KFF: The impact of 'partial' Medicaid expansion on coverage

Document titled, Affordable Care Act
Some states are hoping to get expanded ACA benefits without meeting current Medicaid requirements. (Getty/Designer491)

States choosing to embark on a "partial" Medicaid expansion could see fewer people gaining coverage as a result, according to a new report.

Currently, the Affordable Care Act (ACA) offers federal matching funds only to states that expand Medicaid to nonelderly adults with incomes up to 138% of the federal poverty level (FPL). In 2019, the ACA enhanced match from the federal government is substantially higher than states' traditional Medicaid matching rate, according to a Kaiser Family Foundation (KFF) report

Still, some states are seeking to get a higher ACA enhanced match while limiting coverage to individuals at 100% of FPL, according to the study. Thus far, the Centers for Medicare & Medicaid Services (CMS) has only allowed ACA enhanced funding if the entire expansion group is covered, ignoring waiver requests from Arkansas and Massachusetts. A request from Utah is pending.

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According to the KFF report, partial expansion could result in less overall coverage for recipients that fall in the 100% to 138% FPL bracket. Plus, ACA enhanced matches could result in lower state funding and higher federal spending on Medicaid. 

In addition, studies of states that have the full ACA Medicaid expansion show an improvement in the marketplace pool, with premiums 7% lower than in nonexpansion states. 

RELATED: Voter-backed Medicaid expansion hit snags in 4 states. Where is it now?

“Partial expansion could result in less coverage overall, and less coverage in Medicaid, compared to a full ACA Medicaid expansion,” MaryBeth Musumeci, a Medicaid expert and an associate director of KFF’s program on Medicaid and the uninsured, said. “Partial expansion with the ACA enhanced match could result in lower federal spending for Medicaid and higher federal spending for the Marketplace, which could result in higher federal costs overall compared to a full ACA expansion."

"There is some uncertainty about net federal cost implications, as changes in enrollment are uncertain and there is variation between Medicaid and Marketplace subsidy costs across states," she told FierceHealthcare.

In Utah, CMS is requesting that the state submit additional waiver requests. Utah began the process in 2018 after voters asked for the expansion on the ballot. Musumeci says states will be watching for CMS’ response to Utah’s waiver request for enhanced matching funds while limiting the coverage group to 100% of FPL. 

"CMS has not approved waiver requests in Arkansas or Massachusetts to receive enhanced matching funds while limiting the group to the federal poverty level,” Musumeci said. “It appears that Utah’s request also may be connected to an overall spending cap, which is another factor that could affect states. Details about a spending cap have not yet been provided.”

RELATED: Utah may become the next state to seek Medicaid work requirements 

Still, the CMS guidance remains as it was issued in 2012, requiring that expansions cover people earning up to 138% of the poverty level. "The law does not provide for a phased-in or partial expansion,” cites the KFF report. 

The only state currently extending coverage to all nonelderly adults up to 100% without implementing the full ACA Medicaid expansion is Wisconsin. The state uses a combination of a state plan and a Section 1115 waiver, and federal funds are given at its traditional Medicaid matching rate, according to the report. 

Federal lawmakers and CMS remain wary as “research shows that increases in premiums and cost sharing for low-income populations result in decreased enrollment, higher numbers of uninsured, decreased utilization of needed services and increased administrative costs for states,” states the report. 

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