1. Point-Counterpoint
State Medicaid Policy and Health Reform
Harold A. Pollack
University of Chicago
Authors:
Pollack, Harold A.1
Source:
Journal of Health Politics, Policy & Law; Feb2013, Vol. 38 Issue 1, p161-163, 3p

The article discusses the positive and negative implications of the new ruling that the federal government could not require states that receive federal funds under the Medicaid program to participate in the Patient Protection and Affordable Care Act's (PPACA's) Medicaid expansion. Several shortcomings like limited provider payment and associated patient access barriers have been observed in Medicaid that make its adoption not a good idea. However, families below the poverty line can benefit.
In July 2012, the Supreme Court upheld the constitutionality of the Patient
Protection and Affordable Care Act (PPACA). The Court thus ended one phase in the political and legal battle over health reform. Yet in doing so, it opened a new front. In a notable departure from post–New Deal commerce clause jurisprudence, the Court ruled that the federal government could not require states that receive federal funds under the Medicaid program to participate in the PPACA’s Medicaid expansion. In effect, the Court made states’ participation in the PPACA’s Medicaid expansion voluntary — a possibility that neither the act’s supporters nor its opponents seriously entertained during the long legislative battle of 2009 and 2010.
The full implications of these changes in federal-state relations remain to be seen. For states, the ruling brings both new flexibility and new accountability. Conservative legislators who have traditionally railed against Medicaid while accepting large subsidies will now have to actively accept or reject billions of dollars in federal resources made possible through this program. For the federal government, the ruling brings new uncertainties and complication, as states decide whether and when to participate in the PPACA’s Medicaid expansion. For millions of citizens, this decision likely delays the path to near-universal coverage envisioned under the new law. This issue’s Point-Counterpoint essays underscore the difference in perspective among informed participants regarding what may be the most complex and contested measure in the history of American social policy.

Austin Frakt and Aaron Carroll note that states have powerful reasons to participate in the PPACA’s Medicaid expansion. Under current law, the federal government will initially finance 100 percent of the costs of coverage for newly eligible Medicaid recipients. That federal support will taper off to 90 percent by 2020 and in subsequent years. This is still a tremendous fiscal opportunity for states, localities, safety-net providers, and for an estimated sixteen million otherwise-uninsured individuals who would be covered by Medicaid under the new law. Frakt and Carroll emphasize recent findings that the public health impact of the PPACA’s Medicaid expansion could be substantial. As a matter of policy substance, then, Frakt and Carroll make a strong case that states should — and eventually will — participate in the PPACA’s Medicaid expansion. Their arguments bear similarity to the early days of Medicare and Medicaid, in which providers and conservative state governments bitterly opposed key aspects of these programs, yet eventually found the financial inducements too lucrative to pass up. In the counterpoint, Joseph Antos offers several critiques of Frakt and Carroll’s analysis. He notes important shortcomings in Medicaid, such as limited provider payment and associated patient access barriers.

To my eye, Antos’s most intriguing comments concern the complicated strategic choices states will now face regarding the new law. States have strong incentives to at least delay implementation until after the 2012 election. If Governor Romney wins, the PPACA will be drastically altered. If President Obama is reelected, the Supreme Court decision may still provide states with new leverage to strike better deals with the federal government. Whereas Frakt and Carroll emphasize the generous financial terms states are slated to receive, Antos notes that future congresses and presidential administrations might shift greater burdens on states. States already face significant fiscal challenges arising from Medicaid and public employee retirement benefits. Governors may regard the PPACA as creating other immediate — if admittedly limited — costs and long-term fiscal risks. More to the point, states may have new opportunities for bargaining or for modified Medicaid policies that were not envisioned by the framers of health reform. For example, states might expand Medicaid to 100 percent (rather than 133 percent) of the federal poverty line and then seek to enroll eligible individuals and families above this income threshold into the new health insurance exchanges. This policy would reduce state Medicaid enrollment and would require low-income individuals to pay (modest) premiums for an exchange plan. Although such a policy would increase federal expenditures, along with increased out-of- pocket costs for near-poor households, it potentially offers certain advantages, too. If provider reimbursement rates prove higher within the new exchanges than in Medicaid, patients may have access to a broader set of specialty services.

The current moment — I write this on August 1, 2012 — encourages observers of health policy to view state-federal burden-sharing through a partisan-political lens. The PPACA is most emphatically resisted by conservative Republican governors. Yet in the long run, efforts by states to shift burdens onto the federal government could serve liberal ends, as well. Meanwhile, proposed federal policy changes such as the bloc granting of Medicaid embraced by opponents of the new law are likely to impose major costs and risks on states and local government. Individuals and families with incomes below the poverty line may be well served by Medicaid, which is linked to important social services and which is specifically designed for people with little or no financial resources. Private plans available to low-income people often display shortcomings commonly associated with Medicaid. It remains unclear that health insurance exchanges would serve this population well. Yet the situation may be different for families with slightly higher incomes. Many health reform advocates would welcome greater participation among near-poor recipients in health insurance exchanges. The politics of federal budget policy constrained these possibilities. By weakening federal power to compel states through Medicaid, a surprise Supreme Court ruling further complicates and delays an already-troubled implementation of health reform. Yet the decision may also open new channels of federal financing and ultimate influence unforeseen during the long legislative debate that resulted in health reform.

2. The Medicaid Expansion Is Not Such a Good Deal for States or the Poor.

Authors:
Antos, Joseph1
Source:
Journal of Health Politics, Policy & Law; Feb2013, Vol. 38 Issue 1, p179-186, 8p

In the wake of the Supreme Court decision, states should not rush to expand eligibility for Medicaid. They cannot be certain that the federal support promised in the Patient Protection and Affordable Care Act will remain available, and a better deal might be possible after the election. Adding millions more to Medicaid rolls will exacerbate existing problems of access to providers. A more humane policy would give everyone - even the poor - a choice of health plans

The Patient Protection and Affordable Care Act (PPACA) requires states to expand Medicaid coverage to everyone with incomes up to 138 percent of the poverty line. Although advocates like to point to the generous financial terms offered to the states, including full federal funding for the first three years, the real incentive was the threat that a noncompliant state would lose all federal funding for Medicaid. The Supreme Court found this to be coercive and unconstitutional. As a result, each state has a decision to make about whether, and how much, to expand eligibility for Medicaid.
