If the Medicaid expansion in the Affordable Care Act is repealed, what options would states have to continue to cover this population if they wanted to do so?
Before the Affordable Care Act, in order to be eligible for Medicaid, individuals had to meet the income eligibility standards and the categorical eligibility standards. That is, to be eligible, individuals had to be low-income and a child, or low-income and a parent eligible to receive cash assistance (specifically, Aid to Families with Dependent Children, or “welfare” before the program changed to Temporary Assistance for Needy Families).
The Affordable Care Act continued this general structure but created a new eligibility category in Medicaid – catching many more parents and adults without dependent children (“childless adults”) – and de facto creating a new system whereby all individuals with incomes below 133% of the federal poverty line (FPL) are eligible for Medicaid.
But if this ACA eligibility category – §1902(a)(10)(A)(i)(VIII) for those reading along in your statute – is removed from the law, can states continue to cover these additional parents and childless adults? According to CBO, 10 million people are covered as a result of the Medicaid expansion, so this is an important question.
Some have suggested that yes, states could continue to cover this group just as they could have covered this group before the ACA. But the fact is, states could not cover this group before the ACA – the group didn’t exist.
To be sure, some states covered parents at higher income levels than others, and some states covered childless adults. But they did so using state only dollars or through an 1115 waiver. And in order to get federal approval for such a waiver, states had to show budget neutrality – either by redirecting existing federal Medicaid money or by offsetting additional expenses with cost savings achieved elsewhere. In order to meet these tests, states that wanted to cover more people often limited the benefit package to make it as inexpensive as possible.
In fact, in 2013 – the year before the ACA coverage provisions including the Medicaid expansion went into effect – the median eligibility threshold was 61% of the FPL for working parents, 37% for jobless parents, and 0% for childless adults.
So, if the ACA is repealed without being replaced, the truth is that states cannot simply choose to continue to provide this coverage. Instead, states will lose the option to cover more parents and childless adults, and families will lose coverage and the health and income security that provides.