ACA update: Medicaid Expansion and Its Effects on Hoosier Health

by Emily McKinley, health information specialist for Family Voices Indiana

The provisions of the Affordable Care Act have largely unfolded. Yet, there is a controversial measure that has states deciding their future health, both fiscally and in regards to their population’s physical wellness. That measure is the contentious issue of Medicaid Expansion.

Initially, many conservative governors sharply opposed the ACA provision that called for states to expand Medicaid programs to serve individuals and families whose income sits at or below 133% (138%, when 5% of an applicant’s income is deducted, as is policy) federal poverty levels. In fact, the issue of the expansion and the federal dollars attached to it were subject to scrutiny by the US Supreme Court, which found that states may choose whether they will expand their Medicaid programs. That said, the federal government also has the ability to withhold Medicaid funding, which was allocated to support the expansion, from states that choose not to participate. Therein lies the rub.

Opponents of the provision claim that the costs of expanding Medicaid will outweigh the benefit of covering low-income households.  In Indiana, Medicaid expansion will specifically benefit low-income adults, with and without dependents, who currently do not have the option of coverage (or not without a lapse in insurance). The expansion may increase the number of Medicaid recipients in Indiana by more than 420,000. Those numbers appear daunting.

However, the ACA also provided for the financial burden of adding so many enrollees. In fact, to encourage states to adopt this provision, the federal government will pick up 100% of the costs of expansion for the first three years (2014-2016). Then, states will begin to accept more responsibility for the cost of the expansion; between 2017 and 2020, states will gradually assume 10% of financial burden of this provision while the federal government maintains 90% of the costs. This stipulation has many politicians who were formally in opposition to the provision encouraging their states to adopt it.

Additionally, states must factor in the cost savings of having their populace covered by some form of health insurance, even if state funded. By enrolling low-income adults in Medicaid programs, there will be fewer uncovered health care expenses, the sum of which are later filtered back to other consumers, businesses, and even taxpayers in the state.  It is important to understand that low-income Hoosiers who would benefit from the expansion will not have access to the exchange subsidized plans if the state does not have expanded coverage, leaving them with few options for insurance. 

Further, the citizenry of states choosing not to participate in Medicaid expansion will still pay federal taxes in support of the national expansion. In other words, should Indiana choose not to expand our current Medicaid program, tax dollars will go to other states rather than be reinvested in Hoosier health.

Hoosiers must act to inform state legislatures of their opinions regarding Medicaid Expansion. On Wednesday, February 6, Governor Mike Pence stated that Indiana will not participate in the Medicaid expansion unless the state is allowed to operate it under the current Healthy Indiana Plan (HIP), in which the state and the recipient share the costs of funding a health savings account. Currently, the state invests $1,100 in the account, while the recipient pays between 2-5% of the family income toward coverage.  While adding to this program may, in some ways, make sense, it can also be problematic in that the HIP does not currently cover all of the services allowed under Medicaid. Further, there is a $300,000 cap on coverage, which may be easily surpassed in the case of severe illness.

Governor Pence’s intent to expand Medicaid only if new enrollees can be filtered into the HIP must be reviewed and approved by the US Department of Health and Human Services. In the meantime, Hoosiers must act to ensure the health of the state, both fiscally and physically, is protected. After all, this may be one time when expanding might be just what the doctor ordered. Governor Pence has previously stated that he would let the legislator decide, so interested Hoosiers are encouraged to share their thoughts with the Governor and with their state Representative and Senator.

For more information about Medicaid expansion, please visit www.healthcare.gov orhttps://www.facebook.com/HoosiersforMedicaidExpansion?ref=ts&fref=ts.

If you have questions about how Medicaid expansion affects you, or if you would like help contacting your legislator, please contact Family Voices Indiana at info@fvindiana.org or 317.944.8982.