Roosevelt Institute | Cornell University

Medicaid Expansion Under the ACA

By Philip SusserPublished September 30, 2013

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Before the Affordable Care Act (ACA) was signed into law, Medicaid - a joint federal-state program - gave freedom to states in determining eligibility requirements. After a 2012 Supreme Court ruling that gave the option to states in expanding Medicaid to individuals at or below 133% of the poverty line, 26 states have opted into the program, thirteen have opted out, and 11 remain undecided. A major deciding factor for states in their decision to adopt the program's expansion is financial viability as well as ultimate health outcomes.
By Phillip Susser, Published 9/30/2013


Before the Affordable Care Act (ACA) was signed into law, Medicaid — a joint federal-state program — gave freedom to states in determining eligibility requirements.  Most states restricted coverage to individuals who were either disabled or both had dependents and were in poverty.  While eligibility varied considerably from state to state, all states received partial federal funding for their respective programs. Since health insurance has been historically linked to employer based coverage— the 1942 Stabilization Act led to the widespread development of employer-based insurance plans — the economically disadvantaged (i.e.; homeless people) have found themselves at a loss when it comes to health care.  In many states, Medicaid did not provide health insurance for young, poor individuals without dependents.  This underrepresented group was targeted in Obamacare's expansion of the Medicaid program.  After a 2012 Supreme Court ruling that gave the option to states in expanding Medicaid to individuals at or below 133% of the poverty line, 26 states have opted into the program, thirteen have opted out, and 11 remain undecided.  A major deciding factor for states in their decision to adopt the program's expansion is financial viability as well as ultimate health outcomes.       

A recent study conducted in Oregon gave a unique window of opportunity to understand how increased access to Medicaid affects the health of a population.  After finding some spare money in the state budget, Oregon decided to provide Medicaid coverage to 10,000 additional individuals — decided by a lottery.  This gave researchers the opportunity to look at the "before and after" affects of extended Medicaid coverage.  In the two-year period of data collection, they found that provision of health insurance to these individuals increased the number diagnoses of diabetes but did not affect their blood sugar levels.  Other indicators of physical health showed no signs of significant change either.  Additionally, health care costs rose, as the results showed an increase in the amount of health care services being used, such as mammograms and cholesterol tests.  A significant finding from the study, though, was a decrease in rates of depression and elimination of catastrophic out of pocket medical spending.  Especially among those in deep poverty, reducing the likelihood of catastrophic health care costs — having all of one's resources wiped out by a single trip to the hospital — can be instrumental in providing increased financial stability.  But, this ultimately came at the cost of increased usage of health care services with minimal positive health outcomes.  

            Another study examined the health and behavioral characteristics of a sample of 725 chronically homeless individuals - one of the prime beneficiaries of the Medicaid expansion - from 2004-2009.  By focusing on the demands that this demographic will place on the health system, it painted a clearer picture of the possible economic affects of Medicaid expansion.  Three quarters of the sample were not already enrolled in Medicaid, suggesting that its expansion will open up the program to a large fraction of this subpopulation.  Additionally, the data indicated that chronically homeless people have disparate mental and physical problems (substance abuse, mental illness, etc.); states can potentially save money by opening up Medicaid to this group, since, in some cases, they are currently using state funded services for their care.  In essence, it would force the government to partially "pick up the tab" for these individuals.  Finally, the difference in frequency of reported health problems between the uninsured homeless and those with Medicaid supports the sentiment that Medicaid coverage can be linked to more diagnoses.

Medicaid expansion will clearly increase the quantity of health care consumed nationally.  While the Oregon study cites no significant health changes in the two year period, it omits long-term health benefits of health care coverage.  Additionally, Medicaid expansion will give some states the opportunity to save money by allowing the federal government to partially pay for the health care of a larger fraction of the economically disadvantaged.