Causes and Effects of the Affordable Care Act

8538 words (34 pages) Dissertation

13th Dec 2019 Dissertation Reference this

Tags: Social Policy

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Abstract

With the implementation of the Affordable Care Act, the aim was to provide affordable coverage to all Americans by offering costly incentives. There were unforeseen circumstances in its inception. Premiums were unaffordable. States refused to expand of public health programs to include a low cost option of insurance. A detailed analysis of regulatory and budgetary concerns under the public health expansion provisions under this legislation may cost the federal government and states in the long run.

Introduction

For decades, securing health insurance coverage is a task that Americans must bear. The United States (US) is one of a few countries which does not provide health care to its citizens at no cost. As a result, Americans are expected to bear the financial responsibility of health care costs which have the potential to bankrupt individuals and families, especially in the event of a catastrophic medical occurrence. Having access to affordable health care in the United States is a topic that concerns many Americans because ensuring the accessibility and affordability of health insurance coverage seemingly never comes to a resolution. 

Many Americans derive health insurance coverage through an employer-based program which is works well for the employee. These type policies usually have low cost or no premiums and/or low deductibles or co-payments. However, when dependents are added, the costs associated with coverage for the employee and their dependents skyrocket, making health care unaffordable. Consequently, many Americans are left without insurance benefits. In fact, there are approximately 28.2 million persons under age 65 who are uninsured (cdc.gov/nchs/fastats/health-insurance.htm)[1]. To mitigate the rates of individuals who lack health insurance coverage, the Affordable Care Act (ACA or Obamacare) was enacted.

In addition to providing assistance with the costs associated with private insurance coverage, Obamacare also included provisions to expand public health programs, such as Medicaid and made enhancements to the Children’s Health Insurance Program (CHIP) to assist Americans with expenditures related to health care. Although this public policy’s focus was to relax the eligibility requirements and make being insured easier and more affordable, the states still have the discretion on how these programs are implemented. As a result, many states exercised the option to not expand provisions to include individuals who traditionally would not meet the strict income eligibility guidelines of these public health programs; therefore, Americans still find accessibility to care difficult and the costs still unaffordable.

Statement of Purpose

The intent of ACA was to ensure that Americans received access to affordable health care coverage and services. As previously stated, this legislation included provisions to make public health programs more accessible to individuals who would otherwise not meet the strict income eligibility guidelines. In order to accomplish this, ACA provided the states with the option to expand these programs. It was the hope of the authors of this public health policy that expanding these public health insurance programs would significantly decrease the number of uninsured Americans and improve overall health outcomes. However, unforeseen circumstances emerged. A vast majority of states rejected Medicaid and CHIP expansion, leaving a high percentage of Americans without insurance coverage. Therefore, the problem remains; the accessibility to affordable health care is not a realization for many Americans-even after the implementation of ACA.

The purpose of this paper is to review public health programs and how they were implemented prior to ACA and the funding sources for these programs during that time period. Also, after the effectuation of the Affordable Care Act, changes to public health programs were implemented as well as source funding. A review of ACA policies regarding Medicaid and CHIP will be conducted to determine the cost effectiveness of how these programs run since its enactment and the costs associated with expanding these public health programs to be inclusive of a broader population of Americans to decrease the amount of individuals who lack health insurance coverage. The scope of the research will provide an analysis of the regulatory and regulatory constraints of Medicaid and CHIP programs and provide a comparative analysis of these programs to other health care systems outside the United States to ascertain the benefits of making health care accessible and affordable to those uninsured populations.

 Overview

The Medicaid program was designed to assist families with dependent children during the Great Depression. Billed as a component of the Social Security Act, this public health program was tied into the financial need of families during this era. The federal government provided states with funding to assist families with household and any medical expenses the family incurred. The entire financial and health care package was known as Aid to Families with Dependent Children (AFDC). The AFDC program was successful in that it provided medical benefits to low-income families of that time period. The provisions were amended giving states the regulatory support to change the way the program was applied. The cash assistance portion of AFDC continued to assist with household expenses but medical payments were now authorized to be sent directly to the provider in an effort to control costs.

