Medicaid expansion will stand with revision

June 28, 2012

While many awaited the most significant ruling in healthcare history, Medicaid plans remained optimistic that coverage expansion would continue. But there's a caveat.

After this morning’s Supreme Court ruling regarding the expansion of Medicaid under the Patient Protection and Affordable Care Act, managed Medicaid plans felt some relief knowing they finally could get back to work. The expansion has made the segment a more attractive business prospect.

“It creates universal coverage, ” says Lisa Han, partner with Squire Sanders. “Working healthy folks will come into the category.”

Han says the Court ruled that Congress can indeed pass a law that requires states to expand Medicaid. However, it is unconstitutional for the federal government to take away ALL of a state's Medicaid funds if a state refuses to participate in Medicaid expansion. Refusal to participate in the expansion then would result in only expansion funding being denied.

“Expanding access to Medicaid is a simple matter of equity and basic fairness to the millions of Americans who will be newly insured-some for the first time-when the expansion goes into effect in 2014,” says Margaret Murray, president and CEO of the Association for Community Affiliated Plans. “ACAP has supported the health reform law from the very beginning, and Safety Net Health Plans have been preparing to expand their capacity to accommodate new populations that will be eligible in 2014.”

Unplugging the expansion of Medicaid would have been far more disruptive to the healthcare market than a decision to strike down the individual mandate would have been. The Court ruled that a Medicaid expansion could be an unconstitutional federal coercion of the states, but the expansion does not have a penalty large enough to pass that threshold.

Medicaid by law will expand nationwide to include nearly all individuals with incomes up to 133 percent of the federal poverty level in 2014. States do have the option to expand coverage sooner.

Today the program covers 60 million individuals, including one in four children, but restrictive eligibility results in many low income individuals remaining uninsured. By 2016, Medicaid, along with the Children’s Health Insurance Program, will cover an additional 17 million individuals, mostly low-income adults, leading to a significant reduction in the nation’s uninsured segment of 49 million people.