States hope new funding from health reform law will bolster unique programs

Beginning today, states can apply for federal funding to expand their Medicaid programs to cover low-income people earning up to 133 percent of the poverty level. If implemented nationwide, this massive expansion would bring 15 million more people into the safety-net program, according to the Congressional Budget Office.

States that choose to expand coverage now will still have to pay their share of the new Medicaid costs until increased federal support begins in 2014 (and expansion becomes a requirement). Depending on individual states' circumstances, these offerings could represent either a strain or a windfall, according to Kaiser Health News.

For states standing to benefit from new funding toward their existing low-income programs (e.g., Maine, Washington and Minnesota), Washington state officials said they will suggest an alternative to expanding the traditional Medicaid plan. These states may ask the government to waive Medicaid rules and subsidize their Basic Health Plan, a state-financed program that helps insure people earning up to twice the poverty level.

The new federal subsidy could be worth $52 million to $60 million a year for Washington, covering more than 60 percent of the cost for participants in that plan who earn less than 133 percent of the poverty line, the cut-off for the Medicaid expansion.

Although the federal government doesn't typically allow states to make coverage changes that would cost more overall, Washington could argue that extending the subsidies would be budget neutral for the federal government because it would otherwise be poised to pick up more Medicaid costs under the new health law, Jonathan Seib, Washington Gov. Christine Gregoire's health policy adviser, told KHN. "They haven't promised anything, but clearly are interested," Seib said.

For more information:
- read the Kaiser Health News article