Public Payers News

How the Supreme Court Ruling Affected State Medicaid Expansion

There are significant obstacles that are impacting individual states and their health insurance exchanges when it comes to expanding Medicaid coverage.

By Vera Gruessner

- When the Patient Protection and Affordable Care Act was passed into law in 2010, opposition led the provisions to the Supreme Court where it was decided whether or not the legislation was Constitutional. While the Supreme Court did support the majority of the Affordable Care Act, some key differences were created such as ensuring that state Medicaid expansion was voluntary.

State Medicaid Expansion

When developing state health insurance exchanges, each individual state now has the ability to determine if they desire to expand Medicaid services and how much control they need in creating these health insurance marketplaces, according to PwC.

At this point in time, 30 states in total along with Washington, D.C. have gone forward with expanding their Medicaid coverage. However, the new ruling set by the Supreme Court requiring voluntary Medicaid expansion has led 19 states to decide against it while one state is currently considering broadening Medicaid coverage.

A brief from the Henry J. Kaiser Family Foundation explains that the goal of the Affordable Care Act was to broaden health coverage among the many uninsured Americans through the individual mandate requiring those without coverage to pay a penalty, insurance market reforms, the insurance exchanges, and Medicaid expansion.

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  • While the Patient Protection and Affordable Care Act was signed into law five years ago, its provisions did not take effect until 2014, which gave states more time to figure out the implications of Medicaid expansion.

    There were a total of 26 states that filed lawsuits regarding the constitutionality of these provisions requiring broadening the Medicaid program.

    “The challenge to the ACA’s Medicaid expansion raised questions about the proper balance of power between the federal government and the states,” the Kaiser Family Foundation brief stated.

    “The Constitution grants Congress certain enumerated powers, and when Congress acts within those power, its laws are supreme. All powers that are not specifically enumerated in the Constitution as belonging to the federal government remain with the states pursuant to the Tenth Amendment. If Congress oversteps by enacting a law that exceeds its powers, the Supreme Court has authority to declare the law invalid.”

    Essentially, the Supreme Court found these requirements on the individual states unconstitutional and ensured that states could voluntarily decide whether to expand their Medicaid coverage.

    A Health Affairs editorial details how both the Medicare and Medicaid programs were developed in 1965 with the former meant to assist healthcare coverage among the elderly and the latter developed to help the poor. Five years ago, the federal government covered 57 percent of a state’s Medicaid spending.

    State Medicaid expansion may seem costly but it is actually more cost-effective than if private insurance plans were offered through the state health insurance marketplaces.

    In order to make it more streamlined and favorable among states to broaden Medicaid coverage, the federal government “would pay all of the costs of covering newly eligible enrollees, such as single adults with no dependent children, for the first three years of the program beginning in 2013 or 2014. After that, the federal share would cover 90 percent of coverage costs for the expansion populations.”

    There are definitely significant obstacles that are impacting individual states and their health insurance exchanges when it comes to expanding Medicaid coverage. For instance, while smaller states would have the majority (95 percent) of their extra Medicaid costs covered in 2019, twenty other states including New York and California would only have 82 percent of their program costs covered by federal funding.

    State and federal governments are expected to face significant challenges in the coming years when implementing the provisions for Medicaid expansion under the Affordable Care Act. Despite the administrative difficulties states may face, Lynn Etheredge, independent consultant and former head of the health branch of the Office of Management and Budget, believes that the Medicaid program “has the potential to become a national leader in effective, high quality care over the next five years.”