Healthcare Reform through Medicaid Expansion
In March 2010, President Obama signed the Patient Protection and Affordable Care Act (ACA) into law. The ACA is a reform law aiming to improve the current healthcare system by increasing access to coverage and introducing new protections for those with health insurance. It is certain the primary elements of the ACA will impact different sectors of the healthcare system and one of those key features is the expansion of Medicaid.
Under the Medicaid expansion provision, all legal residents ages 19-65 with household incomes at or below 133% of the federal poverty level (FPL) will be eligible for Medicaid. This means single adults earning up to $14,404 or families of four with incomes up to $29,327 will receive Medicaid coverage. Prior to the reform, low-income parents and childless adults were ineligible in most states. While challenges in implementing this element of the ACA exist, Medicaid expansion will significantly increase healthcare coverage and have a positive effect on the health of Americans.
Expansion of Medicaid to include all non-elderly individuals and families with incomes up to 133% FPL is critical to the success of health reform. Medicaid is the most cost-effective way to provide comprehensive and affordable health coverage to low-income individuals. In 2009, 42.3 million non-elderly adults were uninsured, but 47% of this population live in households with incomes under 133% FPL and will now be eligible for Medicaid coverage. The Congressional Budget Office (CBO) estimates 16 million people will gain coverage through Medicaid expansion by 2019, potentially increasing the number of insured more than any other provision in the ACA.
The Medicaid expansion provision aims to positively impact the U.S. health system but there will be implementation challenges, including funding, enrollment, and access to care. According to a study by the Kaiser Family Foundation, the federal government will bear virtually the entire cost of expanding Medicaid, minimizing the financial burden on states. Specifically, the government will assume all costs of covering newly eligible individuals in 2014 – 2016. Contributions will be reduced in stages: 95% in 2017, 94% in 2018, 93% in 2019, and 90% in 2020 and beyond. According to the CBO, the federal government will contribute $434 billion towards Medicaid’s expansion and states will pay about $20 billion. Although this saves states roughly $175 billion (their usual share is 43% of Medicaid costs), both state and federal budgets are already strained and many worry how the government will fund Medicaid expansion.
With 16 million newly eligible individuals, states and local agencies will be beleaguered to process the volume of Medicaid applicants. Major changes to existing systems are needed to accommodate new standards and connect Medicaid eligibility to the web and the Health Insurance Exchange. Additionally, with an increase in the number of insured individuals, it is difficult to guarantee access to care. In Massachusetts, for example, the increase in insured patients, combined with doctor shortages in the state, caused appointment wait times to greatly increase. Providing access for the newly eligible – many of whom may not have seen a doctor nor received care recently because of their previous ineligibility – is a challenge the government will face.
In addition to considerably decreasing the number of uninsured Americans, Medicaid expansion leads to healthcare prevention and cost savings. Individuals who lack insurance often fail to receive preventative care services; Medicaid expansion addresses this problem by providing coverage to more low-income individuals and encouraging them to seek primary care. Not only will this foster improvements to overall population health, but focusing on prevention should also reduce emergency department and specialty care visits.
Medicaid expansion will have a positive impact on hospitals’ and individuals’ finances. An increase in the number of insured individuals through Medicaid expansion will decrease charity care and minimize the debt many hospitals incur for treating uninsured patients. Moreover, a recent study found Medicaid expansion could decrease the number of consumer bankruptcies because insured individuals pay less out of pocket for care and unpredictable medical occurrences. According to research, a 10% increase in Medicaid eligibility decreases bankruptcies by 8%. The Medicaid expansion provision could increase coverage eligibility by 40%, resulting in nearly 32% fewer bankruptcies. Medical bills cause over 60% of bankruptcies in the United States; expansion of Medicaid coverage could drastically improve this statistic.
Expanding health insurance coverage to Americans who are currently uninsured is arguably the most important objective of the ACA. It seeks to accomplish this goal partly through expansion of Medicaid. While the government will face challenges in its implementation, Medicaid expansion is expected to have positive outcomes and may be the key to improving healthcare in this country.
6. Angeles, J., & Broaddus, M. (2010). Federal government will pick up nearly all costs of health reform’s Medicaid expansion. Center on Budget and Policy Priorities
7. Piper, K. (2010, June). Medicaid expansion: Briefing for Medicaid health plans of america. Sellers Dorsey presentation
8. States uneasy about impact of Medicaid expansion. (2010, April 27). Kaiser Health News.
9. Bernstein, J., Chollet, D., & Peterson, S. (2010). How does insurance coverage improve health outcomes?. Mathematica Policy Research, Inc. Issue Brief, 1.
10. Gross, T., & Notowidigdo, M. (2011). Health insurance and the consumer bankruptcy decision: Evidence from expansions of Medicaid. ScienceDirect: Journal of Public Economics, 95(7-8), 767–778.