For decades, the AFDC program operated as a contingency program, where AFDC payments were accompanied by Medicaid coverage. The federal government provided the financial support to the states for Medicaid coverage. States were required to match federal dollars, but the federal government covered approximately 57% of program costs (Mann, Rowland, Garfield, (2007)[2]. As a result, the states were able to govern the program as it saw fit. The states made the rules regarding financial eligibility standards. Most families who qualified for this program were mainly single-parent families who had little-to-no income.

The Social Security Act was once again amended to transition the Medicaid program from its linkage to AFDC. Delinking Medicaid expanded coverage to include families and children who were not financially dependent upon the cash portion of AFDC. As a result, the number of children and families enrolled in Medicaid significantly increased. Although the federal government bore the majority of program costs, the states began to experience significant increases in program costs. Once the states began to feel the budgetary effects of the increased costs to insure low-income children and families, the states needed a new methodology to continue to provide medical care at lower costs. Therefore, states moved to managed care health care model to help curb costs. As a result, enrollment in Medicaid managed care began to increase but costs associated with care were contained. Medicaid became the largest insurer of children in the United States, and, as a result, impacted the health status of its beneficiaries through managed care.

After the implementation of public policy reforming welfare in 1996, the federal government encouraged states to expand Medicaid coverage to reach those children and families who were slightly above the Federal Poverty Level (FPL). Many states were reluctant; however, coverage was inevitably increased to reach these children who were not “poor enough”, hence, the birth of CHIP.

In its initial stages, states that chose to provide coverage to children through CHIP received an additional $40 billion in federal assistance over a ten-year period (Mann et al, 2007)[3]. However, these funds are limited. The federal government provides block grants as a funding source for CHIP. Although the states are not responsible for the complete cost associated with CHIP, the block funds are not nearly enough to insure these children whose family income is slightly over the poverty level. Therefore, to control costs, the states decided to place strict limitations on care. To cover the short-fall families are assigned monthly premiums in addition to having co-payments for physician visits and medications. Also, when funds recede, there are enrollment freezes resulting in waiting lists which may last for several months, and even years. 

      Table 1 [4]

The Affordable Care Act is funded through taxes collected as well as penalties imposed on those individuals who are not in compliance with obtaining mandatory health coverage. A portion of these monies are used as a source of grant funding for states to expand Medicaid-providing access to health care to individuals who otherwise cannot afford coverage. The intent of this policy is to fill gaps in health care coverage for lower income Americans. Thus, incentives for states to expand Medicaid is for the federal government to offer 100% financing for all adults newly added to the Medicaid program for the first three years; thereafter, financing would be scaled down to 90% (CMS.gov)[5].  

A provision within health insurance coverage, as a requirement of the Affordable Care Act, mandated insurers to provide access to preventative care to head off illnesses prior to onset by helping individuals to remain healthy. Additionally, access to primary health care services is the mechanism by which chronic diseases are managed in order to control the costs of treatment for these type illnesses which have the potential to become more difficult to control and drive up costs of care. In order to remain true to its intent of preventative care, all insurers are required to cover 100% of the cost of preventative care services as well as annual visits which include well women examinations as well as the cost of contraception.

The Affordable Care Act provides access to distinct amenities that are now available to consumers that were not viable options prior to the implementation of the law. The accessibility of these amenities now extends to include the following:

  • Individuals can no longer be denied coverage for preexisting conditions.
  • The cost of coverage is contained at a rate that is the same for everyone, regardless of health status or gender.
  • Women’s health services are covered. This includes preventative treatments and screenings which are at no cost.
  • There are more protections available to senior citizens where there is more access to services.
  • Out of pocket limits no longer exist for emergency room visits, medications, as well as maternity and neonatal care, to name a few.
  • Referrals are no longer required for obstetrical and gynecological services.

Moreover, there are ten essential benefits that insurers (including public health programs) must provide without lifetime limits (“Obamacare Facts”)[6].

