Mind the Gap: The ACA’s Medicaid Expansion Provision Leaves Vulnerable Patients Uncovered

A key element of the Patient Protection and Affordable Care Act (ACA) was the expansion of the Medicaid program, designed to provide financial assistance to many low-income adults who previously did not qualify for the program. However, with the decision to expand placed into the hands of state governments (and, therefore, state politics), as many as 4 million people below 100 percent of the Federal Poverty Level (FPL) are left without affordable options for health insurance coverage. And, according to some estimates, states opting out of expansion are losing out on more than $400 billion in federal funds over the next 10 years.

ASH Clinical News recently asked experts about how the decision to expand Medicaid or not has affected people in those states, especially individuals with hematologic conditions who may fall into coverage gaps.

Where Medicaid Stands

Medicaid programs are jointly funded by the federal and state government, with the state budget funding anywhere between 50 and 75 percent of costs.1 Each state participating in the Medicaid program sets the standards for its program (including decisions on optional benefits and reimbursement to providers), while the federal government mandates coverage of certain groups:

  • Pregnant women and children younger than 6 years old
  • Children aged 6 to 18 years with family incomes ≤100 percent of the FPL
  • Parents and caretaker relatives who meet requirements for the former Aid to Families with Dependent Children program
  • Elderly or disabled people who qualify for Supplemental Security Incomes based on low incomes

The ACA and the Health Care and Education Reconciliation Act of 2010 together were designed to expand Medicaid coverage to millions of low-income individuals and to make improvements to both Medicaid and the Children’s Health Insurance Program (CHIP).

According to Joan Alker, executive director at the Center for Children and Families Research and associate professor at the Georgetown University Health Policy Institute, “The Medicaid expansion was an integral part of the platform of coverage options in the ACA, serving as the foundation for expanding coverage for lower-income patients and adults who were not covered by Medicaid.”

Under the law, beginning in 2014, states would be required to provide Medicaid coverage to people who:

  • Are not pregnant
  • Do not qualify for Medicare
  • Are not already described in an existing mandatory group
  • Have incomes ≤138 percent of the FPL, equivalent to $15,415 per year for an individual and $27,724 for a family of three

To cover the cost of insuring this new segment of the population, the federal government planned to fund 100 percent of state costs through 2016, with funding decreasing to 90 percent in 2020 and after.

For some states, this was a hard pill to swallow. With the National Federation of Independent Business v. Sebelius, several states signed on to a lawsuit claiming that the ACA was unconstitutional – disputing the right of the federal government to require states to expand their Medicaid programs.2 Ultimately, the Supreme Court decided that threatening states that refused to comply with the ACA’s Medicaid expansion provision with a loss of Medicaid funding was unconstitutional. The ruling essentially took the decision to expand Medicaid coverage away from the federal government and the ACA, and placed it in the hands of each state government.

To Expand or Not to Expand?

There are currently 30 states that have decided to expand their Medicaid programs and accept federal funding, 16 states that have decided not to adopt the expansion, and five states in which expansion is still under discussion (Florida, Utah, Missouri, Tennessee, and Alaska; FIGURE 1).3

“States’ decisions about deciding not to expand the Medicaid programs vary from state to state, but in [Louisiana] our governor argues that the expansion is going to cost the state billions of dollars,” said Marc J. Kahn, MD, MBA, Peterman-Prosser Professor of Medicine and senior associate dean at Tulane University School of Medicine in New Orleans, Louisiana – a state with no current plans to adopt Medicaid expansion.

A similar argument is made by many of the states that have opted out of Medicaid expansion, with many of the decisions to expand or not to expand falling along Democrat (expand) or Republican (opt out) party lines, according to Prof. Alker. As seen in the map of Medicaid expansion status in FIGURE 1, it is clear that these decisions also fall across distinct geographic lines.

“Most notably, the decision to opt out has occurred in the South and Mountain West,” Prof. Alker said. “For states that have opted out of Medicaid expansion, I would say there are two policy objections commonly raised: the federal money is not reliable and it can’t be depended on.”

In a 2013 study of the estimated financial effects of the decision not to expand Medicaid, the RAND Corporation found that, for the (then) 14 states who opted out, the states could end up spending approximately $1 billion more on uncompensated health care in 2016.4

In the following years, these states would forgo $8.4 billion annually in federal payments and would still be subject to the taxes, fees, and revenue provisions built into the ACA.4 For example, the ACA cuts a disproportionate share of funding available to safety-net hospitals, reducing resources available to care for uninsured Americans.