The right decision depends on numerous factors that are unique to each state and on federal policies that will not be clarified soon. Increased state budget costs must be balanced against the potential gain of new funds for inner-city hospitals and safety net providers. Such calculations cannot be made with any confidence now because rules controlling what states must do to receive federal funds have not been written and might well be changed next year, regardless of who is elected president. Even if Barack
Obama is elected for a second term, there is considerable uncertainty about whether the deal struck in 2010 can be maintained in future years.
Laws can be changed, and increasing budget pressures at the federal level could translate into a cost shift to the states.
Even when these accounting calculations can be made more precisely, they do not address more fundamental policy questions. Will expanding eligibility create crowd-out, further reducing the already limited access to health care providers willing to take Medicaid patients? Is there a bright line dividing people who get a choice of health plans from those whose incomes are too low to warrant an option other than Medicaid? Could the money targeted for expanding health coverage be better spent elsewhere to help improve the lives and futures of the poor?
What Is the State’s Best Deal?
As a state governor, would you rather give people good insurance without spending state funds or less-good insurance for which you eventually have to pay ten cents on the dollar? If you choose the latter, you stand a good chance of being thrown out of office in the next election.
Inconsistencies in the PPACA and the Supreme Court decision making the Medicaid expansion voluntary create a political windfall for states looking to give their citizens something for nothing (or at least with the cost hidden from view, which is just as good). Now states can decide for themselves whether to expand their Medicaid programs without the potential loss of billions in federal support. Although the lure of full funding for newly eligible enrollees will continue for the first three years, eventually states will be responsible for 10 percent of the cost of services and will also have to cover one-half of all additional administrative costs.
For states facing serious financial difficulties, that does not look like free money. State budgets are in crisis, primarily because of escalating
Medicaid and other health care costs, underfunded public employee pensions, lagging revenues during the recession, and an anemic recovery
(State Budget Crisis Task Force 2012). Governor Mitch Daniels of Indiana pointed out that the full Medicaid expansion would cost his state $2 billion over ten years, and other governors have expressed similar concerns
(Pear 2012). With the Court’s decision, there are new options. Even states that favor expanding Medicaid are likely to think twice before proceeding.
Austin Frakt and Aaron Carroll argue that states should fully expand
Medicaid eligibility because the PPACA offers them a good deal. They show that even the states indicating they will not expand Medicaid would spend less than half of 1 percent of their gross state product to cover everyone to 138 percent of poverty through Medicaid, while the federal contribution would be many times that. That may be true, but that does not make the expansion free.
A state wishing to take full advantage of the PPACA under the terms set by the Supreme Court would make Medicaid available to anyone with an income up to the poverty level. Above that income, the state would direct individuals to subsidized coverage in the exchange, which is fully covered by the federal government. Persons with incomes between 100 and 138 percent of poverty would pay an insurance premium equal to 2 percent of their income and would be liable for cost sharing limited to 6 percent of the actuarial value of the plan. Coverage worth $5,200 (Congressional
Budget Office [CBO] 2009) would likely cost less than $375 in 2016. That makes affordable insurance available to everyone up to 138 percent of the poverty level with the smallest possible cost to the state.
Such a policy is the least complicated way to fully expand insurance coverage while serving the interests of state taxpayers. It also serves the interests of the state’s health care providers, who would receive substantially higher payments from private insurers than from the Medicaid program.
Medicaid pays on average about 66 percent of the rates paid by private insurers for inpatient hospital services and about 58 percent for physician services (Shatto and Clemens 2012). Frakt and Carroll are correct that hospitals and other provider groups will likely apply considerable pressure on states to expand Medicaid coverage, but only up to the poverty level. After that, providers would prefer the higher payments without
Medicaid’s legendary hassle that has discouraged many from participating in that program (Cunningham and O’Malley 2009).
This may not be the best alternative open to states struggling with their budgets that would like to adopt policies to reduce Medicaid spending but cannot because of federal rules. Some states may decide that they should find ways to pay for old benefits, including their employees’ pension plans, before taking on new responsibilities. Even states that do not expand Medicaid eligibility will see a significant increase in subsidized coverage among low-income persons through the insurance exchanges.
Frakt and Carroll raise the concern that the political battle over whether to expand Medicaid eligibility places “the poorest of the poor — those with incomes below 100 percent of the [federal poverty level]” at greatest risk of not having access to affordable insurance. That is a serious issue, but it could have been avoided. If there is a gap in coverage for people below the poverty level, it is at least partly due to the PPACA itself, which creates generous subsidies for private insurance for some but not others.
182 Journal of Health Politics, Policy and Law
The shrewdest move may be to wait until next year and negotiate a better deal than the federal government will offer this year. The Centers for Medicare and Medicaid Services (CMS) has stated that there is no deadline for a state to tell the agency its plans for a Medicaid expansion, and states that have received funds for implementation will not have to pay them back if they do not expand the program (Tavenner 2012). That is as much flexibility as one could expect from CMS before the election.
If Obama gets a second term, CMS may be willing to consider state initiatives that are off the table for now.
Republican governors from Nebraska, Tennessee, Utah, Virginia, and
Wyoming have indicated that they would expand Medicaid coverage if they were given more flexibility in running their programs (Cheney
2012). These governors would move Medicaid to a block grant and replace thousands of pages of regulatory micromanagement with clear objectives agreed to by both the federal government and the states. The head of the
Texas Human Services Commission pointed out that allowing states to manage for results would make better use of Medicaid dollars and support local solutions to local problems (Suehs 2012).
Perhaps the best reason for states to hold back is the uncertainty associated with the election, the economy, and the federal budget. If Mitt Romney is elected, there will be new opportunities for state Medicaid innovation.
Even if Obama remains in office, double-dip recession or tough policies to reduce federal spending as part of a new deal to increase the federal debt ceiling would also change the terms that the PPACA offered the states (Aizenman 2012). Under those circumstances, even the most earnest supporters of a Medicaid expansion would be forced to reconsider.
Is Medicaid Up to the Task?
