Obamacare Provision Allows States to Deny Some Existing Medicaid Recipients Benefits

It appears that President Obama’s health insurance law, designed to provide coverage to 30 million Americans, in part by adding 17 million people to Medicaid has hit yet another snag. There is a provision in the law that the Supreme court justices chose to leave intact when they upheld the law last week that could have a very negative impact on the poor.

Starting in 2014, states will no longer be barred from making it harder for poor adults to qualify for Medicaid, including those who are already receiving benefits.

States could throw some low-income adults “into a black hole with nowhere to turn for coverage,” said Deborah Bachrach, who was New York’s Medicaid director until 2010 and is currently special counsel at Manatt, Phelps & Phillips, a New York law firm.

If a state opts out of the 2014 expansion of Medicaid, poor childless adults wouldn’t gain coverage in that state, but at the same time, the state could roll back eligibility for parents with children who are currently enrolled, reducing the number of participants in the program.

In the last several years, many states have sought to reduce the cost of the program by cutting providers’ rates and contracting with private managed-care companies, among other strategies.

“It’s a perfectly reasonable concern” that states might make it more difficult for adults to qualify, said Sara Rosenbaum, a health policy professor at George Washington University.

In 2009, when Congress approved the federal economic-stimulus law, which included additional Medicaid funding, states were prohibited from reducing eligibility or increasing the cost-sharing requirement for people enrolled in Medicaid. The health insurance law extended that ban until 2014, with the expectation that every state would have a new online insurance market and would have expanded Medicaid to everyone whose income is less than 133 percent of the federal poverty level, but the high court struck down the penalty for states that didn’t expand, saying the threatened loss of their existing federal Medicaid dollars was “coercive.”

Republican governors in at least seven states have indicated that they’re unlikely to expand Medicaid even though the federal government will pay all the costs from 2014 to 2017 and at least 90 percent of the costs after that. States have until next year to decide on the expansion, and some are expected to negotiate their own terms with the Obama administration before signing on.







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