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Medicaid Expansion: Will Positive Outcomes Assure Future Viability?

The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.

By Suzanne Discenza
June 20, 2017

[This article is fifth and last in a series of monthly columns exploring the future of current and pending government-sponsored health care policies and programs.]

There is perhaps a case no more contentious in public administration of U.S. health care services than state implementation (or not) of Medicaid expansion for medically indigent and low income citizens. Originally envisioned as a mandate for all states as part of the Affordable Care Act of 2010 (ACA), the U.S. Supreme Court in 2012 moved to make this provision a state option. By January 2017, motivated by millions to billions of dollars in financial incentives, 32 states (including the District of Columbia) had adopted Medicaid expansion as outlined through federal guidelines. Following failure by the U.S. House of Representatives to repeal and replace key parts of the ACA in March 2017, a growing number of non-expansion states began to seriously reconsider expansion options.

Comparison of positive financial outcomes and increased health services coverage for U.S. citizens in states adopting Medicaid expansion, versus those in states that have not, also seemed to suggest that repeal of Medicaid expansion would become less likely. However, with passage of H.R. 1628 on May 4, 2017, an amended version of the American Health Care Act of 2017 (AHCA) was passed by the Republican majority in the U.S. House of Representatives and is currently being considered for passage by members of the U.S. Senate. Repeal and replacement of the ACA would, in effect, roll back the expansion of Medicaid in addition to many other health policies and programs.

Economic/Financial and Population Health Outcomes for States Expanding Medicaid

On February 22, 2017, the Kaiser Family Foundation (KFF) posted on its website its review of 108 studies, published between January 2014 and January 2017, on the impact on states of Medicaid expansion under the ACA. This report detailed largely positive economic impacts, despite Medicaid questionenrollment growth initially exceeding expectations. Most striking among these findings were 1) Medicaid expansions have resulted in significant reductions in uncompensated care for hospitals and clinics, and 2) several state specific studies (e.g., from Colorado and Kentucky) have documented significant job growth from expansion.

Similarly, the report demonstrated significant increases in health care affordability and financial stability for low income individuals added to the Medicaid rolls in expansion states. These benefits have included larger reductions in out-of-pocket medical spending and large declines in trouble paying bills in expansion states, with concomitant reduction in medical bankruptcies. Moreover, Medicaid expansion states have experienced large reductions in uninsured rates compared with non-expansion states.

Several studies collected by the Kaiser Family Foundation documented an array of positive population health outcomes. For example, several studies identified larger medical coverage gains in expansion states within specific vulnerable populations, including mothers, children, low-income workers, prescription drug users, early retirees and young adults, many of whom had previously gone uncovered. Many studies also found improvements in measures of self-reported health following Medicaid expansion, and one study documented provider reports of life-saving or life-changing treatments that newly eligible individuals could not have received prior to Medicaid expansion.

An Uncertain Outlook for Medicaid Expansion, the “State Waiver” Provision, and the Medicaid Program

Despite the many documented positive outcomes for both low income individuals and states, reported in such studies as outlined by Kaiser above, the future outlook for the continued viability of Medicaid expansion, or even for the state innovation waiver provision under the ACA, remains very uncertain indeed. As discussed in the April 20, 2017, column in this health policy series, “innovation waivers” allow states to modify their health care laws to meet the unique needs of their residents. As recently as March 13, 2017, the Trump administration urged the use by states of “innovation waivers under Obamacare,” and on March 15 top health officials from the U.S. Department of Health and Human Services “cosigned a letter to governors saying that they intended to work with states to improve Medicaid programs” serving low-income citizens. Yet the intent by Republican members of Congress to “repeal and replace” the ACA, stated to be necessary to meet campaign promises to their voter constituencies, would also mean dismantling of the waiver provision for states.

A report by the nonpartisan Congressional Budget Office issued on March 13, 2017, estimated an additional 24 million people would be uninsured by 2026 with passage of the AHCA, but the bill would also cut Medicaid in other significant ways. For example, according to Vox.com, the AHCA “introduces the option of states turning the money into a “block grant,” a lump sum rather than a per-person payment for each Medicaid patient, which would cut the program still further. The block grant would ease limitations on states’ ability to kick people off, charge premiums and cut benefits for children. States, whether they take a block grant, could also add a work requirement for nondisabled adults, further limiting access to the program.

Only time will tell what the future will hold for Medicaid expansion or the Medicaid program as we now know it. Crystal ball, anyone?

Author: Suzanne Discenza currently serves as a lecturer in the School of Public Affairs at the University of Colorado Denver and as an adjunct professor in Public Administration and Healthcare Management at Park University.  Former Director of the MHA Program at Park, she also serves on the ASPA National Council and as Past Chair of the Health Policy Forum of AUPHA.


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