Frakt and Carroll take umbrage at the assertion by my colleague Scott
Gottlieb (2011) that for some patients, no coverage is better for their health than Medicaid. With apologies to the physicians involved in this dispute, sometimes any coverage is worse than none.
Health insurance gives people a sense of entitlement to clinical investigation and treatment when, in some or perhaps many cases, the patient would be better off without medical intervention. Payment incentives drive up the volume of services even when the value of those services is questionable. Preventive measures that do not involve paying anyone, such as changing your diet or taking a walk, and watchful waiting when early signs of disease appear may often be the best approach (Landers 2008).
Antos n Point-Counterpoint
183
A more relevant issue is how access to necessary care will change when Medicaid is significantly expanded. Rosenbaum (2011) points out that poor Americans have faced “a substantial vacuum in actual access to health care” despite Medicaid’s coverage guarantee. A major cause of that access problem is the low rates of participation in Medicaid among health care providers, which is the direct result of low payment rates and overly burdensome administrative practices that delay payment and add to the headaches of dealing with a state bureaucracy.
Putting millions of additional people into a program that has been struggling with access to care for the past forty-five years is likely to result in worsening access for those who are currently enrolled in Medicaid.
Cunningham (2006) finds that Medicaid beneficiaries have between 50 and 100 percent greater use of hospital emergency rooms. Higher use in general is fostered by imposing few or no cost-sharing requirements on beneficiaries. Higher use of emergency rooms is due in part to a lack of access to office-based physicians. The PPACA took some note of this ongoing access problem. The new law significantly increases funding for community health centers, reflecting a realization that expanded Medicaid coverage alone does not ensure access to care — particularly for the poor. In addition, Medicaid payments for primary care services furnished by primary care physicians will increase to 100 percent of the Medicare rate in 2013 and 2014, with the federal government paying the additional cost. Jost (2012) observes that “state Medicaid payments to primary care physicians [in 2008] averaged
2/3 of Medicare rates, with some states paying as little as 36 percent of Medicare rates.”
This is undoubtedly true, but the relevant comparison is with private rates. According to the CMS actuary (Shatto and Clemens 2012), Medicaid payment rates nationally will increase to 77 percent of private rates in
2014 before dropping back to 58 percent. That may have been a nice gesture that scored political points when trying to enact the PPACA, but short-term pay increases of that magnitude will not make Medicaid attractive to physicians and will not attract physicians to low-income neighborhoods. A 2008 survey of physicians (Boukus, Cassil, and O’Malley 2009) gives a sense of how difficult it is likely to be for new Medicaid enrollees to see the doctor. Most physicians will accept all or most new patients with private insurance (86.6 percent), and many will accept those with
Medicare (74.1 percent), but only about half will accept new patients on
Medicaid (52.6 percent). Specialists in family practice (54.4 percent) and internal medicine (40.0 percent) are much more likely to refuse to see
184 Journal of Health Politics, Policy and Law new Medicaid patients than those with private coverage (5.2 percent/4.7 percent) or Medicare (13.6 percent/9.5 percent).
Frakt and Carroll state that “the Medicaid expansion will make a large dent in [the] health care access problem by insuring millions of those currently uninsured.” They may become insured, but they will step to the back of an already lengthy line waiting to see a physician and will make the hospital emergency room even more crowded.
Could the Money Be Better Spent?
The federal government will spend $642 billion to expand coverage under
Medicaid and the Children’s Health Insurance Program (CHIP) between
2012 and 2022 (CBO 2012). Are we likely to get the best value for our money — and for low-income people, the intended beneficiaries? Could those funds be put to better use?
One way to answer that question is to put the Medicaid expansion to the market test: give everyone a choice of private insurance or Medicaid and let them decide for themselves how they wish to spend the subsidy and, potentially, some of their own money. The PPACA expanded Medicaid to everyone with incomes up to 138 percent of the poverty level without giving them the option to buy private coverage. Under the Supreme
Court decision, some states will reverse the restriction by not expanding
Medicaid above the poverty line. Since there is no perceptible difference between people at 138 percent and 139 percent of poverty, or those between 99 percent and 100 percent, there is no reason to restrict their choices — as long as the subsidy received by an individual remains constant regardless of the plan selected.
Some may fear adverse selection, with sicker (and more expensive) people sorting into one type of plan rather than another. That is possible, but those same people with those same costs would be herded into Medicaid under the no-choice alternative. Hence choice does not impose a financial risk on either level of government if the state decides to expand Medicaid eligibility. The problem with offering a fair choice to everyone, regardless of income, is that the PPACA does not provide choice-neutral subsidies. That is no accident. Mandating states to expand Medicaid to people who do not consider themselves poor — because they are not — lowers the cost of universal coverage, at least in terms of the CBO score. Instead of giving lower-income people higher subsidies, the act gives lower subsidies tied to poorer access to care.
Antos n Point-Counterpoint
185
Without the mandate, some states will not fully expand Medicaid coverage as the PPACA originally intended. The CBO assumed that 6 million fewer people would be covered by Medicaid, but half of those would receive subsidized coverage through the exchanges. As a result, CBO lowered its budget estimate even though the exchange subsidy is assumed to cost $3,000 more than the federal subsidy for Medicaid (CBO 2012).
Is a massive expansion of federal health spending really the best way to help low-income people? Health care is important, but for many poor families it is a distant second to putting food on the table and seeing the kids get a decent education. Some of the trillions of dollars channeled to health care under the Affordable Care Act could be profitably directed to investments that promote a sound economy and a brighter future. That is something too often overlooked in the health policy debate.

3. Rounding up support.
Authors:
Daly, Rich
Source:
Modern Healthcare; 1/28/2013, Vol. 43 Issue 4, p8-9, 2p
Abstract:
The article discusses the expansion of Medicaid scheduled for 2014 in the U.S. under the Patient Protection and Affordable Care Act. It notes that the law's central pillar is the eligibility of residents with family incomes of up to 138% of the federal poverty level. According to Bruce Rueben of the Florida Hospital Association, they are talking to the business community about the support for the expansion of coverage.
Medicaid expansion advocates look to business
Expanding Medicaid remains a hard sell in most states. Hospitals and patient advocates are finding they can do it with the right friends and if they show jittery lawmakers how to do it without growing an already crushing fiscal burden.