  • Emergency services
  • Hospitalizations
  • Laboratory services
  • Maternity care
  • Outpatient or ambulatory Care
  • Pediatric care
  • Preventative care
  • Vision and dental care for children
  • Prescriptions
  • Mental Health and substance abuse services

Although the Affordable Care Act provides accessibility to coverage for many Americans, there are minor changes to the structure of accessibility. There continues to be multiple insurers (including Medicaid and CHIP) which must provide the aforementioned coverage. As a result, the Affordable Care Act has not done much to change the structure to the health care system in insuring Americans have coverage. The onus to have coverage remains with Americans. Americans have access to broader coverage options; however, care continues to be heavily dependent cost sharing. While many Americans continue to derive health insurance through their employer, that population of individuals who purchase coverage through the exchange will experience pricing of premiums and deductibles based on age, the quality of health he or she has and which tier he or she selects which may limit the individual’s access to much needed services because of costs as well as fewer covered services (see table 2). This makes accessibility to coverage somewhat limited because monthly premiums are high with extremely high deductibles and drug costs. More importantly, ACA does little to address the challenges of controlling costs of coverage and ensuring all Americans have access to affordable care.

Table 2 illustrates the tier system under the Affordable Care Act[7]

In the early stages of implementation, the Affordable Care Act provided funds to non-profit cooperative plans. These plans received $2.5 billion in grants. The intent of the cooperative plans was to displace for-profit insurers. However, these plans failed to deliver the intended results. Many of these plans provided coverage that was grossly underpriced. As a result, of twenty-three cooperative plans, all but five are no longer in existence. Six cooperative plans received $3.56 million in emergency funding to continue to operate (Gottlieb 2[8]).

The Affordable Care Act poured funds into preventative health care. The Prevention and Public Health Fund has an appropriation of approximately $2 billion annually to invest in a host of wellness programs.

Obamacare funneled money into incentives for private insurers to offer coverage to Americans at affordable rates as well as provided funding for expansion of Medicaid and CHIP. But, private insurers resisted by merging in an effort of pooling resources to provide the mandated coverage. This did little to nothing to drive down costs. It had the adverse effect. It drove smaller insurers to bankruptcy. And, states refused the incentives offered by the federal government for providing Medicaid and CHIP to a broader group of citizens who are uninsured. Additionally, states still controlled how Medicaid and CHIP were implemented. Thus, there are varying degrees of coverage by state for the two public health programs. This makes Medicaid and CHIP programs non-transferable. In other words, if children and families who are covered by Medicaid or CHIP experience a medical emergency while on vacation in another state and need to be seen by a physician, that visit will not be paid by Medicaid.   

In contrast, Canada has universal health care that is accessible to all of its citizens. All Canadian citizens, regardless of age, employment, or the ability or inability to pay are insured. Canada’s primary focus is to provide its citizens with access to preventative medicine and unrestricted access to primary care services as well as hospital services at no cost to the individual.   

The Canadian Health Act directs provinces and territories to provide individuals with unrestricted access to health care. The provinces also mandated to fund health care services for its residents.

In Canada, coverage is universal in that all who are insured are to receive the same type coverage and health services. Moreover, Canada’s universal system is portable. Portability ensures that an individual continues to have coverage regardless of moving to another province or territory. He or she will remain covered. There are some provinces within the Canadian system which may require an individual to pay health care premiums for services. Although this may be the case, health care services cannot be denied because an individual may not be able to pay for services. Additionally, provinces are not required to provide services which are outside the scope of the Canadian Health Act meaning, provinces and territories are merely required to provide basic health care coverage for basic services.

Under Canada’s universal health care package, vision, dental, and prescription medications are excluded. Canadians have the option to utilize private insurance to cover these services. Private insurance makes vision, dental, and prescription medications accessible in a health care system that is not required to provide these services. Many Canadian’s are offered this coverage as a benefits package by employers. Furthermore, this type of insurance is also available for purchase from private providers. However, the vast majority of Canadian’s elect to receive services under the national health plan offered at no cost.

