The Trump administration, along with Congress, is hard at work on their quest to repeal and replace the 2010 Affordable Care Act (ACA). Last week their proposal passed through two House committees and is moving on to a budget panel before it hits the floor.
Logic may dictate that rolling back legislation should be simple. However, several issues are at play within the ACA that add complexity to any decision-making related to its fate. In this case, a primary point of debate is the impact of Medicaid expansion reform. What many don’t realize is that, if the ACA is repealed, there may be massive bankruptcies at the state level.
Under the ACA, individual states had the opportunity to accept Medicaid expansion from the federal government. The expansion allows for each state to receive full federal funding for the first three years of a Medicaid program. After that period, the states have the option to receive close to 90 percent funding of Medicaid costs.
However, one of the caveats of accepting the expansion is that each state has to be more lenient than in the past on the qualifications of who can enter the program, which is one of the main reasons why some states that accepted the expansion terminated the asset test.
Due to the requirements becoming less stringent, enrollment into Medicaid increased by 37 percent nationwide from 2013 to 2016.
For the 35 states that accepted the expansion, on average, enrollment increased by 38 percent into Medicaid (Connecticut data is not available). In states such as Utah, Vermont and Delaware, the increase in new enrollment has been under 10 percent while states like Kentucky, Colorado and Nevada have experienced over 75 percent increases.
In terms of overall costs, California in 2012 paid out roughly $50 billion in Medicaid and by 2015, according to the Kaiser Family Foundation, that number increased to over $85 billion.
The remaining 16 states that did not accept the expansion experienced just over a 12.5 percent increase in enrollment with the largest increases, over 26 percent, being in Louisiana and North Carolina (Maine data is not available).
With the repeal of the ACA, the states that opted for expansion may just find themselves in a position of not being able to fund the total costs of Medicaid. Unless, of course, any new legislation considers these increases in enrollment as well as increases in costs.
With the promise of funding from the federal government possibly coming off the table, the states that accepted expansion may also be firmly against any new legislation that puts their budgets in jeopardy.