States probe HHS on partial Medicaid expansion options

Washington Several states are querying the federal government on how flexible they can be in tailoring eligibility levels to expand Medicaid starting in 2014, given that the full expansion is now optional under the U.S. Supreme Court’s ruling on the health system reform law.

New Mexico officials posed such questions to the U.S. Dept. of Health and Human Services in a recent letter. There are “a large number of unanswered questions surrounding the optional state expansion of Medicaid under the Affordable Care Act” in the wake of the high court’s decision, Sidonie Squier, secretary of the New Mexico Human Services Dept., wrote to HHS Secretary Kathleen Sebelius.

The ACA authorizes states to cover individuals up to 133% of the federal poverty line (an effective rate of 138% when certain income is disregarded) if it decides to expand its Medicaid program fully in 2014. For states that decide not to participate, those above 100% of poverty potentially still could qualify for federal subsidies to buy private coverage through the law’s health insurance exchanges.

In her letter, Squier asked what latitude the state would have in expanding Medicaid just to its poorest residents. Specifically, the state wants to know “what kind of flexibility would be available to establish eligibility up to 100% of [the federal poverty level] and place the remainder of the newly eligibles, from 101% to 138%, on the exchange,” said Matt Kennicott, communications director for the New Mexico Human Services Dept.

In the event the state is able to expand just up to 100% of poverty, “could we then pay for a portion of the premiums of the people between 101% and 138% who are on the exchange?” Kennicott asked. In her letter, Squier said this alternative would offer “more choices and more tailored coverage” to these populations.

Squier also asked HHS if the state could adjust its eligibility criteria or its benchmark plan — a choice that determines the minimum benefits package all exchange plans must cover — if the federal share of funding for the Medicaid expansion ever were reduced. She also wanted to know if the expansion had to be implemented all at once or if it could be phased in over time.

“We must thoroughly assess the fiscal implications of Medicaid expansion and consider them in terms of our ability to maintain current services for those New Mexicans most in need,” Squier wrote to Sebelius.

Indiana, meanwhile, is waiting to hear from HHS about a waiver that would allow its Healthy Indiana Plan to be used as the vehicle for a Medicaid expansion. The program covers low-income uninsured who can’t obtain employer-based insurance. It promotes cost-sharing by requiring monthly contributions from participants based on gross family income, and it places an emphasis on preventive care.

At this article’s deadline, the Centers for Medicare & Medicaid Services had approved a one-year extension of the Indiana program, but it had not responded to state inquiries about using HIP to serve beneficiaries who may be eligible for the Medicaid expansion in 2014, according to a statement from the state’s Family and Social Services Administration. Milliman Inc. has estimated that fully expanding Medicaid could cost the state more than $2 billion over seven years.

Indiana Gov. Mitch Daniels, a Republican whose term ends in January 2013, has indicated that any decisions on Medicaid expansion should wait until after the next governor is elected in November.

At its annual meeting in September, the Indiana State Medical Assn.’s House of Delegates approved a resolution to support Medicaid expansion in the state. The resolution has yet to be approved by the association’s board of trustees.

Anticipating that some states will choose not to expand Medicaid at all in 2014, federal actuaries are reporting that more people will remain uninsured after that year and will end up paying the health system reform law’s tax penalty for noncompliance with the individual coverage mandate. A new estimate from the Congressional Budget Office and the Joint Committee on Taxation concluded that nearly 6 million people who will be uninsured in 2016 will have to pay this penalty, 2 million more than what was projected in a 2010 estimate.