Skip to content





Need lawmakers

As Congress debates an increasingly contentious health care overhaul bill,

As Congress debates creation of a government-run health insurance plan and whether employers should be required to provide health coverage to their workers as part of a sweeping health overhaul bill that President Obama and Democrats hope to pass this year, lawmakers are also contemplating one of the largest Medicaid expansions in decades.

Provisions in both House and Senate bills would expand eligibility for the program and cover the additional costs, at least for a few years. But opinion is split over whether expanding Medicaid, the federal-state health insurance program that provides coverage to about 59 million elderly and disabled Americans, or  providing subsidies to allow the uninsured to purchase coverage through health insurance “exchanges” included in legislation now pending on Capitol Hill, is a better way to provide health care coverage to millions of low-income Americans.

 Democrats tend to favor an expansion of Medicaid while Republicans believe that providing financial help to more lower-income Americans receive medical care through the private sector is the better way to go, noting that many Medicaid beneficiaries already receive their medical care through managed care plan.

 Some health care analysts said expanding Medicaid would cost less than enrolling people in private health insurance plans and provide better coverage. Unlike many private insurance plans, Medicaid covers many services that disabled people need, such as XXXXXX. “Medicaid is by far the better deal from society’s point of view, from the consumer’s point of view,” said Leighton Ku, a health policy professor at George Washington University’s School of Public Health and Health Services.

 But others say that raising Medicaid eligibility to as high as 150 percent of the federal poverty level, or xxxx for a family of four, as proposed in legislation pending before the Senate Health, Education, Labor and Pensions Committee, would burden federal and state governments with additional debt as they struggle to cope with the ongoing recession.

 “I think it’s a real problem,” said Joe Antos of the American Enterprise Institute. “Here the Democrats are offering gigantic fiscal relief to states and a huge expansion of the Medicaid program.”  If Medicaid coverage were  raised to 150 percent and payments are increase to providers, as envisioned in the House Democrats bill, “you could see numbers approaching $1 trillion” over the next decade, Antos said. COMPARE THIS AGAINST CBO NUMBERS-USE THOSE INSTEAD?

 THIS COULD GO LOWER: John Murray, a spokesman for House Republican Whip Eric Cantor, R-Va., said it makes no sense to raise the level of Medicaid eligibility when 30 percent of the uninsured, who are NOW eligible for the program, are not yet enrolled.

  “We think that Medicaid serves an important safety net role but it’s clearly been problematic for state budgets and even if in the Democrat bill if they address that there’s a broader problem about what are they doing about waste, fraud and abuse in that system?” he said.

 The House Democrats bill, unveiled June 19, would raise Medicaid eligibility to 133 percent of federal poverty level, or $28,200 a year for a family of four, for individuals and families. The House Democrats plan would raise Medicaid reimbursement rates for primary care physicians and practioners to 100 percent of Medicare by 2012. The federal government would cover both the cost of the Medicaid expansion OVER CURRENT RATES and the higher Medicaid payment rates.

 While the Finance bill is still being developed, negotiators have discussed raising Medicaid eligibility to 133 percent of the federal poverty line for a family of four, and to 100 percent of the federal poverty level, or $10.800 a year, for parents and childless adults. The expansion would be phased in over time, starting in 2010, and the government would cover the cost of the expanded Medicaid coverage for five years, then states would have to pick up the tab.

 Adults without children and low-income children are expected to benefit significantly from the Medicaid expansion, as would children ages 6 through 19. According to an analysis from Avalere Health, a health care consulting firm based in Washington, under the House Democrats plan Medicaid enrollment could climb to 83 million, an increase of about 28.5 million from current enrollment estimates, by the time it is fully phased in. Under the Senate proposal, which could change, Medicaid enrollment would rise to about 85 million. Both the House and Senate Medicaid plans could reduce the number of the uninsured y 18 million, according to Avalere’s analysis.

 “Literally you can have income at 30 percent of the poverty and line and if you are not disabled or have a child, you are not eligible for Medicaid,” said Bonnie Washington, TITLE at Avalere Health.

