Supreme Court ruling leaves states with major decision on Medicaid

The Supreme Court's ruling yesterday that the Medicaid expansion in the ACA is optional leaves states with a major decision (Source: "The Supreme Court forces states to make a big Medicaid decision. Here’s how they’ll do it.," Washington Post Wonk Blog, June 29, 2012).

“States are going to weigh leaving huge amounts of federal dollars on the table, versus accepting potential exposure from expanding an entitlement program,” said Matt Salo, director of the National Association of Medicaid Directors.

States will have to consider the benefits of having the federal government pay 100 percent of the cost for new enrollees for the first three years of the expansion (the federal share then gradually reduces to 90 percent in 2020 and beyond) versus the potential of significant costs to the state after the first few years.

Those additional Medicaid expenses would come on top of anticipated increases in state Medicaid costs as those who are already eligible but unenrolled in the program are expected to sign up because of the ACA's insurance requirement (the state would get the standard federal matching rate, which is about 67 percent in Ohio, for those already eligible for Medicaid prior to the expansion).

Another consideration for states is that if they do not expand Medicaid coverage to all individuals earning less than 133% of the  Federal Poverty Limit, there could be gaps in coverage for some lower income individuals. Premium and cost-sharing subsidies for purchasing insurance through the exchange start at 100% of the FPL, making it possible that in a state without a Medicaid expansion, some people may be ineligible for both Medicaid and exchange subsidies.

In a statement released shortly after the ruling, Gov. Kasich said that while he is disappointed in the court's decision, no decisions have been made in regard to Medicaid.

"The Administration will carefully analyze the decision to determine the appropriate next steps," Kasich said in the statement. "We are very concerned that a sudden, dramatic increase in Medicaid spending could threaten Ohio’s ability to pursue needed reforms in other areas, such as education."