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Medicaid

What is Medicaid?

Medicaid is a joint state-federal health insurance program providing coverage to low-income individuals. Traditionally, Medicaid covered pregnant woman, children and the disabled. Over 55 million Americans receive health insurance through Medicaid, including more than 740,000 individuals in Arkansas. That means, with around 2.9 million residents, one in every four Arkansans is on government paid healthcare.

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Under the program, expenses are split between the State of Arkansas and the federal government. For every dollar spent under Medicaid, the federal government picks up 70 cents and the State of Arkansas picks up 30 cents. Even with the cost sharing mechanism in place, the Medicaid program ran a deficit of nearly $1 billion over the last years!

How effective is Medicaid?

Medicaid’s joint state-federal structure causes problems for taxpayers and Medicaid recipients.  As currently operated, all Medicaid control resides in Washington, D.C. The federal Department of Health and Human Services (HHS) sets all major policies for Medicaid such as eligibility, coverage and processes. States like Arkansas must receive approval from HHS for any change to the system with many commonsense requests denied. For instance, the State of Illinois recently requested permission to require address verification for Medicaid recipients. HHS said no. Additionally, the federal government’s open-ended fiscal promise fails to control Medicaid spending. Since states pay such a tiny part of total Medicaid expenses, they have very little incentive to control costs.

As a result, Medicaid health outcomes are worse than other types of insurance coverage. A recent study from the University of Virginia found that surgical patients on Medicaid were 97% more likely to die than those on private insurance after controlling for a number of variables. In fact, Medicaid recipients were 13% more likely to die than those who were uninsured. Many other studies have found similar results.

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Clearly this system needs reform.

For more information on Medicaid, please visit these following websites:

Medicaid Funding and Block Grants

What is Medicaid Expansion?

A key component of the President’s health care law is a vast expansion of the current Medicaid system. According to the law’s text, states must expand Medicaid to include all individuals below 138% of the federal poverty level—approximately $32,000 for a family of four. This is a dramatic expansion. For instance, in Arkansas, Medicaid eligibility is only 17% of the federal poverty level for parents and child-less adults are currently not eligible for Medicaid. Expansion would add approximately 250,000 individuals to Medicaid in Arkansas.

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In exchange for expanding, the federal government promises to pay 100% of the costs for newly-eligible individuals from 2014 to 2017, with the reimbursements decreasing to 90% by 2020 and out-years.

If a state chooses not to expand, according to the law’s text, the state would not only lose the funding for the newly-eligible individuals, but would lose all federal funding for the current Medicaid program. Medicaid represents more than 20% of the average state budget losing this funding would be devastating to a state’s financial situation. Twenty-six states joined and challenged the law as an unconstitutional coercive act by the federal government.

How did the Supreme Court rule?

In June 2012, the Supreme Court agreed with the twenty-six states that challenged the President’s health care law. Medicaid expansion, as drafted, was unconstitutional. According to Chief Justice Roberts, Medicaid expansion was like a “gun to the head” of states. Losing a quarter of their budget meant that states truly had no functional choice.

As a result, states must now decide whether or not to expand Medicaid as envisioned by the President’s health care law.

For more information regarding Medicaid Expansion, please visit the following links:

Medicaid: Broken, Costly and Expanding

Medicaid Expansion under the Patient Protection and Affordable Care Act

Medicaid: To Expand or Not to Expand


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