Baucus: Medicaid Expansion Will Not ‘Cost States Nearly As Much As Was Originally Feared’

Advocates of Medicaid expansion — a program that is financed with state and federal funds — are running into one major problem: how to pay for the expansion without shifting too much cost to the states. “For many members of Congress, as well as for governors and state legislators around the country, Medicaid expansion is even more important than issues like the “public option” or illegal immigrants that have tended to get far more publicity,” the New York Times reports. Sens. Dianne Feinstein (D-CA) and Olympia Snowe (R-ME) have expressed concerns about shifting the costs of the expansion to the states and the Senate Finance Committee has been grappling with the issue.

Today, Senate Finance Committee Chairman Max Baucus (D-MT) hinted that he has worked out a deal in which “the Medicaid costs with expansion are not going to cost states nearly as much as was originally feared.” The Committee is hoping to expand the program to all Americans below 133% of the federal poverty level (FPL) and cover approximately 1/3 of the uninsured:

That’s based on the interaction of lots of other programs too including rebates, drug rebates, which is more expansive, more generous to states compared to current law. I think the changes in the SCHIP program also help states. On that basis, states are going to be pleasantly surprised. There is going to be some additional cost but much less than they originally expected.

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So what will the final expansion look like? Below is a table comparing the provisions in the House bill and Baucus’ reform framework:

House Health BillBaucus ProposalWho is eligible?All children and adults with incomes up to 133% FPL.

Newly eligible Medicaid beneficiaries who don’t have children may enroll in the Exchange if they were insured for six months before becoming eligible for Medicaid.

Parents and children aged 6 and older with incomes up to 133% FPL eligible in traditional Medicaid.

Non-elderly childless adults with incomes below 133% FPL will enroll in a different plan where they will be offered less benefits (the benefit package is equivalent to a Silver-level).

Newly eligible applicants with incomes 100–133% of the FPL may enroll in coverage through the Exchange. (States would be required to continue providing services not covered by plans in the Exchange). Individuals with incomes bellow 100% FPL would not be eligible to receive subsidies in the Exchange.

How Will Medicaid Pay Doctors?Increases Medicaid payment rates for primary care providers to 100% of Medicare rates by 2012.No provider provisions.Who Will Pay For The Expansion?Coverage expansions and the enhanced provider payments will be fully financed with federal funds through 2014 and 90% federal financing beginning in 2015. Federal assistance will be provided to help states cover the newly eligible. Details still in negotiation. What Happens To Children’s Health Insurance Program (CHIP)?Most CHIP enrollees are required to obtain coverage through the Exchange once it is established. CHIP enrollees will not be enrolled in an exchange plan until the Secretary certifies that coverage is at least comparable to coverage under an average CHIP plan. Stand-alone CHIP programs would provide 12-month continuous eligibility to all enrollees with income below 200% FPL. Beginning in 2013, CHIP enrollees above 133% FPL would obtain coverage through the Exchange and states would be required to continue to provide services not covered by plans in the Exchange.

Under current law, states are required to cover pregnant women and to children under age 6 from families with income under 133% FPL and children 6–18 from families with income below the poverty line. Only 7 states provide Medicaid coverage for low-income childless adults and only 16 states (plus DC) offer parents coverage at 100 percent of the federal poverty level (FPL). In 43 states, adults without dependent children “are ineligible for Medicaid no matter how low their income.”

Despite its flaws, Medicaid provides comprehensive coverage to children, the poor, and the disabled and many policy makers believe that health reform should build on this foundation. As Families USA points out, “Medicaid is cost-effective compared to private health insurance” and offers services that the private insurance market does not. “For example, Medicaid covers transportation to doctors’ appointments, services that help people with disabilities, and services provided at rural and community health centers.”