 Governors are worried about what new costs an expanded Medicaid will mean for already strapped state budgets. “Any increase in the mandatory minimum eligibility threshold will cost states tens of billions of dollars per year,” National Governors Association Executive Director Ray Scheppach told the House Energy and Commerce Health Subcommittee during a hearing Thursday on the House Democrats’ health care plan. “States must take into consideration not only the actual cost of including additional individuals on the rolls, but also the complex interaction of reimbursement rates and access.”

 In Massachusetts, for example, an expansion of health care coverage has led to a shortage of primary care physicians to meet the demand. But that’s also a problem nationwide, Ku noted..

 Antos said that raising Medicaid provider reimbursement rates in statute, as the House bill would do, would be a major change from current law which now simply requires that payments be “sufficient.” Since most Medicaid beneficiaries are in managed care, requiring that Medicaid payment rates rise for primary care physicians may mean that other provider rates have to rise as well, which will increase costs, he said.

 The xxx plan would give governors the option of moving Medicaid beneficiaries into health exchanges over time but they would first have the secretary of the Department of Health and Human Services. The xx plan would move children from the Children’s Health Insurance Program (CHIP) into Medicaid, which, as an entitlement program, has a longer history of providing benefits and a more stable source of federal funding. EXPLAIN FIGHT HERE OVER CHIP REAUTHORIZATION/ADD BIPARTISAN  GROUP MCAID PLAN (DOLE, DASCHLE) – THEY MOVED FROM MCAID TO EXCHANGES


While Medicaid directors welcome an expansion, states that already offer coverage above 133 percent of the poverty line won’t see any benefit from the Medicaid expansion being discussed on Capitol Hill and states that are under that level will need assurances that the federal government will help, said Carol Steckel, Alabama’s Medicaid Commissioner and chair of the National Association of State Medicaid Directors. Lawmakers might want to consider the cost of living in individual states, for example, as they decide raising Medicaid eligibility levels.


“When you say 500 percent of the federal poverty level in New York vs. Alabama. It’s very different,” she said.



Pounded by the recession, Connecticut was planning to impose a $50 monthly premium in July for some parents enrolled in the state’s Medicaid program for the poor. Virginia officials feared they would have to create long waiting lists for disabled people who need the help of personal aides to live independently in their own homes.

The federal government came to the rescue earlier this year with $87 billion for Connecticut, Virginia and the other 48 states to keep Medicaid working as the ultimate health care safety net for millions of Americans.  An estimated five million more Americans have become poor enough to be eligible for Medicaid since the recession began in December, 2007 and the enrollment may reach 55 million this year.

Even with the cash infusion from Washington, tatters have developed in the safety net. Taking federal dollars means the states can’t throw people off the Medicaid rolls, but they can  pay pay for  fewer services. Eye care and dental care for adults, for example,  have been cancelled in some states. “There are a lot of people who would argue that maintaining your mouth or your sight are not optional, but those are optional federally” said Stan Rosenstein, a consultant who formerly ran  Medi-Cal, the huge Medicaid program in California.

A temporary fiscal reprieve

The reprieve from Washington was just temporary because the special stimulus funds run out at the end of 2010, and the states will be in big trouble if their tax revenues haven’t recovered by then.  The financial  pressures on Medicaid are “the worst in my entire life as an economist; I’ve never seen it so bad,” said Ann Kohler, executive director of the National Assn of State Medicaid directors, and the former Medicaid chief in New Jersey.

Louisiana turned down $20 million of the federal funds aimed at helping people into temporary Medicaid coverage, with state officials saying they won’t be able to pay for the program when the federal stimulus money runs out at the end of next year.

As if the current economic situation weren’t menacing enough, the state Medicaid directors face another major challenge. Elected officials and policymakers in Washington want to give Medicaid millions more people to care for, by making the program a foundation stone for universal coverage.   

One of the key architects of health care reform, Senate Max Baucus (D-Mont), chair of the Senate Finance Committee, wants to expand Medicaid to cover every adult whose income is below the federal poverty line. And for children, he wants expansion of federally-subsidized care to those in families with incomes up to 250% of the federal poverty standard.

A large enrollment hike

This would trigger a massive new enrollment of 22 million people joining Medicaid, including 17 million now without insurance and another five million who would switch from private insurance to the government rolls, according to an analysis by the Urban Institute.

