Although the federal government picks up nearly 60% of program costs, states have a great deal of flexibility in setting eligibility standards. Therefore, when they had the option to do so, many states chose to exclude impoverished adults, most of whom work.
The Patient Protection and Affordable Care Act would have ended this inequitable Medicaid variation by establishing a nationally uniform floor for the nation's poorest children and non-elderly adults. The federal government would have paid 100% of the costs for three years.
But the U.S. Supreme Court's 2012 decision effectively stripped out this floor by permitting states to opt out of the adult expansion. Had the court ruled otherwise, 2014 would have seen Medicaid expanded to approximately 16 million poor Americans with an unprecedented and generous federal contribution.
Currently, as many as half the states plan to say no, leaving some 10 million adults, including 284,000 impoverished veterans who faithfully served our nation, yet again without health insurance.
This disparity, based solely on where an American happens to live, is unacceptable. The Obama administration may be able to move some of these “no” states to “yes” by allowing them to implement the expansion in nontraditional ways, such as by using federal Medicaid funds to buy coverage through the new health insurance exchanges established under the reform law.
Some states are sure to still say no. In a terrible twist of fate, geographic disparity will become more, rather than less pronounced as a result of the good intentions of the reform law.
Should we allow this geographic disparity to continue? As a physician, who had the privilege of leading one of the nation's most effective healthcare safety net systems for 20 years, I think not. We need a solution.
Let's look more closely at the one variation on the model that HHS' secretary seems poised to allow. Under this approach, states would be permitted to implement the intended coverage expansion by enrolling their poorest residents, newly eligible for Medicaid under the reform law, in private health plans sold in the exchanges.
Some states on the fence appear to be contemplating this approach. However, the Congressional Budget Office estimates this approach over time will cost 50% more per person per year. This is a significant draw-back. This creates a financial and political dilemma for states, Congress and the Obama administration at a time when both political parties are concerned about the federal deficit.
But if states can do this, why can't the federal government? Every “no” state will still have a federally run exchange. Why not permit HHS' secretary to use this same approach for the poor Americans living in those states by offering the same type of exchange enrollment directly through the federal exchange into health plans using federal funds? Could it even be possible to use the federal exchange to enroll newly eligible individuals in the “no” states into state Medicaid programs?
After all, during the first three years, the federal government will bear 100% of the Medicaid expansion cost, and the reform law allows the secretary to establish an exchange in any state that chooses not to do so. Direct Medicaid enrollment would solve the increased cost issue of enrolling in exchange plans.
But it would have other barriers, stemming from Medicaid being operationally largely a state-managed program. Any alternative solution will require identification of long-term financing to offset the decline in federal Medicaid funding, which is set to begin by the fourth year of expansion.
