would not be covered. In addition, those who qualify for premium subsidies under the law but can’t find affordable coverage (that is, mostly low-wage workers) would not be covered.

States that opt out of the expansion also could have a harder time balancing impending cuts to providers and hospitals, according to Chris Jennings, president of Jennings Policy Strategies and former top health aide to President Clinton.

Physicians face a 27% Medicare pay cut in January according to the Sustainable Growth Rate (SGR) formula; hospitals, too, face cuts to their Disproportionate Share Hospital (DSH) payments.

Although there may be other ways to balance the cuts, the easiest is expanding Medicaid to get the extra funding, said Mr. Jennings. "It’s a harder road to go than just taking the money."

While added federal funding would help states offset other cuts, it’s unlikely that it would be enough for physicians to rebound from a huge SGR cut, said Dr. Glen R. Stream, president of the American Academy of Family Physicians.

"If the SGR-indicated payment cut was to go into place, there’s no way that the expansion of Medicaid is going to offset the devastating financial impact that that’s going to have for practices," he said in an interview. But he added that expanding Medicaid is currently the best option for providing much-needed care for low-income Americans.

"I don’t think anyone necessarily envisions expansion of Medicaid as the ideal means to expand coverage, but it is the one that’s on the table. My hope would be that if states chose to opt out of the Medicaid expansion, they would do so with some other plan to meet the needs of their citizens. The challenge would be that the plan wouldn’t be coming with any federal dollars," Dr. Stream said.

Officials with the American College of Physicians said states should move forward with expansion as soon as possible.

The "ACP also strongly urges states to move forward on expanding Medicaid to all persons with incomes up to 133% of the federal poverty level, notwithstanding the court’s ruling that states may not be denied existing Medicaid dollars for failing to do so," ACP president David L. Bronson said in a statement following the court’s ruling.

Mr. Jennings speculated that more will participate in the Medicaid expansion than most people currently think.

Dr. Stream agreed. "I suspect, at the end of the day, that we’ll have a lot more states coming in than we currently are hearing, primarily because I have some confidence in stakeholders’ abilities to encourage legislatures and governors to move ahead," he said.

Maryland is one of those states. Dr. Joshua Sharfstein, the state Secretary of Health and Mental Hygiene, said that implementing the law will give states an edge over those that opt out.

"I’ve heard [Gov. Martin O’Malley (D-Md.)] say that he ultimately sees successful implementation of the law as a competitive advantage for Maryland [and] for businesses to locate in the state if there’s real investment in the workforce," Dr. Sharfstein said at the briefing.

Questions and uncertainty abound as state governments begin deciding whether they will participate in the expansion of Medicaid called for by the Affordable Care Act. In light of the Supreme Court’s decision that the federal government cannot penalize states that don’t participate, the governors of Texas, South Carolina, Nebraska, Iowa, Louisiana, Mississippi, and Florida have said that their states will opt out.

Leaders in other states say they need more information.

"The original act was very punitive for states that didn’t expand Medicaid. [The Supreme Court decision] now gives some options which, honestly, I don’t think a lot of us expected," Gov. Bob McDonnell (R-Va.) said at a press conference held at the National Governors Association annual meeting. "I don’t think it’s responsible fully for my state to make a decision now, because there’s still more information I need."

Gov. Jack Markell (D-Del.) said he sees the expansion as a "good deal for Delaware taxpayers," but agreed that most states will need more guidance from the federal government before making a decision.

As the ruling allows states to opt out of Medicaid expansion without losing existing federal monies, health care reform likely will look very different from state to state, said Sheila Burke of Harvard University, Cambridge, Mass.

"These states are going to respond to this very differently, and they are very different in terms of their preparation and their capacity to take on these changes. Governors, state legislators, exchange directors, and insurance commissioners all may have a different view," Ms. Burke said at a briefing held by the Alliance for Health Reform. She pointed out that many states legislatures won’t meet again until next year, so meaningful decision making may be on hold until then.

Prior to passage of the ACA, Medicaid provided health care coverage for the indigent, especially those who were dependent children, pregnant women, disabled, or elderly. Under the expansion, Medicaid would also cover anyone younger than age 65 years with an annual income less than 133% of the federal poverty level. The law also provides tax credits for people with incomes between 100% and 400% of the federal poverty level to purchase insurance.

If a state decides to opt out of Medicaid expansion, people whose income is above the federal poverty level, those who are single, childless, or don’t live with their children would not be covered. In addition, those who qualify for premium subsidies under the law but can’t find affordable coverage (that is, mostly low-wage workers) would not be covered.

States that opt out of the expansion also could have a harder time balancing impending cuts to providers and hospitals, according to Chris Jennings, president of Jennings Policy Strategies and former top health aide to President Clinton.

Physicians face a 27% Medicare pay cut in January according to the Sustainable Growth Rate (SGR) formula; hospitals, too, face cuts to their Disproportionate Share Hospital (DSH) payments.

Although there may be other ways to balance the cuts, the easiest is expanding Medicaid to get the extra funding, said Mr. Jennings. "It’s a harder road to go than just taking the money."

While added federal funding would help states offset other cuts, it’s unlikely that it would be enough for physicians to rebound from a huge SGR cut, said Dr. Glen R. Stream, president of the American Academy of Family Physicians.

"If the SGR-indicated payment cut was to go into place, there’s no way that the expansion of Medicaid is going to offset the devastating financial impact that that’s going to have for practices," he said in an interview. But he added that expanding Medicaid is currently the best option for providing much-needed care for low-income Americans.

