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July 2, 2012   Medicaid Planning

What Will States Do With the Option of Medicaid Expansion?

The landmark decision last week on the Affordable Care Act left many states with the option of expanding Medicaid, rather than the directive to do so.  Matt Salo, Director of the National Association of State Medicaid Directors, stated, “States are going to weigh leaving huge amounts of federal dollars on the table, versus accepting potential exposure from expanding an entitlement program. You used to just have to hold your nose because you had to do it. Now, every state is going to have to make some aggressive calculations.”States can agree to expand Medicaid and receive large amounts of federal dollars as a result, but they are then subject to additional bills from the Medicaid program that continues to expand.  The federal money won’t pay for all of the increased costs.States have until 2014 to begin expanding the Medicaid program, and for the first 3 years, the federal government provides a 100% match for new eligibles.  But after that, the matching dollars decrease -  in 2017 the federal match is 95% and in 2020 the rate drops to 90%.  And, states will be stuck footing the bill for Medicaid enrollees who were eligible but never signed up.  The federal government won’t cover all of those bills as they do for new eligible enrollees.Florida  and South Carolina  just announced they won’t expand their Medicaid programs under the terms proposed by the Affordable Care Act.  Only time will tell if they hold that position, and whether other states will follow.
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