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What the Supreme Court’s ACA Decision Means for Medicaid

July 12, 2012

The U.S. Supreme Court’s decision upholding the Affordable Care Act was a huge victory for millions of Americans. But the Court’s ruling on Medicaid expansion creates uncertainty about whether Americans with incomes below 138 percent of the federal poverty line can access affordable health coverage.

ACA Medicaid Expansion

Today, each state largely determines eligibility for Medicaid, a federal-state partnership to provide health care to nearly 50 million low-income, elderly, and disabled Americans. Although all states must meet minimum federal requirements, state Medicaid programs vary widely. In most states Medicaid only covers certain groups of low-income individuals — for example, children or pregnant women — leaving millions of adults with incomes below the poverty line uninsured.

To expand access to care, the Affordable Care Act increased the federal minimum Medicaid eligibility level to all people with incomes up to 138 percent (133 percent with a 5 percent income disregard) of the poverty line — $15,415 for individuals and $26,344 for a family of three. Estimates showed that, once implemented, this expansion would result in coverage for an additional 17 million Americans.

The federal government will pay for 100 percent of the cost for newly eligible individuals from 2014-2016, gradually transitioning to 90 percent of needed funding for 2020 and future years. This would allow states to increase the number of insured people by an average of 25 percent, with an increased state cost of less than 3 percent (pdf).

Court Ruling

The Court, however, ruled that this change to the Medicaid program constituted not just an expansion of the existing program but the creation of an entirely new one. Because of this, the Court concluded that Congress may not condition the receipt of a state’s existing federal Medicaid funds on its agreement to expand Medicaid eligibility. That eliminated the federal government’s ability to penalize states that choose not to expand their Medicaid programs to meet the Affordable Care Act’s requirements.

Implications for Direct-Care Workers

If states opt not to expand their Medicaid programs, many low-income individuals and families living in those states will remain uninsured. Tax credits provided to low-income families under the ACA in order to purchase coverage do not extend to those with incomes below the poverty level because Congress assumed this population would be eligible for Medicaid.

What does this mean for direct-care workers? PHI’s analysis shows that Medicaid is currently a very important source of insurance coverage for direct-care workers overall and even more critical for personal and home care workers — the fastest-growing occupations in the country. In 2009, nearly one in five (18 percent) direct-care workers received health coverage under public insurance programs; of aides working in the home health care services industry, 27 percent reported relying on public health coverage.

But beginning in 2014, PHI estimates (pdf) that as many as 350,000 currently uninsured workers would be eligible for coverage through Medicaid under the ACA expansion, if all states participate. Leaving tens of thousands of these workers without coverage is unacceptable. Lack of coverage for direct-care workers undermines workforce stability, threatens state efforts to rebalance their long-term services and supports systems to strengthen home care, and places at risk our elders and people with disabilities who rely on these services to live independently and in their own homes.

PHI will be producing fact sheets and sharing additional information on its website in the coming weeks.

— by Carol Regan, PHI Government Affairs Director

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