Feb. 11—Several states are considering expansions of their Medicaid programs and at least one state may cut back program plans in 2014, even as federal funds begin to flow to cover an expanded population base.

Half of the states and Washington DC have implemented an expansion of Medicaid eligibility authorized by the Affordable Care Act (ACA) to include all residents with incomes of up to 138 percent of the federal poverty level.

Another four states—Missouri, Utah, Pennsylvania, and New Hampshire—are considering undertaking the expansion, according to the Advisory Board Company.

In addition, at least one state, Arkansas, is considering backing out of the previously authorized expansion. The state legislature may revoke coverage as soon as July to an estimated 83,000 newly Medicaid eligible beneficiaries who are covered through subsidized plans bought on the ACA insurance marketplace, according to media reports.

The federal government will cover the full cost of the expanded population coverage for three years, starting in 2014, before tapering to covering 90 percent of the costs by 2020. Funding for new enrollments of previously eligible beneficiaries—possibly a majority of new enrollments—will continue at previous matching rates, in which the federal government covered an average of only 57 percent of their cost.

An estimated one to two million new beneficiaries have been added to Medicaid rolls since October as a result of the ACA, according to a report from Avalere, a healthcare consulting firm. That estimate is less than one-third as many as the Obama administration has claimed signed up for the program through the ACA because Avalere excluded both renewals of the previously enrolled and the “woodwork” enrollments of previously eligible residents. Such woodwork enrollments have been significant enough to push Medicaid enrollments in non-expanded states past the number of new sign-ups in states undertaking the Medicaid expansion, according to Centers for Medicare & Medicaid Services.

A recent analysis by rating firm Standard & Poor’s underscored the complex financial issues that states continue to wrestle with as part of their Medicaid decision-making. While local governments and hospitals in non-expansion states will face greater exposure to costs related to providing uncompensated care to indigent patients, state governments in states with expansion could face increased financial risk.

“If health care inflation picks up again, even the incremental additional costs to the states under expansion could add material fiscal strain,” the report stated. “Moreover, in a number of early expansion trial programs, some states have found that adding the expansion population has proven more costly than they had forecast. This suggests that the fiscal burden to the states from expansion could be greater than what they currently project.”

Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter @rdalyhealthcare.

Publication Date: Tuesday, February 11, 2014