State legislatures this month are beginning the sessions that will determine whether they go along with the historic expansion of Medicaid scheduled for 2014 under the Patient Protection and Affordable Care Act.
Raising eligibility to all legal residents with family incomes of up to 138% of the federal poverty level was a central pillar of the law and is expected to add 7 million beneficiaries next year. But the U.S. Supreme Court, set off a state-by-state scrum over expansion when it eliminated penalties on states that don't expand as part of its June 2012 decision upholding the law.
Provider and patient advocates in many states have joined with insurers and union groups to prod political leaders toward expansion. But the recruitment of business groups to the cause has proved critical in many Republican-led states.
"Having that natural ally emerge out of years of working closely with the business community has helped greatly in our efforts" to expand Medicaid, said Pete Wertheim, a spokesman for the Arizona Hospital and Healthcare Association.
Arizona is one of four states with Republican governors who have decided in recent weeks to support growing their Medicaid programs, despite their continued opposition to the underlying federal law that authorized the expansion. Arizona Gov. Jan Brewer's support coincided with the state Chamber of Commerce's move to back the expansion, Wertheim said.
Medicaid advocates in other states have taken note and are pouring energy into corralling support from business leaders.
For instance, the board of directors of the Florida Chamber of Commerce is expected to consider this week whether to back a Medicaid expansion in that state, said Bruce Rueben, president of the Florida Hospital Association.
"Certainly, we are talking to the business community about why it is in the best interests of Florida's business community to support the expansion of coverage," Rueben said. "Obviously, the business community has strong support from Florida's Legislature."
Similar efforts are under way in Texas and Ohio, two other large Republican-led states seen as Medicaid bellwethers. Medicaid advocates in both states have been celebrating recent public endorsements from local Chambers of Commerce, but so far have failed to garner support from their statewide business groups.
But policy experts caution that even when broad coalitions have succeeded in convincing governors to pursue an expansion, an extensive amount of advocacy work remains.
"That's just the governor--you're still going to need to get the legislature to do this," said Matt Salo, executive director of the National Association of Medicaid Directors.
Supporters of the expansion also are making inroads by showing lawmakers where to find the money.
Medicaid advocates emphasize that the federal government would cover most of the tab--including 100% of the cost of newly eligible enrollees for the first three years--although policy experts have identified additional costs states will incur.
For example, a November 2012 analysis by the Kaiser Commission on Medicaid and the Uninsured concluded that if all states undertook the expansion, it would cost them a total of $76 billion from 2013 to 2022. It could be less, the commission noted, because of offsetting reductions in spending in other areas, increased tax revenue or other factors.
"We're not saying you won't have to put more money in your Medicaid budget," said Kathleen Stoll, director of health at Families USA, a liberal patient advocacy group based in Washington.
State fiscal officers, who cannot include hoped-for savings in their budget blueprints, have begun searching for ways to cover the certain expenses the state will face in the next fiscal year.
Medicaid advocates have tried to help find those "payfors." For example, they have suggested a range of new taxes to cover the state share, including cigarette, alcohol and luxury taxes. Two other expansion ideas that could impact hospitals are cuts in state subsidies for uncompensated care and increased provider taxes.
Hospitals in Arizona backed Brewer's proposal for a new provider assessment that would collect $154 million, or the entire first-year state share of the cost of expansion.
However, the long-term viability of provider taxes as a funding stream is "definitely a concern," said Wertheim, of the state hospital group, because the Obama administration and Congress have repeatedly proposed slashing or eliminating such taxes, which draw additional federal matching funds. Many federal officials have criticized the taxes as a "scam."
Meanwhile, the CMS recently introduced the option of offsetting Medicaid costs with higher cost-sharing for some beneficiaries. That flexibility was tucked into a series of proposed Affordable Care Act regulations issued Jan. 14.
"We've heard a lot of governors say, 'We want this to look like private coverage, we want people to contribute,'" said Judy Solomon, vice president for health policy at the liberal Center on Budget and Policy Priorities. "So the regulation basically says, 'Here it is, here's how you can do that.'"
But critics dismissed the option as unreliable. During the budget fights over the past year, President Barack Obama has proposed cutting the amount of the federal Medicaid funding match, which some see as evidence that the federal government could trim its commitment at any moment.
"These are pretty transparent and temporary efforts to induce states to bail out the federal government and do the heavy lifting that the federal government wants them to do," said Michael Cannon, director of health policy studies at the libertarian CATO Institute. "There is nothing permanent about these offers of flexibility because(the) federal government could revoke them all tomorrow, especially when they are done administratively instead of through statute."
Dr. Brent Sherard, left, spokesman for the Wyoming Integrated Care Network, speaks Jan. 22 in favor of expanding the federal Medicaid system. AP PHOTO
~~~~~~~~
By Rich Daly
4. 'Tearing their hair out' Delays on federal details leave states ill-prepared to open exchanges. (cover story)
Authors:
Daly, Rich
Source:
Modern Healthcare; 1/21/2013, Vol. 43 Issue 3, p6-7, 2p
Abstract:
The article reports on the delay in the release of federal information which states the need for launching their insurance marketplaces. States are anticipating a rush following U.S. Department of Health and Human Services (HHS) Secretary Kathleen Sebelius' publicity campaign to notify uninsured Americans that they would soon qualify for affordable, quality healthcare coverage. Uninsured Americans will also receive coverage through expanded state Mediacaid programs.

Delays on federal details leave states ill-prepared to open exchanges
Stomachs churned across the country last week after HHS Secretary Kathleen Sebelius unleashed a massive publicity push to notify millions of uninsured Americans that they would soon qualify for "affordable, quality healthcare coverage." There's little evidence to suggest states will be ready to open the insurance exchanges needed to meet the anticipated rush.
"They are tearing their hair out," said one health insurance exchange consultant about officials in states awaiting the long-delayed federal information needed for launching their insurance marketplaces.
The publicity campaign, which included a redesigned enrollment information website and a multimedia promotion effort, is the latest sign that the major coverage expansion at the heart of the Patient Protection and Affordable Care Act is fast approaching. It is ramping up pressure on states that are either planning or contemplating to launch health insurance exchanges.
