On states taking residents off Medicaid

MedicaidLogoKaiser Health News reports today that four states are planning to shed more than 150,000 of their residents from Medicaid, the joint state-federal health insurance program for low-income Americans.

The states planning to make the cuts in January are Maine, Rhode Island, Wisconsin and Vermont. Most people losing access to Medicaid will be eligible for federal subsidies to help buy private coverage in the law’s online insurance marketplaces also starting in January, but advocates worry some will struggle to afford higher premiums and other cost-sharing expenses.

Looking at the Advisory Board’s map of where the states stand on the Medicaid expansion in the Affordable Care Act, both Maine and Wisconsin are firm against participation while Rhode Island and Vermont will be accepting the expansion under the new law.

AdvisoryMap8.19.2013

As Kaiser goes on to note all but 10,000 childless adults (in Maine) will still be eligible for subsidies in the individual insurance exchanges, but that ” advocates worry some will struggle to afford higher premiums and other cost-sharing expenses.” The thousands of Maine residents excluded from the consolation prize of subsidies is particularly disheartening, given the circumstances. They won’t be eligible for help because their incomes are under the federal poverty line ($11,490 for an individual).

In every case these states are essentially making straightforward decisions: the cost of providing health insurance is expensive and rising, state budgetary restrictions leave them ill-suited to respond to those increases, and the federal government can mostly pick up the slack. For the number crunchers it just makes sense to offload these folks from the rolls.

It’s also an example of what the counter-factual policy environment would be in a world with less federal support for providing health insurance to the poor. The most commonly cited, and most voted upon, conservative alternative to the ACA involves block-granting federal contributions to Medicaid. Additionally, the contributions would grow more slowly over time than the cost of providing medical care. As the detractors of such a policy have repeatedly written, with more freedom to administer the program, states would respond by reducing benefits and/or kicking people off the rolls. That’s because the budgetary reality facing states today would still exist under an alternative federal insurance financing scheme. This is why we say that block-granting Medicaid would leave a greater number of poor Americans without affordable access to health care.

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