States must expand Medicaid fully as called for in the Affordable Care Act to qualify for federal matching funds, according to a letter from U.S. Department of Health and Human Services Secretary Kathleen Sebelius to state governors.
Current Medicaid eligibility guidelines provide health coverage to about 60 million Americans, mostly lower-income children, pregnant women, parents, seniors and individuals with disabilities.
Under the ACA, states must expand eligibility to all residents with incomes no higher than 133% starting in 2014 to qualify for federal funding, which will cover the entire cost of the expansion for the first three years and no less than 90% thereafter.
Some states had inquired whether partially expanding Medicaid eligibility — for all people with incomes up to 100% of the federal poverty level, for example — would qualify them to receive federal funding.
No, Sebelius said in her letter: “Congress directed that the enhanced matching rate be used to expand to coverage to 133% of FPL. As such, we will not consider partial expansions for populations eligible for the 100% matching rate in 2014 through 2016.”
Some governors have expressed a reluctance to expand Medicaid, citing concerns that even the 90% matching rate in future years might be reduced because of federal budgetary issues.
The Medicaid expansion in the ACA was supposed to insure 13 million people starting in 2014, according to projections by the Congressional Budget Office. But this year’s Supreme Court decision gave states a more viable option for opting out of the expansion. As a result, the CBOs latest projection is that 7 million additional people will qualify for Medicaid.
In her letter, Sebelius did not entirely rule out allowing states to qualify for matching funds through a partial expansion: “If a state that declines to expand to 133% of FPL would like to propose a demonstration that includes a partial expansion, we would consider such a proposal to the extent that it furthers the purposes of the program, subject to the regular federal matching rate.”
And in 2017, when full federal funding begins to decrease from 100%, “further demonstration opportunities will become available” and offer states “significant flexibility while ensuring the same level of coverage, affordability and comprehensive coverage at no additional costs for the federal government,” Sebelius wrote.
Affordable Insurance Exchanges
Sebelius also wrote that Colorado, Connecticut, Maryland, Massachusetts, Oregon and Washington have received approval for their plans to establish state-run affordable insurance exchanges as called for by the ACA. These exchanges are designed to allow individuals and small businesses to more easily shop for affordable insurance.
Announcements regarding other states will be forthcoming in the weeks and months ahead, Sebelius wrote. In states that choose not to implement their own exchange, the federal government will operate one.
The exchanges must be operable and open for enrollment by October 2013, according to the ACA.