In order for an individual to receive the universal coverage offered by provinces, an application must be completed and submitted to the province. Once the individual is registered, he or she receives a health card. This card must be presented in order to receive services. There are no “managed care” restrictions in Canada’s universal health system. An individual can show up to any clinic in their area and present their medical card and receive care.

Although Canadians do not have any cost sharing expenses when they incur medical expenses, the universal health coverage they receive has associated costs. Canada’s universal health plan has a variety of funding sources. Unlike Obamacare, it is difficult to discern the amount of tax dollars dedicated to this public program as there is no line-item specifically for health insurance tax. Canada finances health coverage for its citizens though:

  • Income tax dollars
  • Employment insurance
  • Pension premiums
  • Land taxes
  • Alcohol and tobacco tax
  • Imports

Approximately $141 billion of tax revenues were allocated to universal health care which equates to about $3,961 per Canadian, which is an equal share representation (Palacios, Barua, and Ren, 2015)[9]

Table 3[10]

For well over 40 years, Canada has carried out a universal health care program under a single-payer system. The provisions Obamacare implemented, such as preventative care services and coverage being provided regardless of any pre-existing conditions mirror the Canadian model. But, Canadians are able to achieve universal health care at cheaper costs. According to the Congressional Budget Office, the United States spends approximately more than $300 billion in Medicaid and CHIP insurance programs and close to $300 billion for work related coverage; these figures are applicable to subsidies only and is only representative of people under 65. In whole, the United States spends about 18% of the gross domestic product (GDP) on health care, which is up by about 6%. This translates to $3.2 trillion, or close to $10,000 per American (CMS.gov/research-statistics). In contrast, Canadians provided health care coverage to 100% of its citizens. This breaks down to $242 billion or $6,604 per Canadian citizen and represents 11.4% of the GDP.

Methodology

Medicaid is a combined program financed by federal and implemented by state governments, which, in conjunction with the Children’s Health Insurance Program, makes health coverage available to millions of Americans. Medicaid is the principle resource of health coverage in the US. Federal law made it a requirement for states to provide insurance coverage to a particular group of individuals. Families with income below the poverty level, pregnant women and children, and disabled individuals who receive Supplemental Security Income (SSI) are examples of persons who are included in these mandatory eligibility groups.

Table 4 illustrates the financial eligibility standards for Medicaid eligibility in the state of Florida.[11]

 Obamacare legislation gave states the opportunity to expand Medicaid to cover nearly all impoverished Americans under the age of 65. It included a requirement that eligibility for that had not expanded have the option to do so at any time.

The ACA provisions also revised antiquated eligibility methods and developed a new methodology for Medicaid eligibility determinations. This method is based on the Modified Adjusted Gross Income (MAGI) of low-income households. MAGI determines financial eligibility for Medicaid and CHIP, as well as used to determine tax credits for coverage premiums and reductions to cost sharing. This public health legislation revolutionized conventional methodologies for applying income by utilizing a new set of standardized rules. This substituted AFDC income calculation methodologies which included income disregards which differed by state. Additionally, MAGI eliminated all resource testing whereas individuals seeking Medicaid coverage had to have resources no greater than $2,000.

Also, ACA developed a streamlined application process for these programs making it a more simplified process for people to apply and receive medical benefits in the program for which they are eligible.

There are groups of individuals who are not included in the MAGI-based income counting methodology. These groups include individuals whose eligibility is contingent upon meeting the definition of disability due to blindness, other disabling impairments, or age 65 and older. Medicaid eligibility for these individuals is determined by using income methodologies based on Supplemental Security Income (SSI) program which is overseen by the Social Security Administration (SSA). Although this program is based upon established rules and guidelines administered by the SSA, the states are still partially responsible for costs related to insuring this population of Americans. Additionally, Medicaid eligibility can include individuals who are insured under the Medicare program because it provides assistance to individuals with Medicare premium payments, payment of Medicare deductibles (for lower income disabled individuals) and/or co-payments. This program is also based on SSI income methodologies.

