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Medicaid Expansion: Coverage and Consequences

January 18, 2013 

22 states have now signed on to Medicaid Expansion with Governor Jan Brewer of Arizona the latest to do so.  The challenge facing remaining states who are reluctant to do so is the “fairness gap” that could result in 2014 when State Exchanges are in place.  In states that do not expand Medicaid, premium subsidies to purchase insurance will be available for anyone with income >= 100% of the Federal Poverty Limit (FPL) while those that fall below that level and a state’s Medicaid income eligibility income level will have no coverage.  In states such as Texas, with an eligibility level of 26% of FPL for adults with children, this “fairness gap” would result in almost 2 million non-elderly adults with no access to coverage or subsidies to buy coverage while almost 3 million adults with higher incomes would receive government support to buy insurance.

The biggest loser in states that do not expand Medicaid are hospitals that serve the poor, whose payments for indigent care will decline as more people across the country gain coverage.  Much like our recent election, Medicaid Expansion decisions in Florida and Ohio will likely influence other states’ decisions and play an outsized role in how large the total uninsured population will be in 2014.

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