Medicaid Expansion

Mar 27 2015

The rollout of the Affordable Care Act (ACA) has been so calamitous in so many ways that it can be easy to overlook the problems created by the law’s Medicaid expansion.

Historically, Medicaid has been a program with admirable intentions, but deplorable results. Prior to the ACA, Medicaid’s objective was to provide health care and insurance to our most vulnerable populations, such as individuals with disabilities, as well as low-income children, pregnant women, and seniors. But Medicaid is notorious for trapping its beneficiaries in third-rate care.

Matters have only gotten worse under the ACA, which fails to improve the quality of care for our society’s most vulnerable, while expanding Medicaid’s eligibility to include anyone up to 138 percent of the federal poverty level.

Many states, including Utah, are trying to succeed where the ACA has failed, by agreeing to the new, expanded Medicaid eligibility requirements, but only on their own terms. While many of these state-based reforms make significant improvements to the status quo, they are not enough to overcome the systemic flaws in the ACA or guarantee continued success, as the waivers granting flexibility are often short-lived.

Moreover, even states with well-designed Medicaid alternatives will have to abide by the ACA’s most misguided provisions.

For example, by changing the federal medical assistance percentage (FMAP) rates within each state, the ACA covers state costs at a higher rate for the expanded population than for the original Medicaid population. When it comes time for the states to look for savings as they try to balance their budgets, what is now an obscure discrepancy in FMAP rates will become a perverse incentive that rewards states with more savings by cutting benefits to low-income children and the disabled, rather than benefits to able-bodied, childless adults.

Repealing the Affordable Care Act and replacing it with patient-centered, market-driven reforms is the only way to repair this damage done to Medicaid and our nation’s health care system. As we work toward this goal, Congress could resolve the unfair bias created by the ACA’s enhanced FMAP rate, by eliminating the discrepancy between the two federal Medicaid matching rates within each state.