Refusal to Expand Medicaid May Cost Employers $1 Billion

Governors who refuse to expand their Medicaid programs for the poor may cost employers in their states as much as $1.3 billion in federal fines, a study by Jackson Hewitt found. Without Medicaid, a “shared responsibility” payment of as much as $3,000 may be triggered for each employee who can’t get insurance through their company. In Texas, the largest state to refuse to increase Medicaid, employers may be liable for as much as $448 million in fines, the study found. In Florida, where the legislature has refused an expansion supported by Governor Rick Scott, employers may pay as much as $219 million. The report contains estimates for each state, including its status regarding whether it plans to expand Medicaid.

With as many as 22 states potentially opting out of Medicaid expansion, more workers will have to rely on the other core provision of the law, subsidized insurance sold through health exchanges. That would trigger the shared responsibility payment for each employee who can’t get insured through their company and in turn qualifies for a tax credit on the exchanges. Employers would not have to pay the penalties if their workers enroll in Medicaid. The expansion increases the eligibility to those earning up to 138% of the federal poverty level; family of four making about $32,500 this year would be eligible for the program.

NGA Launches New State Health Policy Options Website

The National Governors' Association (NGA) has launched a new website on state health policy options that includes information on planning for exchanges, state-based Medicaid cost containments, population health management, and delivery system improvement, among many other state-level health policy decisions. The website collects and organizes federal announcements, regulations, and other guidance related to state-based Affordable Care Act implementation, as well as published case studies and other research related to state health policy topics. The information is searchable and can be sorted by state or by policy topic.

Medicaid Opt-Out States Could Increase Your Premiums – Even If You Have Private Insurance

Debates over the ACA’s Medicaid expansion — and whether or not states should participate — has centered on how it would impact state budgets. A new paper suggests that the privately-insured have a stake in the matter too. Their premiums, the Academy of American Actuaries say, would rise if states decide to forgo the public insurance expansion.

If a state decides not to expand its Medicaid program, residents between 100 and 133 percent of the Federal Poverty Line — individuals making between $11,170 and $14,893 — become eligible for subsidized health insurance on the public exchange. Those lower-income individuals “can be expected to have higher health care needs than the higher-income exchange enrollees.”

Using CBO data, the brief estimates that those higher health-care costs will be 2 percent higher than “projections made under the assumption that all states do expand Medicaid.” Those premium increases would be borne by both the federal government, which helps buy coverage for subsidized individuals, as well as the individual purchasers themselves.

That would be the expected, nationwide increase in premiums. States that opt out, however, would be likely to see even premiums tick up even more. That has to do with a an ACA provision about reinsurance. When the Affordable Care Act was written, there was worry that very sick people would flood the insurance exchanges when they launched the exchanges. That would cause insurance premiums to spike.

To safeguard against that, the Affordable Care Act included $25 billion in reinsurance funds: Money meant to stabilize the insurance market, and send extra subsidies to the insurers that ended up with really sick members.

That $25 billion budget is fixed; it’s not tethered, in anyway, to the number of people on the exchange. So if states don’t participate in the Medicaid expansion, that same amount of money will be expected to cover a bigger number of people.As the actuaries put it, “a lower payment would be available on a per-enrollee basis.” States without the Medicaid expansion have be expected to have greater exchange participation that would, once again, cause premiums for all to rise.

States Opting Out of Medicaid Could Have Negative Consequences for Employers

It’s not just hospitals who stand to take a financial hit if states don’t fully expand their Medicaid programs. Employers could find themselves the subject of some collateral damage, too. If Congressional Budget Office projections are correct, about 3 million more low-income individuals will be added to health insurance exchanges — rather than Medicaid — as a result of the Supreme Court decision making the Medicaid expansion optional. That means there will be a larger group of low-income people who could trigger the Affordable Care Act’s employer penalty.

In states that don’t take the Medicaid expansion, individuals with incomes between 100 percent and 138 percent of the federal poverty level would be eligible for premium tax credits and cost-sharing subsidies to purchase exchange coverage. If an individual in the new exchange population works for a firm of at least 50 employees, the employer could be dinged by the penalty for not providing affordable or comprehensive insurance.

HHS says it won’t impose a deadline on states to decide if they’ll expand their Medicaid programs, though the department says states would have to figure that out soon to expand in time for 2014. Also importantly, HHS hasn’t said whether states can partially expand their programs and still get the Affordable Care Act’s generous matching rate, even though the CBO assumed the administration would allow partial expansions.

And if states could partially expand their programs, it wouldn’t likely be of much help to employers. States may look to expand their programs to 100 percent of the federal poverty level to ensure that everyone has some coverage, but it would still mean 3 million people who would have been eligible for Medicaid would wind up in the exchanges. Those new exchange populations aren’t cheap to cover, either. They’ll earn less than people previously expected to enroll in exchanges, so they’ll get a higher share of federal dollars. And they’re likely to spend more on care, because they’re generally in poorer health, the CBO said.

Coalitions have an important role to play advocating for Medicaid expansion at the state level.

Medicaid Exchange Rule Expected Soon

Medicaid officials will soon issue a proposed rule that top agency official Cindy Mann said would outline the “rules of the road for eligibility and enrollment” for the program’s 2014 expansion under the health care overhaul law. Read the full post...