What is most likely outcome for Medicaid expansion and health reform?

As speculation continues regarding the future of the Patient Protection and Affordable Care Act (PPACA), state Medicaid directors are continuing with their planning process, says Stan Dorn, a senior fellow at the Urban Institute in Washington, DC. "There is always a lot of posturing. After Medicare Part D passed, there was posturing," says Mr. Dorn. "But it's much harder to repeal a law than to create a law. I think it is realistic to assume it is going to go forward."

However, Thomas Miller, JD, a resident fellow at the American Enterprise Institute for Public Policy Research in Alexandria, VA, says that over the next two years, "early measurable effects of PPACA-style health reform will remain disappointing."

Mr. Miller adds that he expects that Capitol Hill hearings "will begin to dent it further. A few shots at funding some narrower aspects of early implementation may succeed, and state resistance, both in the courts, [legislatures], and among many Republican governors, will grow."

Mr. Miller anticipates that the longer-term future of this health care reform approach will be largely determined in the 2012 presidential election. "No big dollars start to flow until 2014. The essential PPACA coverage infrastructure, including the intersection of big Medicaid expansion and subsidized exchange coverage, doesn't get cemented into place until 2013," he says.

The implications for state Medicaid directors depend on their state's political climate, says Mr. Miller. "The competing tendencies are to just hunker down and ask, 'Just tell us what you want us to do,' and 'We will continue to pretend to do the impossible,' versus 'Hold your fire and do the minimum necessary while continuing to ask for more guidance that is slow to arrive, and then complain about it once it does,'" says Mr. Miller.

The biggest issues, says Mr. Miller, are whether state budgets can withstand the Maintenance of Effort requirements until 2014, and whether the proposed health insurance exchanges will actually turn out to be "real" and capable of administration. "There are lots of moving parts in theory that have never been assembled in such complexity before," he says.

As for states that have sued to overturn the legislation, Mr. Miller says that those states "can operate on parallel tracks to some degree, but with less enthusiasm and fill-in-every-detail exactitude in planning and preparation, for what they hope does not fall into place as originally designed."

Mandate is the focus

Austin Frakt, PhD, a research assistant professor of health policy and management at Boston University School of Public Health, notes that Virginia's recent court decision "doesn't invalidate the law. It just takes out the mandate. So, the Medicaid aspects of the law wouldn't be affected by that."

As for Washington politics, Dr. Frakt says that most of the talk is about the mandate, not the Medicaid expansion. "I haven't heard anyone target the Medicaid aspect, but in the general climate of belt tightening, maybe they will. There is a lot of money there."

Dr. Frakt says that although there are states that want to make major changes, such as pulling out of Medicaid altogether, "as far as I can tell, those don't seem to make a lot of sense. Pulling out of Medicaid and giving up federal dollars is a big loss."

Dr. Frakt adds that "even if states are right that they could do something more efficient, it's hard to make up for 50, 60, or 70% federal Medicaid matching funds. That level of inefficiency does not exist in Medicaid."

Many desperate for care

While Dr. Frakt concedes that "we have a pretty difficult deficit situation, and a political climate that's not really conducive to spending more," he remains hopeful that no changes will occur that result in fewer people being insured than is currently predicted.

This is particularly important for low-income individuals, he says, because "they can't go anywhere else. There aren't affordable private insurance options for them. Many of these people are very sick and in desperate need of help. Many have just missed the Medicaid cutoff for some time and are waiting for some relief."

Dr. Frakt adds that he is a "little bit disappointed that there isn't more of an outcry" over the decision for Arizona Medicaid to stop paying for certain transplants of the heart, lung, pancreas, and bone marrow, which took effect October 2010. "We should really be concerned about that, and frankly, ashamed that we are not doing better in this country," he says.

Looking forward, Dr. Frakt says that there is no question that the phase-out of additional federal money for state Medicaid programs "is going to be painful. Health care is expensive, and this is a population that doesn't vote much. They are not making political contributions, that is for sure," he says. "I can see the temptation to make cuts there, but it's not the right thing to do."

Dr. Frakt says that Medicaid is structured in a way "that invites these kind of challenges," being a joint state-federal program.

"It isn't as though there isn't money, broadly speaking, in the system, that can be directed to Medicaid programs as opposed to elsewhere," says Dr. Frakt. "The dollars that might be spent on Medicare could be better utilized on Medicaid, but it just doesn't work out that way. Politically, that is not the squeaky wheel."

Contact Dr. Frakt at (857) 364-6064 or frakt@bu.edu and Mr. Miller at (202) 862-5886 or tmiller@aei.org.