Patient Protection and Affordable Care Act (PPACA): Medicaid Expansion Provision and Challenges in Meeting the Objective
Aug 1, 2012
A major obscurity in the implementation of the Affordable Care Act has been removed with the ruling of the Supreme Court on June 28, 2012. As we know, the Patient Protection and Affordable Care Act (PPACA) has been enacted in March of 2010 with core objectives like expanding health insurance coverage, improving the quality of Care and reducing the overall costs of Healthcare; this article tries to summarize the challenges in meeting the core objective of the Affordable Care Act which is expanding health insurance coverage to a majority of US citizens and legal residents through the Medicaid expansion provision. There is lots of ambiguity when the Affordable Care Act was enacted from an implementation stand point in meeting its objectives. However, the path is becoming clearer as the time progresses and the Act is here to stay with the ruling of the Supreme Court.
As per the statistics of U.S Census Bureau, a division of U.S. Department of Commerce; the United States of America has a population of 306 million in 2010 of which 50 million do not have health insurance coverage. 256 million have health insurance coverage; of which 95 million are covered through government sponsored insurance programs like Medicare, Medicaid, Tricare, and the others through private health insurance. One of the core objectives of The Affordable Care Act (ACA) is to expand Health insurance coverage to a majority of US citizens and legal residents. As per Kaiser estimates, the uninsured population is expected to reduce by 32 million in 2020 by implementing Affordable Care Act. This can be achieved by enacting various provisions of ACA like expanding coverage through Medicaid, bringing in the Individual Mandate, implementing Health Insurance exchanges, changes to employer sponsored coverage etc. Two of the major provisions of the Affordable Care Act, i.e. Medicaid expansion and the Individual Mandate, have been challenged in the Supreme Court of United States about their constitutionality. The court has given its judgment about their enactment which will have an impact on achieving the coverage expansion objective of the Affordable Care Act. Let us delve through the Medicaid expansion provision of the Affordable Care Act, areas of contention among key stakeholders, the Supreme Court ruling and the challenges in implementing the provision.
Medicaid Expansion: Medicaid is one of United States largest public health insurance programs jointly funded by State and Federal governments, and is providing health insurance coverage to around 52 million people as of 2010. The percentage of funding contributed by the Federal Government is known as Federal Medical Assistance Percentage (FMAP) which averages anywhere in the range of 50 percent to 75 percent among all the states. Medicaid is a voluntary program for the states to participate; however all the states from the US participate in Medicaid which is a major source of health insurance coverage for under privileged sections of the society.
Current Eligibility Groups: The current eligibility criteria to get enrolled with the Medicaid program and the principal eligibility groups are mentioned below:
- Pregnant women and children under age 6 with family incomes at or below 133 percent of the Federal Poverty Level (FPL- $14,856 per year for an individual and $30,657 per year for a family of four in 2012)
- Children ages 6 through 18 with family incomes at or below 100 percent FPL
- Parents and caretaker relatives who meet the financial eligibility requirements for the former AFDC (Aid to Families with Dependent Children) program
- Elderly and disabled individuals who qualify for Supplemental Security Income benefits based on low income and resources.
(Eligibility Groups Source: Kaiser Group Portals, CMS)
ACA’s Medicaid Expansion Provision: There were multiple changes to the original statute of Medicaid enacted in 1965 expanding the coverage provisions to other eligibility groups. However starting Jan 1, 2014, The Affordable Care Act (ACA) intended to expand health insurance coverage to all non disabled adults who are below 65 years and with household incomes at or below 133 percent of FPL. The premise or assumption taken by the Congress or Federal Government is that expanding Medicaid program would increase health insurance coverage to a population size of 16 million by 2020. The funding pattern devised for this eligibility group (non disabled individuals below 65 years with household incomes less than 133 percent of FPL) is that Federal Govt. would fund all 100 percent of the expenses from 2014 to 2016 coming down to 90 percent by 2020 unlike the previous eligibility groups stated above where there is a contribution by both Federal and State Governments. However, the act proclaimed that Congress has the authority to stop complete funding for those states that violate this provision of providing health insurance coverage to non disabled individuals who are below 65 and with household incomes at or below 133 percent of FPL.
Bone of Contention and Supreme Court Ruling: This provision of the Affordable Care Act has been contested in the courts by the state of Florida, along with twenty five other states, and the ruling has finally been given in the Supreme Court of United States. The primary contention by these states was that ACA’s Medicaid expansion provision is coercive in nature and is changing the nature of the Medicaid program from voluntary to mandatory. The size of the population covered by Medicaid is huge and states do not want to forgo Federal grants for not implementing ACA’s provision of expanding Medicaid to under privileged (those with household incomes less than or at 133 percent of FPL), non disabled individuals below 65 years old. The Federal government presented its argument proclaiming that conditions put forward by Congress on the usage of Federal grants cannot be considered as unconstitutional and further saying that states are voluntary in participating in the program. The Supreme Court, with John Roberts as Chief Justice of the bench, has given a judgment on June 28th upholding ACA’s Medicaid expansion provision but making it voluntary for the states to participate. The court gave a judgment that states would forgo only those Federal grants pertinent to ACA’s Medicaid expansion if they do not provide health insurance coverage to the new eligibility group of non disabled individuals below 65 years with incomes at or below 133 percent of FPL but not the entire Federal grants.
Challenges in meeting the goals of the Act: This ruling of the Supreme Court on ACA’s Medicaid provision has posed some challenges in meeting the objectives of The Affordable Care Act Medicaid expansion provision, a few of which are elucidated below:
- As per Congressional Budget Office (CBO) estimates, the Medicaid expansion provision is expected to increase health insurance coverage to a population of 16 million by 2020. However the Supreme Court ruling has made it voluntary for states to meet the new requirement of expanding Medicaid coverage. Considering the political ramifications and other factors, we cannot predict the number of states going for expanding Medicaid coverage as per ACA requirements. Hence it is a challenge to meet the overall target of increasing insurance coverage to a population size of 32 million and 16 million through Medicaid by 2020.
- As per Prudent Layperson Standards, providers are supposed to provide Emergency care to patients irrespective of health insurance coverage. Most of these emergency room costs are passed on as expenses to Government bodies and as higher premiums to members opting for health insurance coverage. It would be beneficial for Providers, Members and the Government with the enactment of new provisions as it would ensure coverage and thereby reduce the overall healthcare delivery costs due to risk distribution. Voluntary participation of states would pose a major challenge in meeting this goal.
- The Affordable Care Act introduced premium credits and cost sharing subsidies for individuals and families lacking health insurance with income levels ranging from 133 percent to 400 percent of FPL encouraging them to buy the same through health insurance exchanges to be introduced in Jan, 2014. However, the most vulnerable population is that group which is below 133 percent of FPL who are expected to receive coverage through Medicaid expansion provision. With the mandatory clause of providing health insurance being proclaimed as voluntary, the poorest sections of the society are at the risk of losing affordable insurance coverage.
With the uncertainties around The Affordable Care Act getting reduced, and the ACA taking a near definite course of action, let us hope it meets most of the objectives as per the timelines planned; and meets its goal of expanding affordable health insurance to majority of US citizens.
About The Author
Lakshminarasimha Nemani works as a Consultant in the Healthcare IT area with one of the leading IT services firms with experience of 8.5 years. His areas of interest include health reforms, Payers, PBMs, ICD 10 implementation. Lakshmi is a Fellow, Academy of Healthcare Management (FAHM) from American Health Insurance Plans (AHIP). He can be reached at firstname.lastname@example.org