Those exchanges are at the heart of state and federal efforts to offer affordable health insurance plans to more than half the estimated 16 million previously uninsured Americans expected to take advantage of the law in its first year. The remainder will receive coverage through expanded state Medicaid programs--at least in those states that choose to accept federal funding for the effort (See story, p. 7).
The tightening time frame for building the exchanges has brought into sharper focus myriad questions the federal government still hasn't answered and the logistical challenges inherent to such a historic expansion of private insurance coverage.
"Imagine just a million people who have never filled out those kinds of forms before and don't know how to shop and haven't gone through open enrollment once a year for their entire adult lives," said Jordan Battani, a managing director at Computer Sciences Corp., which is providing consulting services to states on the startup of exchanges. "They're all hitting the water at the same time on Oct. 1 trying to use these systems. It's hard to imagine how this could happen on time."
Top insurance industry executives agree the states face daunting odds in meeting the ACA's deadlines. The ability of federal and state health insurance exchanges to begin enrolling millions of consumers in nine months "seems challenging," Stephen Hemsley, CEO of UnitedHealth Group, told stock analysts last week.
The pressure has spawned repeated speculation that various exchange-related regulatory deadlines will be delayed. Last week, rumors swept the country that the Feb. 15 deadline for states to submit partnership exchange applications had been extended. States have the option of forging a partnership with the federal government or neighboring states.
Federal officials moved quickly to quash the rumors. "We've been getting lots of questions about this.… There have been absolutely no changes in policy," Amanda Cowley, acting director of state health exchanges at HHS, told state health officials in an e-mail.
But misunderstandings abound, especially in states that are moving in opposite directions on exchanges and Medicaid expansion. Last June, the U.S. Supreme Court gave a green light to the exchanges by upholding the law's individual mandate, but gave states the right to opt out of the Medicaid expansion.
For instance, Mississippi Insurance Commissioner Mike Chaney applied to launch a state-run exchange against the wishes of the state's Republican leadership. He told the governor and state legislators that the state-run exchange will be needed to keep the federal government from forcing unwanted growth in the state's Medicaid program.
"A federally facilitated exchange will increase the federal government's involvement in Medicaid eligibility," he told Modern Healthcare in an e-mail. "And while they cannot expand Medicaid under PPACA, they could use new Medicaid eligibility and enrollment rules to increase current Medicaid rolls."
A CMS official said the federal government does not have the authority to grow a state's Medicaid rolls against its wishes.
Such types of misunderstandings followed HHS' decision to withhold most details about how they plan to run the federally operated exchange, which will cover every state that does not operate either its own exchange or one in partnership with the federal government. "A lot is riding … on the federal government getting the federal exchange up and running, but I wouldn't bet against the feds on this," said Heather Howard, director of the State Health Reform Assistance Network, a pro-reform advocacy group. "They have a lot of experience in building systems."
State officials hoping to meet the Feb. 15 deadline for state exchange plan--and even those hoping for a deadline extension--have continued to plead for details on the federal version. But even without details of the federal exchange, other long-overdue federal actions are needed to provide certainty in key areas, according to health industry officials and policy experts.
One of the elements needed for the operation of both federal and state exchanges as well as expanded state Medicaid programs is an operational federal data hub to help determine eligibility for enrollment and subsidies. The digital link will provide real-time access to the databases of seven federal departments and agencies to verify a range of details, including the incomes and citizenship status of 7 million Medicaid and Children's Health Insurance Program applicants and 9 million exchange applications expected to begin arriving Oct. 1.
"We've heard a lot of questions as to whether or not the federal data hub would be ready on time," said Cheryl Smith, a director at Leavitt Partners, which provides exchange expertise to a range of states.
The hub's data is also critical for applicants, since they will need to know if they qualify for exchange subsidies or if their income falls below the income threshold that exempts them from new federal tax penalties for failing to carry qualified coverage next year.
States and insurers also need final versions of proposed federal rules governing crucial components of the exchanges, such as the essential health-benefits package. It's making life difficult for firms, since insurance companies typically need about 18 months to develop new plans, according to Robert Zirkelbach, press secretary for America's Health Insurance Plans, the industry trade group. "Health plans are starting, but some of the final rules and regulations are still outstanding," he said.
Last week, major insurers such as UnitedHealth, Aetna and Humana said their exchange offerings for the individual and small-business market would probably be limited to about half or fewer of the states.
The insurers and state-run health exchanges are awaiting long-delayed technical specifications from HHS for how their information systems are supposed to connect with the federal data systems, Computer Sciences' Battani said. Such details are critical if the millions of applicants are to get a Travelocity-like enrollment experience that provides real-time feedback, instead of the weekslong paper application processes that still characterize many state health programs. "If the will is there to do it, it won't be pretty but you could do it without some of the automation," Battani said. But "it would be a mess."
TAKEAWAY: State officials are still waiting on the federal government to provide guidance for setting up insurance exchanges, which are due to begin operations on Oct. 1.
STATE OF EXCHANGES
Twenty-five states chose not to set up their own health insurance exchanges this year, meaning HHS will operate the insurance marketplaces in 2014, though states may opt to partner with the feds by Feb. 15

5. CMS proposes rule to streamline eligibility for Medicaid, CHIP. Detail Only Available
Source:
Mental Health Weekly; 1/21/2013, Vol. 23 Issue 3, p7-8, 2p
The article discusses a rule proposed by the U.S. Centers for Medicare & Medicaid Services (CMS) on January 14, 2013 to strengthen and streamline eligibility categories for Medicaid, the Children's Health Insurance Program (CHIP) and the health insurance industry. The proposed rule offers further guidance to assist states with implementing the Affordable Care Act's (ACA) plan for achieving a simple, streamlined system of affordable healthcare for almost all citizens.

6. Medicaid, health care issues top 2013 legislative agenda.
Source:
Mental Health Weekly; 1/21/2013, Vol. 23 Issue 3, p7-7, 1/2p
Abstract:
The article discusses the results of a survey of U.S. state legislative fiscal officers by the National Conference of State Legislatures (NCSL) entitled, "NCSL Fiscal Brief: Top Fiscal Issues for 2013 Legislative Sessions." The report notes that at least 34 states are expecting to deal with rising costs and the implementation of the Affordable Care Act (ACA). The survey pointed out federal deficit reduction as the potential leading issue in 11 states and the District of Columbia.
