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Supreme Court Ruling on Medicaid Expansion Led to Coverage Gap

Eligibility for Medicaid expansion has faced some disparity since the Supreme Court ruling on the ACA allowed states to choose whether or not to expand this program.

By Vera Gruessner

A Supreme Court ruling in 2012 determined that the Patient Protection and Affordable Care Act is Constitutional while Medicaid expansion is optional for individual states to pursue. This led more than two dozen states to postpone Medicaid expansion as well as decline to participate in it altogether. Today there are 19 states that have not expanded their Medicaid programs.

Affordable Care Act

Starting in 2014, states had the option to pursue Medicaid expansion under the Affordable Care act to cover more low-income families making below 133 percent of the Federal Poverty Level (FPL), but a number of states either postponed or rejected expanding their Medicaid programs even though the vast majority - more than 90 percent - of funding for this expansion is provided by the federal government.

This led to a disparity among low-income families and individuals that are eligible for Medicaid coverage in some states but ineligible in others. More than 3 million Americans have been left in a coverage gap.

The reason that this coverage gap occurred is because the Affordable Care Act initially required states to provide Medicaid for all adults 18 to 65 years of age with incomes up to 133 percent, but the Supreme Court ruled in 2012 that Medicaid expansion would be optional for states, according to HealthCare.gov.

The ACA also offers premium tax credits for people with incomes of 100 percent to 400 percent of the federal poverty level to be able to purchase health plans in the health insurance marketplace. However, in states that haven’t expanded Medicaid, people who fall below the 100 percent federal poverty line are left in a coverage gap.

READ MORE: President Obama Highlights Progress from Affordable Care Act

As reported by the Henry J. Kaiser Family Foundation, Medicaid coverage in these states would only be offered to a family of three if their yearly income was $8,840 or less with childless adults completely ineligible for Medicaid. These individuals fall into a coverage gap in these states since their income would be too high for Medicaid and too low to be eligible for tax subsidies on the public health insurance exchange.

If these states chose to expand their Medicaid programs, healthcare coverage could be expanded to an additional 5 million Americans. In order to cut down on the disparities seen within state Medicaid programs, it is necessary to work toward expanding these programs and incentivizing states to invest in healthcare coverage for their citizens. Presidential nominee Hillary Clinton declared her stance in expanding Medicaid coverage among the 19 states that have chosen to keep their Medicaid program as it currently stands in an editorial within The New England Journal of Medicine.

Some states such as Kentucky have seen problems with Medicaid expansion and Kentucky Governor Bevin has proposed changes to the Medicaid expansion in his state, according to the Henry J. Kaiser Family Foundation.

The changes include requiring premiums to take on a sliding scale depending on family income, requiring those living 100 to 138 percent above the federal poverty line to pay the first premium before coverage is effective, and requiring 20 hours per month of employment for most adults in order to be eligible for Medicaid.

Additionally, the Kentucky Governor is seeking to disable people with incomes 100 percent above the federal poverty level from enrollment in the Medicaid program if they fail to pay a premium after a 60-day grace period. Bevin has sent a waiver to the Centers for Medicare & Medicaid Services (CMS) with these proposed changes.

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However, since Kentucky has taken part in a successful and traditional Medicaid expansion roll-out, CMS may deny the waiver application much as it has recently done in Ohio. A proposed waiver in Ohio would have made some significant changes in coverage for adults eligible for Medicaid including creating a health savings account and imposing monthly premiums. In states that initially chose traditional Medicaid expansion, CMS may decline changing its terms and accepting such waivers.

“Unlike other states with approved Medicaid expansion waivers to date, Kentucky has an existing traditional expansion,” The Kaiser Family Foundation brief stated. “On September 9, 2016, CMS denied a waiver application from Ohio, another state that had successfully implemented a traditional expansion and subsequently sought to alter the terms under a waiver.”

“CMS determined that Ohio’s proposal, including imposing premiums regardless of income and excluding individuals from coverage indefinitely until all arrears were paid, ‘would undermine access to coverage and the affordability of care, and do not support the objectives of the Medicaid program.’  CMS also noted that Ohio’s proposed policy changes under the waiver ‘would lead to over 125,000 people losing coverage each year’ compared to the state’s existing traditional expansion.”

In order to ensure those who’ve fallen into the coverage gap gain access to Medicaid health plans, the federal government and CMS will need to work with state agencies to position a future in which the financial incentives align with state budgets to expand this type of coverage.

 

READ MORE: CMS Rule Renovates Coverage beyond ACA’s Medicaid Expansion

Dig Deeper:

How the Affordable Care Act Changed the Face of Health Insurance

Medicare Advantage Premiums Drop 13% Due to Affordable Care Act

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