The number of states saying “yes” or “no” to Medicaid expansion continues to change, and conservative politicos are again caught in a dilemma. Although they are philosophically opposed to anything related to the Affordable Care Act (ACA), they realize that federal funds will subsidize 100 percent of the cost of Medicaid expansion in the first three years and at least 90 percent after that. Their low-income constituents and many health industry leaders support expansion.

Under the ACA, if individual states expand their Medicaid program to cover individuals earning up to 133 percent of the federal poverty level, the federal government will pay 100 percent of the cost of all newly eligible Medicaid recipients in the state for three years, beginning in 2014. However, if a state were to fund anything less than 133 percent of the poverty level—say, only 100 percent—it would not be eligible for the federal funding, according to an FAQ sheet released by the U.S. Department of Health and Human Services (HHS). 

States can opt in and out of the Medicaid expansion program at any time, the FAQ sheet said, but only the earliest adopters will be eligible for the full amount of potential federal funding, given the CY14 start date.

The HHS FAQ sheet also addressed questions that state governors, including the Republican Governors Association, have had over the past few months about the new state exchanges and market reforms, including whether HHS would grant further extensions to the Dec. 14 opt-in deadline for state-run exchanges. HHS declined to extend the deadline.

On Dec. 14, it was reported that Washington, D.C., and 19 states had committed to creating their own exchanges, seven states were planning to “partner” with the federal government to do so, and the remaining 25 would default to a federally managed exchange. The decision-making process was sharply partisan: Every state defaulting to a federally managed exchange is led by Republican governors; no state with a Democrat as governor has chosen to do so.

View a table outlining states’ decisions regarding whether to build their own exchanges or default to a federal exchange, the types of exchanges that will be developed, and the structures for such exchanges. 

J. Stuart Showalter, JD, MFS, is a contributing editor to HFMA’s Legal & Regulatory Forum and author of The Law of Healthcare Administration  (

For more information, see J. Stuart Showalter's  "SCOTUS and the Voters Have Spoken: Where do we go from here?," hfm, January, 2013.


Publication Date: Tuesday, January 01, 2013

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