-------------------------------------------------
7. Sound Policy Trumps Politics: States Should Expand Medicaid.
Authors:
Frakt, Austin B.1
Carroll, Aaron E.2
Source:
Journal of Health Politics, Policy & Law; Feb2013, Vol. 38 Issue 1, p165-178, 14p, 1 Chart
By virtue of the Supreme Court's decision on the constitutionality of the Patient Protection and Affordable Care Act, states may reject the law's expansion of Medicaid without losing all Medicaid funding from the federal government. The Court's ruling potentially permits a range of Medicaid options for states, including some that may be very attractive from state officials' political perspectives. In the context of the presidential campaign, the uncompensated care problem, and their concerns about costs of expansion, state officials are weighing their options, and some have already pledged to opt out of expansion. We argue that despite the politics, expansion is in fact good for patients, providers, and taxpayers, and states should therefore comply. [ABSTRACT FROM AUTHOR]

On June 28, 2012, the U.S. Supreme Court upheld the constitutionality of the Patient Protection and Affordable Care Act (PPACA) with one exception: the Medicaid expansion could not proceed as dictated in the law
(National Federation of Independent Business v. Sebelius, 567 US ___
[2012]). As originally written, the statute offered states a binary choice: expand Medicaid to all individuals with incomes below 138 percent of the federal poverty level (FPL) in 2014 or forgo all Medicaid funding from the federal government,1 both the generous funding for the expansion and the relatively less generous funding for the current program. The Court considered this choice unconstitutionally coercive and ruled that states need not give up federal funding for their current Medicaid program if they decline it for the expansion (Landers 2012). The ruling potentially permits a range of Medicaid options for states, including some that may be very attractive from a state perspective but far less so for the uninsured, providers, or, more broadly, federal taxpayers, as we discuss below.
The Medicaid expansion became an issue before the Supreme Court by virtue of a suit brought by twenty-six states. They argued that the expansion was an overreach by the federal government, effectively altering the state-federal contract that governs the Medicaid program and placing a large new burden on state budgets. By tying federal support for existing
Medicaid programs to the adoption of the full expansion, states argued that that the federal government was unconstitutionally forcing them to accept costs they could not afford. The Court agreed.
States have two separate concerns about Medicaid costs. The first is the cost of the expansion itself, though none of that would be borne by states until 2017, and only 10 percent would be the states’ burdens from 2020 on. The second is the cost of providing Medicaid coverage to individuals currently eligible for the program but not enrolled. Of course, this is a potential liability of Medicaid programs today even without the PPACA, and it continues to be so despite the Court’s ruling on the expansion. The individual mandate, facilitated enrollment through state exchanges, and outreach and marketing conducted at the federal, state, and local levels with respect to the new law make it more likely that these people will come “out of the woodwork” (Rovner 2012). None of these things were altered by the Supreme Court’s ruling.
In light of these cost concerns and the Court’s ruling, states are weighing their options on Medicaid programs. Though states’ decisions are fluid, as of this writing and according to the Advisory Board (2012),
Republican governors of six states have declared that they will not expand their Medicaid programs; further, governors in five other states (again all
Republican) are inclined to not do so (see table 1 for a list of “opt-out” and “leaning opt-out” states). What remains true, however, is that these deliberations take place in the context of challenges that the Medicaid expansion — and the PPACA’s coverage expansion more broadly — was intended to address. Among those targeted by the expansion (adults with incomes below 138 percent of the FPL), 44 percent are uninsured, which has health and financial implications for this population and is also problematic for the health system (see Kaiser Family Foundation [2011]).
Uncompensated care is straining hospitals (Kirchgaessner 2012), a problem that will get worse without Medicaid expansion, because additional federal payments to hospitals that provide a disproportionate amount of care to low-income individuals (disproportionate share hospital [DSH] payments) will be reduced under the PPACA (Blewett 2012).
States’ considerations about how to handle Medicaid, as well as the suit brought before the Supreme Court, also take place in the context of the upcoming presidential election. Both in the campaign and more generally, health care remains a politically charged subject, making it hard to parse rhetoric about the expansion as principled statements of preferred policy versus political jockeying. In the near term, much of the discourse is likely the latter.
Aside from the politics, the Medicaid expansion is good policy. It is good for patients who would otherwise be uninsured, for providers who would otherwise face more uncompensated care, for states that struggle to pay for that care, and for taxpayers in the sense that it is a relatively inexpensive way to expand coverage and address those other issues. We therefore argue that states should accept the expansion as designated in the law.
The Imperfect Is Far Better Than Nothing
Let us acknowledge that Medicaid, even as reformed by the PPACA, is not perfect. As many have pointed out, the program underreimburses for its services. Some have complained, rightly, that too few physicians are willing to accept new Medicaid patients. Medicaid has also been the victim of significant fraud in the recent past, which makes it an easy target for those who want to demonize government involvement in health insurance.
Nevertheless, Medicaid addresses some important problems in a reasonably parsimonious way.
Medicaid Is Good for Health
A particularly troubling assertion is that Medicaid is bad for health
(Gottlieb 2011). If this were true, expanding the program would be foolish, harming patients while expending resources. But the assertion is false, born of a faulty reading of literature that demonstrates an association of
Medicaid with poor health, relative to that of the uninsured (Gaglia et al. 2011; LaPar et al. 2010). Such studies do not completely control for confounders that affect both Medicaid enrollment and health outcomes.
Omitted variable or selection bias inevitably remains, calling into question any causal inference that Medicaid is harmful. Medicaid is, in fact, good for health (Frakt et al. 2011; Sommers, Baicker, and Epstein 2012).
Careful studies that apply statistical methods to account for individuals’ self-selection into Medicaid show this (Bhattacharya, Goldman, and Sood
2003; Currie and Gruber 1996; Busch and Duchovny 2005; Goldman et al. 2001).
Moreover, initial findings from the ongoing randomized controlled trial of Oregon’s 2008 Medicaid expansion corroborate these results. With a policy design nearly perfect for studying the effect of Medicaid on health,
Oregon used a lottery to expand its Medicaid program to ten thousand individuals in 2008. Because of budget limitations, another eighty thousand who entered the lottery were not offered coverage. Baicker and
Finkelstein (2011), part of a team of researchers continuing to study the result of this randomized experiment, report that relative to those not enrolled in Medicaid, those who did enroll were far more likely to have a usual source of care; to receive preventative care; to be in good, very good, or excellent health (self-reported); and to be less likely to screen positive for depression. Moreover, they were far less likely to need to borrow money or to have unpaid medical bills.