"I don’t think anyone necessarily envisions expansion of Medicaid as the ideal means to expand coverage, but it is the one that’s on the table. My hope would be that if states chose to opt out of the Medicaid expansion, they would do so with some other plan to meet the needs of their citizens. The challenge would be that the plan wouldn’t be coming with any federal dollars," Dr. Stream said.

Officials with the American College of Physicians said states should move forward with expansion as soon as possible.

The "ACP also strongly urges states to move forward on expanding Medicaid to all persons with incomes up to 133% of the federal poverty level, notwithstanding the court’s ruling that states may not be denied existing Medicaid dollars for failing to do so," ACP president David L. Bronson said in a statement following the court’s ruling.

Mr. Jennings speculated that more will participate in the Medicaid expansion than most people currently think.

Dr. Stream agreed. "I suspect, at the end of the day, that we’ll have a lot more states coming in than we currently are hearing, primarily because I have some confidence in stakeholders’ abilities to encourage legislatures and governors to move ahead," he said.

Maryland is one of those states. Dr. Joshua Sharfstein, the state Secretary of Health and Mental Hygiene, said that implementing the law will give states an edge over those that opt out.

"I’ve heard [Gov. Martin O’Malley (D-Md.)] say that he ultimately sees successful implementation of the law as a competitive advantage for Maryland [and] for businesses to locate in the state if there’s real investment in the workforce," Dr. Sharfstein said at the briefing.

Questions and uncertainty abound as state governments begin deciding whether they will participate in the expansion of Medicaid called for by the Affordable Care Act. In light of the Supreme Court’s decision that the federal government cannot penalize states that don’t participate, the governors of Texas, South Carolina, Nebraska, Iowa, Louisiana, Mississippi, and Florida have said that their states will opt out.

Leaders in other states say they need more information.

"The original act was very punitive for states that didn’t expand Medicaid. [The Supreme Court decision] now gives some options which, honestly, I don’t think a lot of us expected," Gov. Bob McDonnell (R-Va.) said at a press conference held at the National Governors Association annual meeting. "I don’t think it’s responsible fully for my state to make a decision now, because there’s still more information I need."

Gov. Jack Markell (D-Del.) said he sees the expansion as a "good deal for Delaware taxpayers," but agreed that most states will need more guidance from the federal government before making a decision.

As the ruling allows states to opt out of Medicaid expansion without losing existing federal monies, health care reform likely will look very different from state to state, said Sheila Burke of Harvard University, Cambridge, Mass.

"These states are going to respond to this very differently, and they are very different in terms of their preparation and their capacity to take on these changes. Governors, state legislators, exchange directors, and insurance commissioners all may have a different view," Ms. Burke said at a briefing held by the Alliance for Health Reform. She pointed out that many states legislatures won’t meet again until next year, so meaningful decision making may be on hold until then.

Prior to passage of the ACA, Medicaid provided health care coverage for the indigent, especially those who were dependent children, pregnant women, disabled, or elderly. Under the expansion, Medicaid would also cover anyone younger than age 65 years with an annual income less than 133% of the federal poverty level. The law also provides tax credits for people with incomes between 100% and 400% of the federal poverty level to purchase insurance.

If a state decides to opt out of Medicaid expansion, people whose income is above the federal poverty level, those who are single, childless, or don’t live with their children would not be covered. In addition, those who qualify for premium subsidies under the law but can’t find affordable coverage (that is, mostly low-wage workers) would not be covered.

States that opt out of the expansion also could have a harder time balancing impending cuts to providers and hospitals, according to Chris Jennings, president of Jennings Policy Strategies and former top health aide to President Clinton.

Physicians face a 27% Medicare pay cut in January according to the Sustainable Growth Rate (SGR) formula; hospitals, too, face cuts to their Disproportionate Share Hospital (DSH) payments.

Although there may be other ways to balance the cuts, the easiest is expanding Medicaid to get the extra funding, said Mr. Jennings. "It’s a harder road to go than just taking the money."

While added federal funding would help states offset other cuts, it’s unlikely that it would be enough for physicians to rebound from a huge SGR cut, said Dr. Glen R. Stream, president of the American Academy of Family Physicians.

"If the SGR-indicated payment cut was to go into place, there’s no way that the expansion of Medicaid is going to offset the devastating financial impact that that’s going to have for practices," he said in an interview. But he added that expanding Medicaid is currently the best option for providing much-needed care for low-income Americans.

"I don’t think anyone necessarily envisions expansion of Medicaid as the ideal means to expand coverage, but it is the one that’s on the table. My hope would be that if states chose to opt out of the Medicaid expansion, they would do so with some other plan to meet the needs of their citizens. The challenge would be that the plan wouldn’t be coming with any federal dollars," Dr. Stream said.

Officials with the American College of Physicians said states should move forward with expansion as soon as possible.

The "ACP also strongly urges states to move forward on expanding Medicaid to all persons with incomes up to 133% of the federal poverty level, notwithstanding the court’s ruling that states may not be denied existing Medicaid dollars for failing to do so," ACP president David L. Bronson said in a statement following the court’s ruling.

Mr. Jennings speculated that more will participate in the Medicaid expansion than most people currently think.

Dr. Stream agreed. "I suspect, at the end of the day, that we’ll have a lot more states coming in than we currently are hearing, primarily because I have some confidence in stakeholders’ abilities to encourage legislatures and governors to move ahead," he said.

Maryland is one of those states. Dr. Joshua Sharfstein, the state Secretary of Health and Mental Hygiene, said that implementing the law will give states an edge over those that opt out.

"I’ve heard [Gov. Martin O’Malley (D-Md.)] say that he ultimately sees successful implementation of the law as a competitive advantage for Maryland [and] for businesses to locate in the state if there’s real investment in the workforce," Dr. Sharfstein said at the briefing.