There are Medicaid eligible groups who are exempt from the process of income determination. The coverage for these individuals is based on enrollment in another program under Medicaid entitlement. These programs are:

  • SSI
  • Breast and Cervical Cancer Treatment and Prevention Program
  • Children of adoption who have an active adoption assistance agreement
  • Young adults who “aged-out” of foster care are also eligible at any income level

Medicaid eligibility is based on other conditional requirements. Individuals have non-financial eligibility standards they must meet. The individual must be a resident of the state in which they receive Medicaid coverage, be citizens of the US or meet specific requirements as a qualified non-citizen, such as be a lawful permanent resident.

Once all eligibility requirements are met for Medicaid, coverage begins on the first day of the month of application. Individuals may also be eligible for retroactive Medicaid coverage for up to 3 months before the application date. If the individual no longer meets Medicaid requirements, coverage ends at the end of the month as the individual no longer meets the eligibility requirements.

There is a “spin-off” Medicaid program called medically needy which is for individuals who have major health needs and whose income is above the Medicaid income eligibility standard. Medically needy individuals must “spend down” the income that is exceeds their state’s medically needy income standard (MNIL). This occurs as individuals incur expenses for medical and corrective care. Once these medical expenses surpass the difference between the individual’s income and the state’s medically needy income level (the “spend down” amount), the person can be eligible for Medicaid (CMS.gov). Once eligibility is derived, Medicaid pays the cost of services that exceed the incurred medical expenditure.

Table 5

In looking at the Medicaid and CHIP programs holistically, the coverage options do not differ much from that of Canada. But, Canada’s universal health care program spends less in providing basic care to 100% of its Citizens. Additionally, health outcomes are better than that of the US. Canadians have lower infant mortality rates and the life expectancy is approximately 10 years that of the United States.

Since the ACA revised public health program requirements, directed astronomical federal funding to states to get on board with public health care expansion, and relaxed income and asset standards of eligibility for these programs to streamline coverage and attempt to control costs, as well as to provide health care to the uninsured.

Obamacare did not reach far enough to achieve its goal; to provide health coverage to the uninsured. Individuals are still grappling with the high costs of private health care; the inability to provide coverage to their dependents through employer based health insurance due to costs, and is still shut out by public funded health care. Thus, the costs to implement this legislation and provide mandated coverage remains futile, at best. Therefore, with the amount of federal funds that went towards the cost of private health programs in making Obamacare “work”, these funds may have been more beneficial in providing universal health coverage to Americans billed under Medicaid and CHIP programs.

Analysis

The main purpose of ACA is to decrease federal spending on health care. Historically, public health programs spent over $676 billion, or 10.4% of the federal budget (Amadeo, 2017). These costs are projected to double by the year 2020 and will be approximately 20% of the budget federal budget (Amadeo, 2017). Medicaid and CHIP programs are part of a fixed spending package which cannot be rolled-back without a congressional vote. 

The state and federal governments are responsible for funding Medicaid. Funding of Medicaid for adults is matched at a much higher rate as a part of Medicaid expansion provisions under ACA. Medicaid spending totaled $549.8 billion, with 10.5% allocated to newly Medicaid eligible adults (CMS.gov). In prior years, the federal government’s allocation to Medicaid was about 57% (as previously stated). This included 100% of Medicaid costs fully funded by the federal government for a specific newly eligible demographic. The allocated funds began to slightly taper off each year until it reaches the targeted threshold in 2020 and stays there. All Medicaid recipients received the 100% match of federal dollars which included those who were not historically eligible for Medicaid. The matching rate continually increased by a conversion factor and by the year 2020 the all Medicaid and CHIP rates will have the same federal matching rate as newly eligible adults.

The total cost spent on Medicaid increased by 11.6%, which translates to $549.8 billion. This is attributable to an increase in federal spending, per Medicaid recipient, which rose by 16.0%, with 4% of growth happening between the year 2014 and 2015 (CMS.gov).

