Federal expansion and simplification of Medicaid could help states

Tucked into the 1,000 page “America’s Affordable Health Choices Act of 2009” (H.R. 3200, the House Tri-Committee health reform bill) is a significant simplification of Medicaid that has big implications for expanding access to health care coverage as well as helping states like Minnesota that are facing serious budget challenges.

H.R. 3200 would replace the existing complex rules about who can qualify for Medicaid. Under H.R. 3200, all individuals (children, pregnant women, parents and adults without dependent children) with incomes up to 133 percent of the federal poverty level would qualify. A similar provision in the Senate Health, Education, Labor and Pensions (HELP) Committee’s Affordable Health Choices Act extends Medicaid coverage up to 150 percent of the federal poverty level. Because the Medicaid expansion provision appears in both House and Senate bills, it is likely to stay in some form in any final health care conference report.

Medicaid is jointly financed by the federal government and state governments. In Minnesota, normally about half of Medicaid costs are paid by the federal government and half are paid by the State of Minnesota. (Under a temporary provision in the federal economic recovery legislation signed into law in February, the federal government is currently paying 60 percent of Minnesota’s Medicaid costs through 2010.)

Under H.R. 3200, the expansion of Medicaid (except for some optional expansions) would be fully paid for with federal funds. This provision will allow states to expand Medicaid coverage without increasing the state’s share of its Medicaid costs. (Note, however, that an amendment adopted in the House Energy and Commerce Committee would only continue full federal funding for Medicaid expansion through 2014, after which the federal government would finance 90 percent.)

The expansion of Medicaid in H.R. 3200 would hold particular significance for approximately 35,000 Minnesotans living in extreme poverty, many battling chronic illnesses, chemical dependency and mental health issues. Most of these individuals will lose access to health coverage as a result of Governor Pawlenty’s line-item veto and unallotment of General Assistance Medical Care (GAMC) to help balance the state’s budget. Unfortunately, even if passed by Congress, the federal program wouldn’t kick in soon enough to prevent these individuals from losing coverage next spring. State-level action is still needed to avoid leaving these vulnerable populations uninsured.

Ensuring that federal expansions of Medicaid are fully funded by the federal government will be important in expanding health care coverage for many Minnesotans while at the same time not creating additional budget pressures for states. In fact, it could even ease some state budget challenges in cases where the federal expansion allows the state to shift some folks whose health care is fully funded by the state into Medicaid, where there is shared responsibility with the federal government.

-Steve Francisco

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About Steve Francisco

Steve Francisco is the former federal policy analyst for the Minnesota Budget Project.
This entry was posted in Federal Budget, Health Care, Unallotment and tagged , , . Bookmark the permalink.

One Response to Federal expansion and simplification of Medicaid could help states

  1. As someone living w/a disability, it sure could be helpful. I can’t afford to purchase a medicare supplement, but do not qualify for medicaid.

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