Repealing the ACA: Potential Effects on Medicaid
Medicaid provides health insurance to more than 70 million Americans who fall within one of four main categories: infants and children; pregnant women, parents and other nonelderly adults; individuals of all ages with disabilities; and very low-income seniors.1 Prior to the passing of the Affordable Care Act, or ACA, in 2010, most low-income adults were not able to qualify for Medicaid because federal law excluded adults without dependent children from the program. Additionally, income eligibility for most parents was extremely limited in most states.2
States Choosing to Expand Medicaid
The ACA originally required states to expand their Medicaid programs or face the possibility of losing all federal funding for their Medicaid programs.3 However, in National Federation of Independent Business v. Sebelius, the Supreme Court ruled that this exceeded Congress’ power under the spending clause by failing to offer states a genuine choice of whether to accept federal funds to expand their Medicaid programs.4
Following the Supreme Court ruling, 31 states and the District of Columbia have adopted the Medicaid expansion.5 Seven states—Arizona, Arkansas, Iowa, Indiana, Michigan, Montana, and New Hampshire—have used Section 1115 waivers to implement the ACA’s Medicaid expansion.6 Section 1115 waivers allow states to test new approaches in Medicaid that differ from federal program rules.7 However, states must maintain certain sections of the Medicaid program such as the federal matching payment system and requirements rooted in the Constitution such as the right to a fair hearing.8
The implementation of the Medicaid expansion through the ACA established coverage for low-income adults who were not previously eligible. Specifically, nonelderly adults with an income at or below 138 percent of the federal poverty level—about $16,394 for an individual in 2016—gained access to coverage.9 As a result, Medicaid coverage has grown by about 17 million people since December 2013, the last fiscal quarter before the expansion was implemented. As of November 2016, the uninsured rate had fallen to below 9 percent, the lowest uninsured rate in the nation’s history.10
Expansion states experienced large increases in enrollees. In many states, enrollment numbers under the expansion have far exceeded original expectations.11 A study by The Foundation for Government Accountability found that enrollment of newly eligible adults in California was more than four times the number projected. Enrollments in Colorado, Kentucky, Nevada, New York and Washington were more than double the projected numbers.12 The two states with the highest number of newly eligible adult enrollees since the expansion were California with 3.8 million new enrollees as of May 2016, and Ohio with 714,595 new enrollees as of August 2016.13 States with smaller populations such as Connecticut and Kentucky have seen significant increases in newly eligible adult enrollees with 186,967 and 439,044 new members respectively.14 The states with the lowest number of newly eligible adult enrollees were North Dakota and Hawaii with 19,389 and 35,622 new members respectively.15
Furthermore, the expenditures for health services for these newly eligible adult enrollees make up a significant portion of many of the states’ total Medicaid budgets. Based on reports from the Centers for Medicare and Medicaid Services, expenditures for newly eligible adults in California were approximately $19 billion, nearly 22 percent of the state’s total Medicaid budget in 2015.17 In states with smaller populations, such as Kentucky, the expenditures totaled almost $3 billion, representing 31 percent of the state’s total Medicaid budget in 2015. The states with the least amount of expenditures for new members were North Dakota with $2.4 million in expenditures and New Hampshire with $2.8 million in expenditures.18 This represented 21 and 16 percent of their total state Medicaid budgets respectively.
The Future for Expansion States
With the ACA’s future clouded in uncertainty, many states face concerns regarding the sustainability of their Medicaid programs.
If changes to the current federal match rate of the Medicaid expansion occur in the future, states will most likely be required to make changes to their Medicaid programs because of their heavy reliance on federal funding. Due to the lack of other available general funds to replace shrinking federal funds for Medicaid, states would likely be forced to make serious budget cuts to their Medicaid programs. Traditionally, when states move to effectuate cuts in their Medicaid budget they look to reducing provider reimbursement rates, member eligibility, the overall services and benefits provided to members, or all three.
Additionally, a rollback in Medicaid expansion could potentially have negative impacts on state economies. Studies have documented or predicted significant job growth as a result of the Medicaid expansion for states such as Colorado and Kentucky.19 For example, The Colorado Health Foundation found that Colorado had 31,074 additional jobs created as a result of the Medicaid expansion from fiscal year 2015-2016.20 Additionally, Deloitte Development LLC estimated that Kentucky would see more than 40,000 new jobs created as a result of the expansion through state fiscal year 2021.21
3 Nat’l Fed’n of Indep. Bus. v. Sebelius, 567 U.S. 519, 132 S. Ct. 2566, 183 L. Ed. 2d 450 (2012)
13 CSG calculation; The Henry J. Kaiser Family Foundation, State Health Facts, http://kff.org/health-reform/state-indicator/total-
16 Centers for Medicare and Medicaid Services, DHHS, https://www.medicaid.gov/medicaid/financing-and-reimbursement/state-expe...
20 The Colorado Health Foundation, Assessing the Economic and Budgetary Impact of Medicaid Expansion in Colorado, (The Colorado Health Foundation, March 2016).
21 Deloitte Development LLC, Commonwealth of Kentucky Medicaid Expansion Report (February 2015).