Could we someday see full federalization of Medicaid?

Interestingly, the Patient Protection and Affordable Care Act (PPACA) takes some steps toward federalization of Medicaid from both a philosophical and a financial perspective, says Nicole Huberfeld, an associate professor at the University of Kentucky's College of Law in Lexington.

"For the past 46 years, only the 'deserving poor' have been eligible for Medicaid. This categorization was a holdover from colonial, state-based concepts regarding which citizens were worthy of government assistance," says Ms. Huberfeld.

The PPACA enacts a major philosophical shift by making all citizens eligible for Medicaid as long as they meet federal poverty requirements, she says, with the federal government funding the newly eligible enrollees completely in the first few years of the Medicaid expansion.

"The federal government arguably has 'federalized' this newly eligible population, and would have funded them 100% forever if not for budgetary constraints," Ms. Huberfeld says.

The states that have challenged the constitutionality of the Medicaid expansion in the 11th Circuit litigation have not challenged the philosophical change in Medicaid, she adds, only the economic detriment that they believe will result from the expanded rolls.

"Over the years, various actors have proposed that the federal government take over Medicaid," Ms. Huberfeld says. "These proposals may have been politically feasible, but they have gone by the wayside in the larger debate about national health reform."

Benefits for beneficiaries

With federalization, Medicaid would no longer be the second largest budgetary outlay for the states, says Ms. Huberfeld, and fluctuations in medical access that Medicaid enrollees often suffer would diminish.

"States often must cut benefits in the very moment they face enlarged Medicaid enrollment," she explains. "This is poor timing, and dangerous to enrollees."

The program could be administratively simplified if it were federalized, adds Ms. Huberfeld, which would save time and money. "Enrollees would likely benefit from national standards being applied to their medical care. After all, a person with renal failure still needs a new kidney, whether or not the state's program covers the transplant," she says.

Currently, a low-income, childless, non-elderly and non-disabled adult in Utah might be able to get coverage for certain primary care services, but wouldn't be covered if he or she needed surgery to repair a fracture resulting from a motor vehicle collision, says Laura Hermer, JD, LLM, an assistant professor at the Institute for the Medical Humanities at University of Texas Medical Branch in Galveston.

"The same individual might get his care covered by Connecticut's Medicaid program, and nothing covered at all in Alabama," she adds. "These sorts of disparities are not rational, and ought not to occur in this country. Yet they are commonplace."

Even if state experiments to reform Medicaid are unsuccessful, it's still not very likely that Medicaid will be federalized, according to Ms. Hermer. "There are a number of reasons for this. First, many states would likely fight such a change," she says, noting that different states have very different notions of what it means to "reform" Medicaid.

"Reform to Vermont, for example, means quite a different thing than it does to Texas," she says. "Many states and politicians argue this is a good thing, because different states have different needs."

Although differences involve medical or coverage needs of varying populations to a small degree, Ms. Hermer says that the real differences are ideological, such as who deserves public coverage, what that coverage should consist of, and how it should be provided and funded.

There is no good reason for coverage variations from state to state, argues Ms. Hermer, but many states nevertheless guard their prerogative to control the structure and funding of their respective Medicaid programs.

"The fact that 26 states challenged the new federal standards for Medicaid under the Affordable Care Act speaks loudly to this," she says. "If it only boiled down to money, then depending on how we structured it, states needn't necessarily complain at all."

For instance, a national Medicaid program could be funded through a payroll tax as with Medicare, without extracting a cent from the states, says Ms. Hermer. "But it's not just a matter of funding. States and localities have historically had control over what their programs for lower-income residents look like," she says.

Additionally, numerous private players are involved in state Medicaid programs, notes Ms. Hermer. If states no longer have control over Medicaid, then states might lose the ability to determine funding for providers of all the goods and services that are necessary to provide and administer health and long-term care to their Medicaid populations, she explains.

Ms. Hermer notes that Wyoming, Texas and Indiana studied what would happen if they withdrew from the Medicaid program, shortly after the PPACA was enacted.

"The bottom line for most of them turned on the effect such a withdrawal and concordant loss of federal funds would have on their respective health care economies," she says.

Contact Ms. Hermer at (409) 772-9379 or ldhermer@utmb.edu and Ms. Huberfeld at (859) 257-3281 or nicole.huberfeld@uky.edu.