The Centers for Medicare & Medicaid Services (CMS) statistical report showed the average cost for a newly Medicaid eligible adult was approximately $6,365. This amount surpassed Medicaid spending for other non-disabled adults by about 12% per Medicaid enrollee. In the year 2015, the estimated cost for newly eligible adults (per enrollee) was approximately $5,926, which is a 7% decrease. This figure is still about 14% greater, per enrollee, than for other non-disabled adults who receive Medicaid.

These higher costs are attributed to the monthly capitation rates paid to the managed care plans. Since the newly eligible Medicaid adult population is limited, the states that chose to expand Medicaid may have set the managed care rates for this group at a higher level as a result of the uncertainty of the actual cost of health care services at inception. Costs for newly eligible adults are expected to continue to decrease to less than the costs of other non-disabled Medicaid eligible adults by 2018 (CMS.gov).

Studies show that those individuals who are potentially eligible for Medicaid have similar or better health, physically and mentally, than those who were enrolled in Medicaid prior to the roll-out of Obamacare. Additionally, chronic conditions were found to be less common. Therefore, it may be more beneficial to expand Medicaid coverage to those groups of Americans as managed care rates and spending may decrease based on the health of these individuals.

In 2014, the increase in Medicaid spending rose across the nation which is a reflection of the increase in Medicaid enrollment as well as an increase in costs per recipient. Along with the rising costs of medications and an increase in payments to primary care physicians, expanded Medicaid coverage for adults was a critical component of increased spending rates. However, spending rates were lower for 2015, and are projected to continue to decline annually. Medicaid spending is projected to slow to 4.2%, which is attributed to the surge of newly eligible Medicaid recipients, which continues to decline (CMS.gov).

Also, states reported increases in spending in 2015 partially due to increased enrollment. Specifically, of the states that expanded Medicaid, over half reported faster enrollment increases than expected. And two-thirds of those states reported that costs monthly costs per member were below earlier estimates. Also, states that did not expand Medicaid reported a boost in spending, primarily due to increased enrollment among previously eligible families.

Additionally, states may utilize the increased federal matching dollars to offset effects of their budget because of the decision to expand Medicaid coverage. This is also indicative of cases involving those individuals who were eligible previously, but not enrolled. Due to an increase in enrollment of this population of Medicaid enrollees, for example, there may be an availability of federal dollars for expenses that, at one point, was funded by the state. Additionally, in states that expanded Medicaid, there were also reports of budgetary savings as a result of revenue gains resulting for expansion. For example:

  • A study in Health Affairs found that expansion lead to an 11.7 percent increase in overall Medicaid spending, as well as a 12.2 percent increase in federal spending. It found no significant increases in overall state spending on Medicaid, no significant decreases in state spending on other programs, and that state spending was, in the aggregate, in line with projections (Sommers and Gruber, 2016).
  • A 2014 analysis of three states, Connecticut, New Mexico, and Washington by the Kaiser Commission on Medicaid and the Uninsured examination of three states, Connecticut, New Mexico, and Washington, reported state savings both within the Medicaid program from the enhanced matching rate and in other areas of the state budget, such as behavioral health and corrections (Sommers and Gruber, 2016).
  • An issue brief from the State Health Reform Assistance Network looking at 11 expansion states indicated that as a result of Medicaid expansion, states may achieve savings from the enhanced matching rate as well as from replacing general funds with Medicaid funds, such as for services for the uninsured (Sommers and Gruber, 2016).

Although ACA reformed the manner in which health coverage is delivered, it left the majority of pre-existing insurance programs largely intact. Many Americans maintain health insurance coverage through their employer, mostly unaffected by the provisions of ACA. When ACA began to affect existing health coverage, it mainly expanded coverage by abolishing annual and lifetime limits in relation to employer coverage, allowed coverage of young adults up to age 26 to remain on their parent’s insurance plan, and/or it closed the payment gap in drug coverage.

The most remarkable effect of Obamacare is that it helped the uninsured to obtain coverage. Prior to 2014, most working adults under age 65 whose employer did not offer health insurance did not meet the eligibility standards for any public health program or subsidies to assist with purchasing insurance. This made attaining health insurance unaffordable. Under ACA there were two provisions to extend health insurance coverage.

