Medicaid Reform and
Expansion
Background:
• The Patient Protection and Affordable Care Act (PPACA) was
signed into law in March 2010.
• In June 2012, U.S. Supreme Court upheld the individual
mandate provision of the health care reform law.
• However, the Court also declared that states could not be
forced to expand Medicaid eligibility as the law initially
required.
• As a result, states can opt out of the Medicaid expansion
program.
• If states do expand Medicaid, the federal government will
fund 100 percent of Medicaid coverage for newly eligible
individuals for the first two years, then gradually dropping
their share to 90 percent by 2020 and thereafter.
Background:
• Since the Court’s ruling, many states have wrestled with the
question of whether to expand their Medicaid programs. To
date, 24 states are moving forward with expansion; another
21 are not. Six states are still considering expansion.
– Participation through an alternative expansion model—Arkansas
has gotten and Indiana, Iowa and Oklahoma are seeking federal
approval to extend coverage to expansion-eligible residents
through private insurance, state insurance exchanges or
enrollment into the state’s health plans.
• In Virginia, the General Assembly and the Governor have laid
out the path forward for Medicaid expansion that requires
the Medicaid Innovation and Reform Commission to study
the feasibility of expansion and how to best streamline
Virginia’s health care system to correspond to the PPACA.
Medicaid Innovation and Reform Commission:
The path to expansion runs through the new Medicaid Innovation
and Reform Commission that will oversee three major phases of
reform that are necessary to move forward:
• Continue reforms that are currently underway.
• Implement innovations in service delivery, administration and
beneficiary engagement.
• Design a cost effective and coordinated delivery system for all
Medicaid patients.
Once the Commission agrees that the conditions of the reforms
have been met, the Commonwealth can offer coverage to more
than 400,000 eligible Virginians without health insurance and
collect federal dollars that are available to help pay for Medicaid
expansion.
Medicaid Expansion Concerns:
• Impact on the Commonwealth’s budget
• Increase costs
• Federal government’s ability to continually
pay their share of expansion
Business Case for Medicaid Reform and Expansion:
• Taxes
– Under the PPACA, Virginia businesses and individuals will
be taxed an additional $10 billion over the next 5 years.
– If Virginia does not opt to extend Medicaid coverage in the
state, we will be subsidizing Medicaid expansion in other
states.
• Economic Impact
– Medicaid expansion.
• Would provide up to $3.9 billion boost to the Virginia economy
annually.
• Create more than 30,000 jobs.
Business Case for Medicaid Reform and Expansion:
• Hidden Health Care Tax
– Due to cost shifting as a result of uncompensated medical
care, businesses, as the primary purchaser of health
insurance, are paying a hidden tax that makes their health
insurance premiums higher than they should be. The
estimated cost savings in insurance premiums for Virginia
businesses as a result of Medicaid expansion is
approximately $20 million per year for the next 5 years.
• Reforms
– Essential to reduce duplicative or unnecessary services and
streamline the administrative process.
– Critical to ensure the long-term sustainability of the
Medicaid program.
– Important to improve health outcomes.