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Vorys Health Care Advisors

Health Care Reform: Count Down to Decision Day

Posted in Health Care, Health Care Reform, Medicaid

Conventional wisdom holds that the U. S. Supreme Court is likely to render a decision on the fate of the Affordable Care Act (ACA) near the end of its term concluding on June 30th.  Four separate issues are under review:

1. The so-called “individual mandate” that all Americans have health insurance

2. The Medicaid expansion to low-income individuals

3. The severability of the issues (in essence, whether the entire law must be struck down if one part is held unconstitutional)

4. Whether the law is even ripe for consideration based on an arcane requirement that bars federal courts from ruling on the constitutionality of a tax law before payments are due

In preparation for the firestorm that is sure to ensue no matter how the Court decides each of these issues, we’ve outlined the practical effects on the American public of the Medicaid expansion assuming it is upheld and that the Court determines the issues are severable (in the event the individual mandate is ruled unconstitutional).

What does the Medicaid expansion really mean for Americans?

• The ACA creates a Medicaid floor under which nobody can fall.  Anyone earning up to 133% of the federal poverty level (an annual income of approximately $14,850 for an individual and $30,650 for a family of four in 2012) will become eligible for Medicaid.  States with income eligibility thresholds above 133% of the federal poverty level (FPL) may maintain them.

• Between 15 and 17 million Americans (including 900,000 to one million Ohioans) will become insured through Medicaid either because they’re newly eligible or as a result of increased awareness of the Medicaid program due to the expansion.

• According to a 2009 analysis, because almost half (46%) of uninsured Americans, or 21 million people, live in households with incomes under 133% of the FPL, the Medicaid expansion will potentially do more to increase the number of people with health insurance than any other provision in the law.

• Those newly eligible for Medicaid under the expansion will receive a benchmark benefit package that must include essential health benefits (including prescription drugs and mental health services).

• Adults who have children will not be covered unless their children are covered by Medicaid or other health insurance.

• Children currently covered by the State Children’s Health Insurance Program (SCHIP) with income between 100% and 133% of the FPL will be transitioned to Medicaid.  So all children 0-133% of the FPL will be in Medicaid starting in 2014.

Is there any other impact of the expansion?

• Adding this many people to the Medicaid program will probably result in a shortage of primary care providers, especially those most likely to work with Medicaid patients—such as pediatricians and family practitioners.  The shortage is exacerbated by current Medicaid reimbursement rates that are already often criticized as being too low to encourage more doctors to treat Medicaid consumers.

Less than a month remains before the Supreme Court is likely to announce its decision on health care reform.  Keep watching this space for updates and breaking news alerts.