Payment Matters: Medicaid Matters: States Weigh Medicaid Expansion Options


In late June of 2012 the Supreme Court overturned the "Medicaid Expansion Penalty" that required each state to expand its Medicaid eligibility requirements on January 1, 2014 to include all non-elderly persons with incomes below 133% of the federal poverty level (FPL) or else risk losing that state's entire federal matching funds for Medicaid. National Federation of Independent Business v. Sebelius effectively made sweeping Medicaid expansion in the Patient Protection and Affordable Care Act (PPACA) optional. Three months after National Federation of Independent Business and 15 months before the January 2014 deadline, health care facilities need to assess how their respective states are approaching Medicaid and plan accordingly.

Medicaid expansion was touted as both a significant federal expense and a means of controlling health care spending when the Patient Protection and Affordable Care Act was enacted in April 2010. CMS estimated that the expansion would cost the federal government $410 billion from 2014-2019. A more recent estimate from the Congressional Budget Office noted that the Medicaid expansion (pre-National Federation of Independent Business) was projected to cost $931 billion from 2012-23. It was expected that these new Medicaid beneficiaries would more likely seek primary and non-emergency care which would prevent those people from developing more costly health care conditions in the future. These beneficiaries would also seek care from facilities other than hospital emergency departments, resulting in a lowering of overall health care expenditures because the health care services would be provided in a less costly setting like a physician's office or clinic.

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