Supreme Court opens door for states to drop current Medicaid enrollees

In the wake of the Supreme Court decision in NFIB v. Sebelius, the greatest threat to enabling health insurance for 30 million uninsured Americans may come not from Republicans in Congress, but in the states. With the Court's ruling that the federal government cannot penalize states who refuse to accept the expansion of Medicaid, Republican governors are threatening to turn down $258 billion in funding that would cover roughly 9.2 million Americans. Worse still, as McClatchy reported this week, "Not only might some states opt out of increasing the number of adults in the government health-insurance program for the poor as a result of the Supreme Court's ruling, but they also might cut people who now are enrolled."

Phil Galewitz of Kaiser Health News explained how that nightmare scenario could unfold:

This wasn't supposed to happen under President Barack Obama's health law, which was designed to expand coverage for 30 million Americans, in part by adding 17 million people to Medicaid. But the impact of the Supreme Court's ruling last week making the expansion voluntary is likely to be compounded by another provision in the law that the justices left intact: In 2014, states no longer are barred from making it harder for adults to qualify for Medicaid.

Experts worry that those two developments taken together could spur some states to reduce the number of people covered.

Here's why. Currently, the $300 billion Medicaid program serves roughly 60 million Americans. On average, the federal government picks up 57 percent of the tab, with poorer states like Mississippi and Alabama getting 75 percent of the funding from Washington. Medicaid not only pays for a third of nursing home care in the United States; it covers a third of all childbirths. In Texas, the figure is one half. But with the full implementation of the Affordable Care Act beginning in 2014, federal assistance will increase. The expansion of Medicaid to families earning 133 percent of the federal poverty level (FPL) and the availability of subsidies to those at four times the FPL will enable coverage for over 30 million more people nationwide. (Of these, the Urban Institute estimated that 8.1 million Americans would have their insurance paid for in full by the expansion of Medicaid. Another 10.9 million people would receive subsidies to buy private insurance in the new state exchanges, while only 7.3 million, 2 percent of the total U.S. population, would be required to purchase a health plan using their own resources alone.)

But as New York's former Medicaid director Deborah Bachrach explained, the Court's ruling last week means states could throw some low-income adults "into a black hole with nowhere to turn for coverage." Galewitz provided a potential case in point:

As a hypothetical example, if Mississippi opted out of the 2014 expansion of Medicaid, poor childless adults wouldn't gain coverage in that state. At the same time, the state could roll back eligibility for parents with children who are currently enrolled, reducing the number of participants in the program.

And as Glenn Kessler explained in the Washington Post last year, it is hard to believe that a state like Mississippi could make it current program any worse:

Mississippi provides some of the lowest Medicaid benefits to working adults in the nation. A parent who isn't working can qualify only if annual family income is less than 24 percent of the poverty line. Working parents qualify only if they make no more than 44 percent of the federal poverty level. Seniors and people with disabilities are eligible with income at 80 percent of the poverty line...

Translated from the federal poverty guidelines, that means a working Mississippi couple with one child could earn no more than $8,150 a year and still qualify for Medicaid, seniors and people with disabilities could earn no more than $8,700, and a pregnant woman could earn no more than $20,000 a year.

The new barriers states might erect to health insurance don't end there.

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