States Opting to Embrace Expanded Medicaid Coverage Face Major Budget Squeeze

June 7, 2015

While the Obama administration can tout the number of people receiving health care under the Affordable Care Act (ACA), the truth is a number of those people are merely receiving free health care under the existing Medicaid entitlement program. That said, the ACA raised the cut off for coverage to 138% of the poverty line. To entice states to accept the expanded coverage, the Obama administration offered short-term assistance from the federal government. Because of the short-term nature of the assistance versus the long-term liability states accept if they adopt the expanded Medicaid coverage, many states chose to not enroll in this aspect of the ACA.

Now, the states which opted for Medicaid expansion are facing the daunting task of paying more money than they previously anticipated having to pay. This is because 1.4 million more people have enrolled in the program than were originally estimated. This has surprised many pundits. At the same time, Medicaid offers people cost-effective health care coverage without the cumbersome premiums of health care coverage through the state or federal exchange. In the case of Kentucky, Illinois, and Washington, Medicaid enrollment was fully 100% higher than anticipated. One Florida state representative expressed his dismay over the program given the difficult task his state now faces in paying for the program. The budget realities have Florida Governor Rick Scott fighting against Medicaid expansion; he had been an early supporter of it. GOP governors have largely been excoriated in the press for being indifferent to the needs of the poor by refusing to embrace Medicaid expansion. Now, their decision is looking increasingly prudent, and Matt Landis isn’t sure what will happen.

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