Medicaid is thus good for physical and mental health, and it offers financial protection to a population particularly vulnerable to the cost of care. These facts alone should give states ample reason to at least consider an expansion of the program.
The Health Care Access Problems Medicaid
Addresses Are Real and Large
Another faulty line of argument is that Medicaid is unnecessary because everyone has access to medical care under the Emergency Medical
Treatment and Active Labor Act (EMTALA). A related and even worse line of argument is that EMTALA provides such access for free. Neither assertion is accurate (Pollack 2011). EMTALA specifically refers to conditions such as active labor or an acute problem that would lead to death, serious harm to bodily organs, or serious impairment of bodily functions if not immediately treated (Center for Medicare and Medicaid Services
2012). Any other types of care, which comprise the vast majority of health care, are not guaranteed in an emergency room, nor could they be provided.
Moreover, nothing in the law stipulates that emergency care is free.
Recently the news has been littered with stories of hospitals aggressively collecting payment from patients, no matter how little money they have
(Silver-Greenberg
2012).
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The Medicaid expansion will make a large dent in this health care access problem by insuring millions of those currently uninsured. Table
1 lists the uninsurance rate for the expansion’s target population for those states whose governors have already said they will not expand the program or are leaning against doing so. Uninsurance rates are very high in these opt-out or leaning opt-out states: above the national average for the target population of 44 percent in all but three of them. According to
Congressional Budget Office (CBO 2012) estimates, Medicaid will cover
17 million more Americans in 2016 than it does today. In doing so, by
2019 it will reduce the number of uninsured adults with incomes below
138 percent of the FPL (the group targeted by the expansion) by 11.2 million, or 45 percent (Holahan and Headen 2010).
Table 1 also breaks out new Medicaid enrollees according to whether they are currently eligible or become so under the expansion, as a percentage of 2011 enrollment. In all states the number of expansion enrollees dominates those currently eligible. This is not to imply that the currently eligible are less deserving of coverage. They are equally deserving, but they have elected not to obtain it now. In contrast, the much larger group who would be eligible by virtue of the expansion includes many with no other means of access to affordable coverage (Pizer, Frakt, and Iezzoni 2009).
States that do not expand coverage would continue to deny this group such access while remaining liable for those currently eligible who might choose to enroll. If all the states listed in table 1 opted out of the expansion, the number covered by Medicaid would decrease by an estimated
4 million individuals (Kliff 2012b).
Medicaid Solves Big State Problems at Little State Cost
Though many states have large numbers of uninsured poor residents, the
Medicaid expansion addresses this issue with little cost to the states. Over the first nine years of the expansion, the CBO estimates that the federal government will pay 93 percent of costs, relative to just 57 percent of the costs for the existing components of Medicaid (Solomon 2012; Klein
2012). Table 1 illustrates just how good a deal this is for states, reporting projected state spending for expansion enrollees as a percentage of states’ gross state product (GSP), a measure of the size of a state’s economy, which is a good proxy for a state’s capacity to raise tax revenue. For all states listed, a state’s spending for the expansion as a proportion of its
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economy would be very small, less than half of 1 percent. Yet federal spending would be much larger, reaching over 10 percent of Mississippi’s
GSP, for example. As low as the state liabilities seem, table 1 likely overstates them. The Council of Economic Advisers (2009) and Buettgens,
Dorn, and Carroll (2011) estimate that reform will lead to net savings in many states because of decreased spending on uncompensated care and the shifting of coverage from Medicaid to federally subsidized exchanges for Medicaid enrollees with incomes above 138 percent of the FPL.
The generous federal funding for the expansion will flow to hospitals, doctors, and other health care providers, all of which would otherwise continue to wrestle with the uncompensated care problem. According to the American Hospital Association, its members provided nearly $40 billion of uncompensated care in 2010 (Kliff 2012c). Hospitals and other provider groups will likely apply considerable pressure to state governors and legislators to take the federal government’s expansion offer (Burton,
Dooren, and Lippman 2012).
The federal government does provide some assistance for uncompensated care through DSH payments. However, under the PPACA those payments will be reduced considerably. For example, in 2019 DSH payments will decrease by $5.6 billion. Today they stand at $11.3 billion. The reductions are supposed to be distributed across states in part according to the extent to which they increase coverage. That is, the largest DSH reductions will occur in states with the lowest percentage of uninsured (Blewett
2012). States that are threatening to forgo the expansion have some of the highest levels of DSH payments. Table 1 gives an indication of the amount of federal DSH money at stake in each of the (potential) nonexpansion states. They total over $3.5 billion, over 30 percent of current total DSH payments to all states.
Medicaid has a stimulative effect on state economies. In a review of twenty-nine studies using a variety of methodologies and focused on twenty-three states, the Kaiser Family Foundation (2009) found that
Medicaid spending promotes job and income growth as well as state tax revenue. The effects on employment and earnings extend beyond the health care sector and are commensurate with the level of federal matching.
Chodorow-Reich
et al. (2012) studied the impact on employment of the $88 billion in additional federal Medicaid funds included in the
American Recovery and Reinvestment Act of 2009, finding that $100,000 in additional Medicaid spending resulted in 3.8 additional job years, 3.2 of which were outside the government, health, and education sectors.
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These results suggest that the Medicaid expansion, which is funded predominantly at the federal level, will have large, broad, and strong positive effects for state economies.
For all these reasons, the Medicaid expansion helps states solve costly and complex problems stemming from high rates of uninsurance. In part, that is why five states have already expanded their programs in advance of the 2014 target for doing so (Kliff 2012a).