  • Medicaid eligibility was expanded to individuals and families whose income was below 138% of the FPL, who were not otherwise eligible.
  • Tax credits were offered on a sliding fee scale to individuals and families whose income was between 100% and 400% of the FPL. These individuals were not offered coverage in public health programs or employer based coverage

Effective 2015, individuals became eligible for financial assistance. To receive this assistance, the annual income threshold could not exceed $47,080. To illustrate, a family of four may be eligible for premium tax credit assistance with a household income less than approximately $100,000.

Unfortunately, Medicaid expansion did not stretch to all Americans. This is in part due to the Supreme Court’s 2012 decision in the National Association of Independent Business case which allowed states to “opt out” of the expansion of public health care. This critically weakened efforts to expand Medicaid. There are millions of adults across several states that are not covered because of the Supreme Court’s decision. Nevertheless, ACA reduced the percentage of Americans, under age 65, who are uninsured from about 18% to 10% (MACPAC.gov).

Moreover, while the premium tax subsidies were successfully applied to many Americans, it continues to remain burdensome as these subsidies have not been completely effective. Millions of middle class Americans who are enrolled in ACA backed coverage were not insured before they obtained insurance through the provisions under ACA. But, there are millions of Americans who continue to remain uninsured. Others are still not covered, or they may miss out on being covered, because the premium tax credit program is so convoluted, that they are unaware that this assistance is available to them, or because the insurance premiums, even with the tax credit assistance, is still too costly and health care is still unaffordable.

Improvements to Medicaid for lower income Americans through Medicaid expansion is the end goal strategy for expanding health care coverage to this group of individuals. There are 72 million Americans currently enrolled in the Medicaid program which includes 13.2 million more individuals enrolled than there was in 2013, before ACA expansion. Medicaid plays an important role for these persons because it provides access to health care in which they otherwise cannot afford.

The Supreme Court’s 2012 decision in National Federation of Independent Business vs Sebelius (known as NFIB) gave states permission to opt out of the ACA’s Medicaid expansion. There are currently twenty states that have elected to opt out of Medicaid expansion. In an effort to make Medicaid expansion appealing to these states, the Obama administration allowed these states some create control by providing considerable leeway by allowing coverage through the Medicaid waiver program. However, the degree of discretion allowed to states must remain limited in order to avoid weakening the broader goals of ACA, which is getting states to yield to expanding Medicaid coverage.  The federal government can to parlay this into an opportunity to offer states further incentives to expand Medicaid.  

Lastly, the following should be taken into consideration in making Medicaid more beneficial to recipients of Medicaid.

Recommendations

  • The federal government should assume the cost of Medicaid expansion to all Americans.

As previously stated, in revisiting the Supreme Court’s NFIB decision, there are twenty states which refused to implement ACA’s Medicaid expansion, despite extremely generous federal matching rates which are at a rate of 100%, and will dwindle down to a set matching rate of 90% by the year 2020. The Medicaid expansion under ACA is representative of the most substantial federal-state joint financing provisions in the history of health policy. The Congressional Budget Office projected that the federal government will cover over 93% of costs associated with Medicaid expansion between 2014 and 2022 (2014). The added cost for states is projected to increase by 2.8%. The states would have spent this on Medicaid regardless of the health care reforms associated with Obamacare (Congressional budgeting office, 2017). In fact, studies show that Medicaid expenditures are increasing at a more rapid rate in states that opted to not expanded Medicaid than those states that have (Congressional budgeting office, 2017).

A further review of economic analyses shows that the economic impact of Medicaid expansion, locally, is extremely favorable to state government budgets as well as state economies. Therefore, funding provided as a result of Medicaid expansion, regularly serves as a replacement for state expenditures.

Despite these benefits, state administrators and citizens are concerned about the amount of federal monies associated with Medicaid expansion as a result of ACA. It is more effective for the federal government to assume all the costs associated with the expansion for all states. Since the federal government is already footing an overwhelming majority of costs to insure a fairly healthy population, this would require a tiny amount of added federal funding which equates to about $5.2 billion to cover the 11.9 million newly eligible adults in calendar year 2020 (MACPAC.gov)

  • Develop a counter-cyclical system for funding Medicaid.

