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Report: Even States Not Expanding Medicaid Will See Surge In Spending, Enrollment

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Originally, the Affordable Care Act (ACA) called for a nationwide expansion of Medicaid eligibility, set to begin in 2014. However, "Medicaid expansion" was one of the major provisions at stake in the ACA cases decided by the Supreme Court in June 2012. The Supreme Court upheld Medicaid expansion, but limited the federal government’s ability to penalize states that don’t comply. So, while Medicaid expansion was originally mandatory for states as part of the ACA, it is now optional.

Currently, 26 states are not moving forward with Medicaid expansion. The main reason states say they are not moving forward? Increased costs. However, a recent report released by the Kaiser Family Foundation projects increased Medicaid costs for all states, regardless of whether they have opted to expand Medicaid or not.

What is Medicaid Expansion?

Medicaid expansion widens coverage eligibility to nearly all residents under 65 with family incomes up to 138% of the federal poverty level (FPL). That's equivalent to an individual earning $15,415 in 2012 or a family of three earning $26,344 in 2012. 

In many states this is a significant expansion of the program, particularly for childless adults who in more than 40 states cannot currently qualify for Medicaid regardless of their income level. 

What States are Participating in Medicaid Expansion?

Here's an updated look at which states plan to move forward and expand eligibility for Medicaid, as of September 30, 2013.

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Chart source: KFF.

All States to See an Increase in Medicaid Spending

According to KFF, in states expanding Medicaid in 2014 enrollment is projected to increase almost 12%. In states not expanding Medicaid, enrollment is projected to increase by 7%. The projected increases are a result of other ACA mandates such as eligibility being based off of Modified Adjusted Gross Income (MAGI), the new enrollment systems, and the coordination with the online marketplaces.

When it comes to state and federal spending, the states planning to expand Medicaid project an average increase of 13%, and those not expanding Medicaid project an average increase of 7%. However when it comes to spending growth, states moving forward with Medicaid expansion have a slightly lower spending growth than states not moving forward, which are 4% and 6%, respectively. These rates may be a reflection of the federal government paying the full cost of expansion through 2016 and paying at least 90% thereafter. Increases in state spending are projected based on the costs related to increased participation of those currently eligible for Medicaid, reimbursed at a state’s regular Medicaid match rate.

In 2013, Medicaid enrollment growth slowed to an average rate 2.5% over all states, the lowest increase in six years. The report estimates that it will increase 8.8%, on average, in 2014 once the expansion has taken place.

Read the full Kaiser Family Foundation report here.

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