AAFP Summarizes Challenges, Benefits of Medicaid Expansion, State Health Insurance Exchanges

Provisions in the Patient Protection and Affordable Care Act that affect states have left many AAFP members and chapters scratching their heads about the meaning of these regulations. In response, the AAFP recently issued an information summary (18-page PDF; About PDFs) that documents the opportunities, challenges and benefits of implementing Affordable Care Act regulations, in particular the expansion of Medicaid eligibility requirements and the establishment of state health insurance exchanges.

Language in the Affordable Care Act calls on states to expand their Medicaid eligibility requirements to 133 percent of the federal poverty level for non-disabled individuals younger than age 65. The Affordable Care Act also requires states to establish health insurance exchanges by 2014 to enable individuals and small businesses to compare and purchase private health insurance plans.

If adopted by all 50 states, the Medicaid expansion would provide coverage to more than 21 million uninsured individuals, cutting in half the number of uninsured individuals in the United States, says the summary. The state health insurance exchanges, meanwhile, will improve access to health insurance for consumers.

"The establishment of insurance exchanges and the expansion of Medicaid are meant to work together, along with the other provisions in the (health care reform act) to improve coverage and access to health care for all," says the summary. "Improved coverage and access lead to better population health, which also leads to cost savings for states, as well as the federal government.

"Expanding Medicaid eligibility and establishing health insurance exchanges aligns with the AAFP's principles of seeking to ensure health care coverage for all by increasing access to care and enabling physicians to provide cost-efficient care."

The summary is a resource and advocacy tool for chapters and AAFP members that provides a brief overview and history of the Medicaid program and the health insurance exchanges. The AAFP also has created data tables that demonstrate the estimated impact of the proposals on the insured, state budgets and the overall health care system.

For example, one table estimates what the Medicaid expansion would mean in terms of state and federal Medicaid spending, as well as the number of additional covered Medicaid enrollees in 2019. Another table breaks state uninsured populations into five separate poverty levels to help show how many uninsured individuals in each state would be eligible for Medicaid or subsidies to buy health insurance through state exchanges.

"Though the data compiled in these tables demonstrates the financial impact of implementing the Medicaid expansion, they also show that it is the worth the cost," says the summary. "As a direct result of the expansion, the number of Medicaid enrollees will increase by 14.9 million in 2014 and by 25.9 million in 2020."

Although the Affordable Care Act originally required states to expand their Medicaid programs to receive federal Medicaid matching funds, in June, the Supreme Court ruled that the provision was unconstitutional. As a result, states now have the option of deciding whether to expand Medicaid eligibility requirements.

Before the Affordable Care Act, few states covered non-disabled patients up to 133 percent of the federal poverty level, and even fewer states covered non-disabled adults without dependent children on Medicaid. However, according to the summary, "a state refusing to expand its (Medicaid) program leaves a tremendous gap in coverage for some of the poorest Americans."

The summary cites a Congressional Budget Office (CBO) estimate that says expanding Medicaid eligibility requirements to 133 percent of the federal poverty level will "add insignificant costs to what states would have spent on Medicaid without the implementation of health reform, which provides insurance coverage to 17 million additional low-income adults and children."

"The additional cost of implementing the Medicare expansion is estimated to be only a 2.8 percent increase from what states would have spent between 2014 and 2022 without the health care reform law. However, this number is significantly overstated as CBO's calculations do not factor in the savings that state and local governments will realize in their health care spending for the uninsured."