Federal Agency Says States Can Expand, Later Reduce Medicaid Under ACA

CARSON CITY – States do not face any deadline for deciding whether to expand their Medicaid coverage under the Affordable Care Act, and will be able to expand coverage and then later chose to reduce it, federal officials told Governing magazine on Monday.

Cindy Mann, deputy director for the Centers for Medicare and Medicaid Services, made the comments at a National Conference of State Legislatures meeting in Chicago.

Photo by Debora Cartagena/CDC.

The article by Dylan Scott with Governing magazine also had comments from a CMS spokesperson confirming that states can chose to expand eligibility and later choose to reduce it, the first public confirmation that CMS will make such an option available.

Nevada Gov. Brian Sandoval is still assessing whether to expand Nevada’s Medicaid eligibility as a result of the June ruling by the U.S. Supreme Court upholding most of the federal health care law. The court struck down the provision allowing the federal government to penalize states if they did not opt into the Medicaid expansion.

The optional expansion to cover those at 133 percent of the poverty level is set to take effect Jan. 1, 2014.

Sandoval’s initial comment was that the state could not afford to undertake any expansion under the law. But he is awaiting additional information and clarification from the U.S. Department of Health and Human Services before deciding how to proceed.

Federal funding will pay for 100 percent of any Medicaid expansion for the first three calendar years beginning in 2014, with the state required to pick up a percentage of the cost beginning in 2017. The first year state cost is 5 percent, in 2018 the state cost is 6 percent, in 2019 the state cost is 7 percent, and in 2020, the state cost is 10 percent.

The expansion in Nevada would mostly cover childless adults, who are not covered by the state program now. The other expansion will come from parent caretakers of children who are covered at 75 percent of poverty now, according to Mike Willden, director of the Nevada Department of Health and Human Services.

Willden said last month there are also administrative costs to the state that are not fully covered by the expansion but instead are shared between the federal government and the state at a 50-50 match. They include information technology costs and the cost to hire new eligibility workers, for example, he said.

Willden said in May  that as many as 150,000 additional Nevadans would be eligible for Medicaid if the law was upheld by the court, but that estimate was two years old and was made before the court said states could opt out of the expansion.

He estimated that bringing new residents onto the rolls would cost the state general fund an estimated $574 million between now and 2020.

But only $63 million of that cost estimate was due to the Medicaid expansion. The rest was due to those Nevadans who are already eligible for Medicaid but who have not enrolled. This population is expected to enroll in the program as a result of the mandate to obtain insurance.