“In addition, even in states that don’t participate in the expansion, our tax dollars are still going to fund the Medicaid expansion,” Dr. Kahn pointed out.

In August 2014, the Urban Institute and Robert Wood Johnson Foundation published a study calculating that the 24 states that, at that time, refused Medicaid expansion were forfeiting $423 billion in federal funds over the next 10 years, as well as leaving an estimated 6.7 million residents uninsured through 2016.5

Mind the Coverage Gap

Those 6.7 million residents fall into the “coverage gap” created by the states’ decisions to forgo Medicaid expansion. Because the ACA was originally designed with the assumption of an expansion of the Medicaid program, some adults find themselves in this vulnerable position.

“Depending on the state, there could be people who make too much to qualify for Medicaid, but not enough to qualify for marketplace subsidies,” explained Johanna Gray, MPA, vice president at Cavarocchi, Ruscio, Dennis Associates, a government relations and public policy consulting firm.

Here is the dilemma in states where Medicaid expansion did not occur: The median Medicaid eligibility limits include childless adults at 0 to 44 percent of the FPL ($8,840 for parents in a family of three). At the other end of the spectrum, the ACA marketplace subsidies kick in at 100 to 400 percent of the FPL ($11,770 to $47,080 for an individual).

That leaves people whose incomes fall into 45 to 99 percent of the FPL, an estimated 4 million adults according to the Kaiser Family Foundation’s analysis of 2014 Medicaid eligibility levels, in the coverage gap (FIGURE 2).6

From a practical standpoint, how would this affect a patient in the coverage gap? “In dollar amounts, if you are a parent with two children and work more than 18 hours a week at minimum wage, you earn too much to get Medicaid coverage. But if you still fall below the FPL, you don’t have any insurance options,” Prof. Alker said.

In a 2015 study, the Kaiser Family Foundation estimated that this coverage gap is more concentrated in states that already have a large uninsured population, such as Texas, where approximately 26 percent of people in the coverage gap reside. Overall, the report found that roughly 89 percent of individuals who fall into this gap reside somewhere in the South.6

“Theoretically, those people could buy insurance without subsidies,” Ms. Gray said, “but often their incomes are so low that they are left without insurance.”

The authors of the Kaiser Family Foundation report echoed this point, stating that it is unlikely that this group will be able to afford ACA coverage without one of these two assistance programs: “In 2015, the national average premium for a 40-year-old individual purchasing coverage through the Marketplace was $276 per month for a silver plan and $213 per month for a bronze plan, which, for people in the coverage gap, equates to about half of the income for those in the lower income range … and about a quarter of the income for those in the higher income range.”

A Public Health Issue

Looking at the nationwide consequences of opting out of Medicaid, a recent Harvard study put the number of deaths that could be potentially attributed to a lack of Medicaid expansion in opt-out states at between 7,000 and 17,000.7 In states where Medicaid was expanded, the study authors added, people with chronic conditions who once did not have any financial assistance with health insurance now have increased access to health-care services.

“In Louisiana, the study estimated that Medicaid expansion could have saved about 500 deaths a year,” Dr. Kahn said. “The cost of not taking Medicaid expansion is not only a fiscal cost but also a public health issue.”

This is especially true for patients with certain hematologic conditions.

“We were very hopeful for Medicaid expansion,” said Michelle Rice, vice president of public policy & stakeholder relations, at the National Hemophilia Foundation. “While the majority of those with bleeding disorders are insured, Medicaid expansion would have offered an option to those who remain uninsured.” Over the past couple of years, she noted, “we have seen a slight increase in Medicaid enrollment in the bleeding disorder community, from approximately 23 to 25 percent.”

However, for patients with hemophilia who fall into the coverage gaps there is not as much hope.

“For someone with a condition like hemophilia, treatment is not an option; it is a necessity,” Ms. Rice sad. “So, instead of being treated preventively, the uninsured will likely receive their care in the emergency department. When you don’t have insurance, you will only get treatment when you have a bleed, which will result in increased joint disease and will increase the medical costs to the state.”

Even those people with hemophilia who reside in states with the Medicaid expansion have been facing some new challenges when it comes to the care of their condition.

Roughly 70 percent of Medicaid enrollees are enrolled in managed care programs.8 Managed care delivery systems are organized in a way that manages cost, health care use, and quality, and their plans are often capitated, meaning that they receive a set per-member, per-month payment for health-care services.