Most of the increase in Medicaid enrollment would come in the south and the west, typically in the poorest states. “The trouble is that these states are least able to afford expanded coverage,” according to John Holahan of the Urban Institute, one of the authors of the Medicaid study. “How do you deal with it?” Picking up the full tab for the added costs in poor states would require a huge amount of federal dollars, perhaps as much as $80 billion a year, according to Holahan.

Sen. Baucus and other backers of an expanded Medicaid seek to make the program a comprehensive package of health benefits as part of their vision to give every American a high quality standard policy.

That would be very different from the reality of Medicaid today.  You have to be poor and also fit in certain categories: pregnant women, children up to 18, the disabled, and the elderly. Rules and standards are variable and often confusing: a child up to age six can get help if family income is  less than 133% of the federal poverty  standard; for a child between 6 and 18, the income rule is 100% of the poverty line. .On top of that come the state  rules,  which supplement Medicaid. In a rich state like Connecticut for example, a family with income up to 300% of the federal poverty can get subsidized health coverage. In a poor state, such as Alabama, a childless adult qualifies only with an income below 12% of the federal poverty line.

Different views in Washington

Medicaid as in insurance system falls far short of the plans being debated in Washington and promoted in House and Senate committees.

“If you are just a single person, a non disabled single person, a kid out of high school, a kid out of college, a kid coming back from Iraq, wandering around looking for work, not disabled, doesn’t have dependent children, just a single person unemployed, there is no way you are going to be eligible for the Medicaid program,’ noted David Parella, the Connecticut Medicaid director.

Medicaid already is the second biggest category of states spending, ranking behind only education.  .

.Medicaid spent $332 billion in fiscal 2007, the last year for which compete numbers are available. Most of the money, 57% or $333.2 billion came from the federal government, while the states contributed $142.6 billion or 43%.  There is a varied matching rate; the federal government pays more for the poor states.


Going on and off the program

People go on and off Medicaid, as they income situation varies, as they lose a job and lose health insurance, or they get work and a health policy. A further wrinkle comes from being “medically needy.” You can have too much income to qualify for Medicaid, but if you have huge medical bills, those are included and can reduce your net income so you become eligible for Medicaid.

The estimated average enrollment was 49 people during 2007, but at some point during the year 62 million people about one of every five Americans was enrolled in Medicaid, according to a report by the Centers for Medicaid and Medicaid Services, the federal agency that sets rules for the program.

“We see this as a bridge until a family gets a job again and insurance again,” said Cindi Jones , the deputy director of Medicaid in Virginia, who estimates that only 9% of the people are on the program year in and year out. Medicaid is getting lots of new people now, those once securely anchored in the middle class who never would have imagined themselves in a program designed for the poorest citizens. In Connecticut, where fully 25% of state revenues have come from people with jobs in the financial sector on Wall Street, “we are seeing people” enrolling in Medicaid who had jobs in the hedge fund business, said noted Parella.

Enrollment rising in  hard times


The standard estimate is that every percentage point increase in the unemployment rate will make another million people eligible for Medicaid and for the federal Children’s Health Insurance Program, designed for families who are poor but not poor enough to be eligible for Medicaid. . However, it is impossible to say now how many will get the benefits. Enrollment is a daunting process  as applicants go county offices, and provide a plethora of documents about their payroll stubs, their bank accounts and other assets. 

One way the states keep down enrollment is to require people to be certified more often, and that technique is being applied during the current recession.

Unlike the federal government, which can run unlimited deficit spending, the states have to balance their budgets. Medicaid, as a big budget item, will continue to be a  prime target for cuts during the current prolonged recession. Collectively, the states face a shortfall of  shortfall of $350 billion in their budget needs through 2011, according to a compilation by the liberal Center for Budget and Policy Priorities.

The shortage will bring new pressures on Washington for  a stimulus package Number Two. And if Washington wants Medicaid to morph into a new insurance policy for every poor American, it will face demands for even more money from the states.

In Alabama, it would cost another $80 million on top of the already strained budget to provide Medicaid coverage for all poor, childless adults in the state. Alabama voters have three times rejected tax hikes proposed by the governor, so it would be impossible to pay for any new Medicaid expansion without federal help, according to Carol Steckel, the state Medicaid director.