Medicaid Changes US Health Policy

Medicaid Changes

US Health Policy Decision

Examine how the proposed Medicaid changes would impact your state's public health insurance program. Overall, would your state benefit from the proposed changes or would it experience greater challenges? What barriers do you see in implementing the proposed changes?

One of the cornerstones of President Obama's recent healthcare legislation was the expansion of healthcare services to the working poor. The Affordable Care Act allows more adults to avail themselves of the federal health insurance program Medicaid by raising eligibility levels nationwide to a national floor of 133% of the federal poverty level (which is $14,404 for an individual and $29,326 for a family of four). This will reduce state-by-state variation in eligibility for Medicaid and will also include non-Medicare eligible adults under age 65 without dependent children, in contrast to previous eligibility restrictions. Children currently covered by the Children's Health Insurance Program (CHIP), the health insurance poverty program for children, from households with income between 100% and 133% of the poverty level would be transitioned to Medicaid coverage (Medicaid and CHIP in the new health reform law, 2010, KFF).

But the Obama Administration has had to take into consideration the needs of state healthcare budgets, which are overburdened because of lower tax revenues due to the recession. Even before healthcare reform, in fiscal 2010 Medicaid made up 22% of state budgets, more than was spent on public schools. Medicaid's share of states' budgets was particularly high in Illinois: 37.1% -- as compared with 7.3% in Wyoming and 7.5% in Texas (Fletcher 2010)

On a state level, Illinois has been attempting to curtail, rather than expand social health services to the poor, including ending free health insurance for 3,100 eligible children who were allowed access to state health insurance programs regardless of their family income. Families of four earning more than $66,150 annually no longer qualify for the coverage of their dependent children. Additionally, applicants for government-subsidized health care will have to prove they are residents of Illinois and prove they meet income guidelines annually. There will no longer be automatic re-enrollment for recipients. The plan seeks to cut the cost of Medicaid by moving at least half of the recipients out of the program (Medicaid changes on the horizon in Illinois, 2011, Quad City Times).

Even President Obama recently proposed cost cuts to the federal Medicaid program, in light of the pressure to reduce government expenditures. Obama has proposed replacing the federal Medicaid matching formula with a single rate and also to reward states for efficiency and enrollment reduction (Luhby 2011). (The set limits will increase if the unemployment rate increases and the U.S. another recession). The bill would also bolster the controls of the Independent Payment Advisory Board (Luhby 2011).