How Losing the Affordable Care Act Could Undo Years of Progress in the Medicaid Program

Manatt on Health: Medicaid Edition

Editor’s Note: A Supreme Court decision overturning the Affordable Care Act (ACA) could erase ten years of progress in expanding and improving Medicaid coverage. In a recent post for The Commonwealth Fund’s “To the Point” blog, summarized below, Manatt Health examines the coverage impacts and other critical benefits that Medicaid expansion is driving—and the significant ways that the ACA has improved Medicaid in both expansion and nonexpansion states. On November 10, 2020, the Supreme Court heard arguments in California v. Texas, the case challenging the constitutionality of the ACA. While the case focuses on the validity of the individual mandate, a decision striking down that provision could bring down the entire law, resulting in millions of people losing coverage, particularly in states that expanded Medicaid. The fate of Medicaid expansion, however, is just one of the many ways the ACA impacts Medicaid.


Coverage Impact

Thirty-eight states and Washington, D.C., have adopted Medicaid expansion. As of June 2019, nearly 15 million people were covered under Medicaid expansion, and enrollment has grown sharply over the past several months as a result of pandemic-related job losses. Research has shown that Medicaid expansion brings significant benefits to enrollees, states and providers:

  • Increased coverage. The ACA has pushed uninsured rates to historic lows, with Medicaid expansion playing a central role. In expansion states, uninsured rates plummeted from 15.3 percent in 2013 to 7.6 percent in 2016. The uninsured rate in nonexpansion states dropped from 19.8 percent to 13.7 percent over the same period.
  • Reduced racial and ethnic disparities. Data show that from 2013 to 2018, the uninsured rate among Black adults in Medicaid expansion states dropped from 21.5 percent to 10.1 percent. During this same period, Latino adults also saw significant improvements, with uninsured rates dropping from 36.3 percent to 19.1 percent.
  • Improved access to care and health outcomes. Adults in Medicaid expansion states have better access to care and health outcomes than adults in nonexpansion states. One study found that individuals who gained insurance coverage during the first three years of Medicaid expansion in Arkansas and Kentucky experienced a 41-percentage-point increase in the likelihood of having a usual source of care. Other evidence suggests that, relative to nonexpansion states, beneficiaries in expansion states have better access to treatments for mental health conditions and substance use disorders, better self-reported health outcomes and reduced infant mortality.
  • State fiscal benefits. Expansion states have experienced budget savings and revenue gains, which have offset a large portion of their costs associated with the expansion. 
  • Reduced hospital uncompensated care. One study calculated that from 2013 to 2015, uncompensated care costs across expansion states decreased by $6.2 billion.

Improved Services and Process Simplifications

The ACA has profoundly changed Medicaid in both expansion and nonexpansion states:

  • Enrollment simplification. To promote coverage and reduce churn, the ACA required simplification and coordination of Medicaid application and renewal processes with other coverage programs. Eliminating these requirements could bring back processes that depressed enrollment.
  • Simplified eligibility calculations. The ACA introduced a new method for calculating Medicaid eligibility for all populations other than the elderly and disabled. If the ACA is voided, states would need to undo the changes, which would be costly and time-consuming.
  • Home and community-based services. The ACA created new eligibility pathways for providing home and community-based services for people who need long-term services and supports. It also provided a higher federal match for states to promote access to these services in lieu of nursing home care.
  • Care management for high-needs enrollees. Under a “health homes” provision, the ACA increased the federal share for care management provided to Medicaid enrollees with chronic conditions.
  • Extending drug rebate. The ACA extended the Medicaid drug rebate to Medicaid managed care organizations. Without it, drug costs for managed care beneficiaries will grow significantly.

Destabilizing Markets and Shifting Costs Back to States

If the ACA ends, many of the health plans serving Medicaid will experience significant destabilization. In addition, eliminating the ACA provisions that bolstered Medicare and private insurance coverage could shift costs onto Medicaid.

Conclusion

Striking down the ACA could erase ten years of structural improvements in Medicaid and impose new costs on states. The federal government could work with states to address some of the damage, but without statutory authority, the administration’s hands will be tied in many areas. Most notably, without statutory authority, the only avenue for maintaining the Medicaid expansion is through a federal waiver, but that would not be sufficient to restore the 90 percent federal matching rate under the ACA.

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