Why States Might Decline to Expand
Despite the advantages of Medicaid expansion, some Republican governors are resisting. Why? First, ideological momentum generated in the long struggle over reform and the run-up to the Supreme Court decision is obviously a factor. Some red state officials have been talking about resistance and repeal for so long, it’s natural that they have not yet changed their tune. Second, the reform fight is not over. A lot rides on the election in November. Repeal of the PPACA is a likely outcome of a GOP sweep
(McDonough 2012). Earlier this year Senator Jim DeMint (R-SC) and Representative Michele Bachmann (R-MN) wrote a letter to state lawmakers, signed by twelve senators and sixty-one representatives, urging governors to block PPACA implementation and to support repeal (Viebeck
2012). This is a defining issue in an active campaign. Third, the Medicaid expansion is still a substantial budget issue. Though it is a good deal for many states, it will cost the federal government nearly a trillion dollars over nine years (Solomon 2012), and some might prefer that the money be spent in other ways (e.g., tax cuts). Finally, Hudak (2012) suggests that it is politically rational for Republican governors to reject the expansion because their electoral constituencies are less likely to benefit from it than are Democratic ones. He notes that some of the demographic groups that are more likely to support Democrats (e.g., Hispanics and lower-income populations) are also more likely to be uninsured. Republican governors may be correct that coverage expansion is not a high priority among their own supporters, despite the good it may do for the citizens of and health providers in their states.
States have other options beyond just accepting or rejecting the expansion entirely. Some governors might be holding out for better terms. They can submit proposed variants to the Department of Health and Human
Services (DHHS) in the form of Medicaid waiver requests. A quirk in the law makes one option tempting to some states. Under the PPACA, individuals with incomes between 100 and 138 percent of the FPL who
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obtain coverage through state exchanges are required to contribute only
2 percent of income toward the premium and pay only 6 percent of the actuarial value of the plan in cost sharing. The remaining premium and cost-sharing expenses would be liabilities of the federal, not state, government.
Consequently, in the fight over Medicaid expansion, it is the poorest of the poor — those with incomes below 100 percent of the FPL — whose access to affordable insurance is most at risk.
States may therefore be tempted to try to assuage provider stakeholders and address the uncompensated care problem by expanding their Medicaid programs as little as possible so that all state residents have access to affordable coverage. They could try to permit, via a Medicaid waiver, eligibility only to those with incomes below 100 percent of the FPL, leaving the 100 – 138 percent group to seek federally subsidized insurance through exchanges. (Incidentally, in some states the insurance industry may also prefer this variant, as it puts more customers in the fully private, exchange-based market.) Even though states pay only a small fraction of the costs of Medicaid expansion, this option is cheaper still for states.
On the flip side, this would increase federal costs considerably, because private coverage is more expensive than Medicaid, and the federal exchange-based subsidy rate is even higher than the federal-to- state Medicaid support rate (98 percent of premiums versus 93 percent of Medicaid costs for the expansion). In other words, though states may appear to win, taxpayers collectively lose. Former CBO director Douglas
Holtz-Eakin
(2012) has estimated that the additional federal cost would be $500 billion over ten years if all states expanded Medicaid only to 100 percent of the FPL. For this reason, the waiver necessary for this partial expansion would not be routinely granted; according to policy, waivers must be budget neutral (National Health Policy Forum 2009). In principle, a state might attempt to craft a partial expansion that is lean enough to offset the additional federal costs (e.g., by paring back benefits), though it is uncertain that would be viewed favorably by DHHS.
States may also use the expansion as a bargaining chip (Feder and
Millman 2012; Gostin 2012; Landers 2012). States may seek waivers to change their existing Medicaid program by, for example, increasing managed care options or changing the relationship between Medicaid and
Medicare for dual eligibles. Others may ask for waivers to change the generosity of existing coverage for some already eligible groups. Currently, under the PPACA this is not permitted, but states may try to alter this as a prerequisite for moving forward. In the medium term and beyond the
November election, the desire for concessions from DHHS will be the
174 Journal of Health Politics, Policy and Law strategic source of expansion resistance by states. However, though states may be interested in partial expansion options and greater flexibility, there is some uncertainty as to whether DHHS has the authority to grant the types of waivers states seek (Jost and Rosenbaum 2012; Rosenbaum and
Westmoreland 2012).
Conclusion
The Supreme Court’s PPACA ruling leaves states with more than a binary choice of immediately preparing to implement or rejecting the Medicaid expansion in full. In the short term it leaves them with a means of stoking the political fire until the November elections, and in the medium term it may provide a potentially powerful bargaining chip with which to extract concessions from DHHS. But because of the large benefits we have documented, we believe all states should comply with the expansion and that in time the vast majority will do so.
Ultimately, even states that resist expansion for the reasons we have explained will likely find ways to expand affordable coverage access for all citizens. It may just take longer in some states than others. Indeed, though some states did not adopt Medicaid when it was initially introduced, in time they all established a program (Kliff 2012b). The administration has some control over how long state adoption plays out. The more forcefully it negotiates with states reluctant to expand — denying their waiver requests, for example — the longer this process may take (Norman 2012).
Of course, a GOP sweep in the November elections will change everything. Republicans seem unified in a desire for major changes to
Medicaid, turning it into a block grant program. Even if that does not come to fruition, a Romney administration would be more favorable to red states’ waiver requests. Some of those states have been clamoring for more flexibility in the design of their Medicaid programs, though it should be noted that they were given a great deal of flexibility by the Deficit
Reduction Act of 2005, and not all of it has been exploited (Coughlin and Zuckerman 2008). It is difficult to predict what states might do or be permitted to do under a Romney administration, or under a second Obama one, for that matter. One thing is certain: a full PPACA repeal, as Romney has proposed and the GOP-controlled
House has passed, would make the
Supreme Court’s ruling on Medicaid and all other facets of the law moot, apart from its implications for constitutional jurisprudence.
All in all, it is likely politically rational for some governors to continue their anti-expansion rhetoric. By doing so, they hope to improve
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the chances of remaking Medicaid to their liking within their borders.
Unfortunately, the coverage, health, personal finances, and lives of some of their residents hang in the balance, as do the associated uncompensated care problems of providers. Governors may have good political reasons to resist expansion, but we believe the policy reasons for them to adopt it are stronger, and the sooner the better. After all, it is not our job to look after the political fortunes of governors. Our concern is for the functioning of the health system and for better, timely, and more affordable care for those who rely on it. For many, a lot more is at stake than politics. For some, it is literally life and death (Sommers, Baicker, and Epstein 2012).
References