Most attention surrounding the Obamacare decision has centered on whether the individual mandate is a penalty or a tax. However, the other part of that decision, allowing states to opt out of Medicaid expansion, could prove problematic in 2014, depending on what states in thrall to the Republican Party do.
The Supreme Court decision upholding the constitutionality of health care reform inadvertently opened a hole in health insurance coverage that could harm some of the nation’s poorest citizens. The problem arises from a mismatch between how the law was framed and how the court’s ruling will affect Medicaid, the joint state-federal health program for the poor.
The reform law sought to provide coverage to tens of millions of uninsured Americans starting in 2014 through two mechanisms. It required states to expand their Medicaid programs to cover virtually everyone earning up to 133 percent of the federal poverty level (about $31,000 for a family of four) or lose all federal financing for Medicaid. And it established new insurance exchanges through which people without affordable coverage at work could buy coverage. The law provides subsidies to help low- and middle-income families pay those costs.
The Supreme Court’s ruling struck down the mandatory expansion of Medicaid as coercive and made expansion optional. Many states, perhaps most, are expected to expand voluntarily because the federal government would pay 100 percent of the increased costs for three years, dropping down to 90 percent by 2020. Even so, some states may resist paying even 10 percent more. Gov. Rick Scott of Florida announced this week that his state would not expand Medicaid…
Inserted from <NY Times>
Not all states cover Medicaid the same way. Some already cover at income levels up to 133%. Some, are as low as 25%, like Florida. A family making of four making more than $585/month cannot qualify. Republican dominated states that opt out will have a coverage gap between the states maximum covered income and $31,000 when federal subsidies will kick in. Very few states will opt-out, unless coerced under the threat of Teabuggery. Here’s why.
States that opt out won’t really save money, because uncovered citizens will just be free riders at emergency rooms, raising health care costs for all. And with the federal government picking up almost all the cost, only states willing to throw their own citizens under the bus, just to politicize the matter, will opt out. It won’t be just the poor, who lose in those states. Everyone who pays higher rates, because their states refuse to cover the poor, lose with them.
Therefore, it behooves residents of red states to blue shift. If your governor says no to the Medicaid expansion, it’s up to you to provide him or her with some some great government benefits… unemployment checks.