Why it matters if states don't expand Medicaid

by Jonathan H. Burroughs
On June 28, 2012 Chief Justice Roberts surprised pundits by upholding the individual mandate that requires most individuals to pay a modest annual tax if they don't have health insurance by 2014.
On the other hand, states are not obligated to expand their Medicaid program to those with household incomes below 138 percent of the federal poverty level (FPL).
Although Medicaid accounts for more than 20 percent of total state budgets, it also represents the largest single source of federal funding to the states. The federal government finances 50 percent to 83 percent of Medicaid costs, according to the formula:
State Share of Medicaid = (State per capita personal income/National per capita personal income) X 0.45

Thus, to put it another way, the state contribution to Medicaid ranges from 17 percent to 50 percent based upon the relative affluence of its citizens. Furthermore, under the Patient Protection and Affordable Care Ac, the Medicaid expansions are accompanied by 100 percent federal funding for the first three years, phasing down to 90 percent by 2020.
With this anticipated expansion, the Supreme Court upheld several key provisions of the PPACA:
1. Reduce disproportionate share hospital (DSH) payments ($22 billion/annually) which reimburse almost 75 percent of U.S. hospitals for uncompensated care provided to low-income or uninsured patients.
2. Prohibit cost shifting so those with insurance coverage are not subsidizing uncompensated ca...

Source: hospital impact - January 25, 2013 Category: Health Managers Authors: Wendy Johnson Source Type: blogs