A counter-cyclical system ensures funding for public programs to deal with any budgetary shortfalls. This could be done by following the funding scheme that the unemployment insurance program follows.

Both state and federal governments have an established unemployment insurance trust fund. The federal government can place funds associated with Medicaid into a trust, divided by state. Therefore, when the costs associated with health care arise, Medicaid has a monetary safety net available to them to cover these additional costs. Additionally, this type of system would also be beneficial for CHIP when there is an increase in demand for this program.

Conclusion

A review of Medicaid and CHIP was conducted. These programs were initially available to families as a component of welfare payments. With the enactment of reformative legislation, for more than two decades, Medicaid evolved considerably. These changes allowed for Medicaid to be its own separate entity, aside from AFDC payments. This change no longer precluded certain individuals from being eligible for the Medicaid program, but because of strict income guidelines, it still prohibited many Americans from access to public health care.

With the implementation of the Affordable Care Act, also known to the public as Obamacare, there were considerable incentives to cover more uninsured Americans by expanding public health insurance coverage. However, states did not buy-in to the idea of increased spending. But a detailed analysis proved that the costs associated with insuring all Americans under a public health option will not “break the bank” as previously thought. In fact, the cost to insure the uninsured will have little to no change on the bottom line. Therefore, expansion of Medicaid and CHIP programs will be beneficial, attainable, and more importantly cheaper.   

The provisions under the Affordable Care Act made coverage affordable and attainable for many Americans. This enabled coverage for many Americans. However, if fell short because Americans found that the costs-sharing was too expensive. The cost of premiums which included premium tax credits to assist with costs were not enough to provide much needed coverage to those individuals.

The expansion of Medicaid would remedy this. Medicaid is the largest provider of insurance coverage. And costs are covered by the federal government at over 90%. Individuals who would derive eligibility through expansion are found to be healthier than those who are eligible for Medicaid. Thus, the cost to insure more Americans will not rise as once believed. Therefore, making Medicaid the insurer of all Americans will be more cost effective in the long-run.

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[1] The Centers for Disease Control and Prevention (CDC) provides the latest statistical data available regarding the numbers of uninsured Americans after the effectuation of the Affordable Care Act.

[2] This article provides a complete overview of the Medicaid and CHIP programs from its inception as a Depression-era answer to providing medical coverage to families and children. The program became widely known as the Aid to Families with Dependent (AFDC). An overhaul of AFDC de-linked Medicaid from welfare payments thereby making eligibility for public health coverage solely based on income.

[3] The Children’s Health Insurance Program (CHIP) is funded by block grants which have propensity to run low on funding. Because CHIP is funded by block grants, there is an expiration and Congress must decide to expand this program which continues to insure millions of children.

[4] Table 1 provides a statistical breakdown of the percentage of uninsured adults and Children as well as the costs associated with insuring these populations.

[5] As an incentive to expanding Medicaid, the federal government agreed to allocate 100% of the funding for Medicaid for the first three years of expansion. Thereafter, Medicaid funds allocation will be provided to states by the federal government at a rate of 90%. States will only have to provide a 10% allocation match.

[6] These listed factors are what insurers are mandated to provide in coverage under the provisions of ACA.

[7] Table 2 provides the cost-sharing breakdown of private insurance plans available under the ACA. Americans can select the plans based on their health care needs. The premium payments are based upon the type of coverage selected, the income of the individual or household, and the premium tax subsidy.

[8] This article provides a comprehensive analysis of the amount of funding that was rolled into Obamacare at its inception.

[9] This bulletin provided the financial analysis of the cost of universal healthcare in Canada.

[10] Table 3 provides the breakdown of healthcare spending in Canada on average in comparison to other expenditures.

[11] Family-Related Medicaid. (2017, February 01). Retrieved December 01, 2017, from http://www.myfloridafamilies.com/medicaid

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