The fiscal cliff is looming and debates are raging about whether or not to tax the rich, but starting January 2013 individuals and couples with incomes over $200,000 and $250,000 respectively are going to have to pay more in taxes anyway. These new payroll taxes will help pay for the expansion of Medicaid starting in 2014, which is projected to newly insure about 16 million people and is one of the major foundations of the Affordable Care Act. But things aren’t that simple.
In June 2010 the Supreme Court upheld Medicaid expansion so that individuals making up to 133 percent of the federal poverty level (FPL) can qualify, but did not uphold he government’s right to enforce it. So some states are debating whether or not to expand Medicaid despite the fact that without it, millions of Americans will remain uninsured.
Today, Medicaid is known by most people as health insurance for the poor but it’s not that simple either. To qualify, your annual income must be below an amount set by the state (as low as 50 percent of the FPL which is $5,585 for one individual) and you must fall into one of the following categories: children, pregnant women, parents, the elderly, or people with disabilities. So, if you don’t have kids or if your kids are above the age of 19 you no longer qualify for these benefits despite your income. With the new Medicaid expansion, low-income adults without dependent children will qualify for Medicaid.
Before the Affordable Care Act, states had the option to help insure childless adults through a Medicaid waiver or a fully state-funded program. Only 24 states chose to do so, and Maryland is one of them. This lovely state has Primary Adult Care (PAC), which provides low-income adults with insurance through managed care organizations (MCOs). Most Medicaid works through MCOs and most MCOs work under a risk-based model, meaning they are paid a fixed monthly fee per person which pays for certain services. The MCOs differ in the services provided, what clinics and hospitals accept them and in quality of services. PAC only provides compensation for primary care but no speciality care. Plus with the new year, two MCOs – Maryland Physicians Care and Priority Partners (the two MCOs that work mostly with Johns Hopkins) – will be pulling out of PAC due to funding issues.
Fortunately, having PAC in the first place is going to save Maryland a lot of money. According to a report by the Hilltop Institute at UMBC, PAC will be absorbed into the expansion of Medicaid in 2014 and those individuals served may have more MCOs from which to choose. The state will save money mostly by spending less on uncompensated care. Other states that currently have a Medicaid waiver for childless adults are also expected to save money. As for the states that don’t have a program, their Medicaid spending will increase, but only by a projected .1-.3 percent since the federal government will pay for 100 percent of all newly enrolled individuals for the first three years and then at least 90 percent thereafter.
Without the Medicaid expansion, some of these individuals will receive subsidies to help pay for insurance through exchanges, but this will be more costly than Medicaid expansion for the federal government. Many in this group (people with incomes 100-133 percent of the FPL) are the most in need of care, especially those between the ages of 50-64. Also, there are still problems with access to care as shown by the waiver programs. Many people do not enrol in insurance because they do not know they are eligible or they do not know how. For the past two years states have been experimenting with ways to improve Medicaid and access to it through additional MCOs, better long-term care, and even something as simple as an online application.
States that do not participate in Medicaid expansion will be limiting the research to improve Medicaid, will have a huge population of uninsured individuals, and will not receive help in federal government funds to help pay for newly enrolled people in Medicaid (those newly enrolled due to the individual mandate). Hopefully certain state representatives can swallow their pride and accept that the Affordable Care Act is happening whether they like it or not.