“The problem is that some of these plans may be small county or regional plans with a limited number of covered lives (i.e., 10,000 to 20,000 people),” Ms. Rice explained. “The idea behind these capitated plans is that there are low users and high users of medical care and, therefore, costs will ‘average’ out over the pool of insured patients. But, if there are patients with hemophilia in the pool, even if they do not go into the hospital and are receiving regular infusions, they are more than likely going to exceed any capitated rate.”

While the practice of “carving out” the clotting factors that patients with hemophilia require – managing these types of regular hemophilia treatments in a fee-for-service plan separate from the managed care plan – “seems to be working better,” there are still concerns about placing restrictions on treatments for unpredictable hematologic diseases, Ms. Rice added. “If you take a high-cost, pretty volatile disease like hemophilia and place it into a capitated plan, you run the risk of causing the plan to go under, affecting care not only for hemophilia patients, but for everyone else on the plan.”

Patients with hemophilia have also experienced narrowing networks under some of the new Medicaid plans. According to Ms. Rice, all drugs to treat hemophilia were either included on the preferred drug list or simply covered under the plans in the past; however, more recently there has been a push to start reviewing these drugs lists, with some states placing hemophilia products on preferred drug lists.

“The problem is that it is such a small population of patients and there really are no head-to-head trials to clinically show the differences between these drugs. From anecdotal evidence from patients, though, we know that people respond differently to different drugs,” she said. “Our doctors are hesitant to switch patients between products without forethought because the way you know a clotting factor doesn’t work is with a bleed. That treatment’s failure could be life-changing for that person.”

The Future State of Medicaid Expansion

Although in many states the decisions about Medicaid expansion are already set, physician advocacy in states that have not expanded is important, Dr. Kahn said.

Prof. Alker agreed, adding that physicians could play an important role in educating their community and state legislators about the importance of Medicaid expansion. “There are many important reasons why states should be accepting these federal dollars,” she said. “In states that continue to carry a high level of uninsured people, refusing to expand Medicaid creates a considerable coverage gap and considerable risk for hospitals and health-care systems.”

At time of this writing, Prof. Alker said that the debate about whether to expand Medicaid is alive and well in Florida and Alaska, with Montana just recently passing legislation to expand the program in April.—By Leah Lawrence


References

1. Kaiser Family Foundation. Focus on Health Reform. A guide to the Supreme Court’s Decision on the ACA’s Medicaid Expansion. August 2012. Accessed April 22, 2015 from https://kaiserfamilyfoundation.files.wordpress.com/2013/01/8347.pdf.

2. Memorandum to Members of the Joint Select Committee on Health Reform Implementation. Accessed April 22, 2015 from http://leg.wa.gov/JointCommittees/HRI/Documents/July%202012/JSC%20-%20NFIB%20summary.pdf.

3. The Henry J. Kaiser Family Foundation. Current Status of State Medicaid Expansion Decisions. Accessed April 23, 2015 from http://kff.org/health-reform/slide/current-status-of-the-medicaid-expansion-decision/.

4. Price CC, Eibner C. For states that opt out of Medicaid expansion: 3.6 million fewer insured and $8.4 billion less in federal payments. Health Affairs. 2013;32:1030-1036.

5. Dorn S, McGrath M, Holahan J. What Is the Results of States Not Expanding Medicaid? Accessed April 22, 2015 from http://www.rwjf.org/content/dam/farm/reports/issue_briefs/2014/rwjf414946.

6. The Henry J. Kaiser Family Foundation. The Coverage Gap: Uninsured Poor Adults in States that Do Not Expand Medicaid – An Update. Accessed April 22, 2015 from http://kff.org/health-reform/issue-brief/the-coverage-gap-uninsured-poor-adults-in-states-that-do-not-expand-medicaid-an-update/.

7. Dickman S, Himmelstein D, McCormick D, Woolhandler. Opting Out of Medicaid Expansion: The Health And Financial Impacts. Accessed April 23, 2015 from http://healthaffairs.org/blog/2014/01/30/opting-out-of-medicaid-expansion-the-health-and-financial-impacts/?utm_source=rss&utm_medium=rss&utm_campaign=opting-out-of-medicaid-expansion-the-health-and-financial-impacts.

8. Medicaid.gov. Managed Care. Accessed April 23, 2015 from http://medicaid.gov/medicaid-chip-program-information/by-topics/delivery-systems/managed-care/managed-care-site.html.

 

FIGURE. Current Status of Medicaid Expansion Decisions

 

 

 

 

 

 

 

FIGURE 2 – Medicaid coverage gap

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