Amid Health Law Expansion, Some States Trim Medicaid Rolls

While millions of adults nationwide will gain Medicaid coverage next year under the federal health law, more than 150,000 people could lose their coverage in the state-federal health insurance program for the poor as four states reduce eligibility.

Amid Health Law Expansion, Some States Trim Medicaid Rolls

The states planning to make the cuts in January are Maine, Rhode Island, Wisconsin and Vermont. Most people losing access to Medicaid will be eligible for federal subsidies to help buy private coverage in the law’s online insurance marketplaces also starting in January, but advocates worry some will struggle to afford higher premiums and other cost-sharing expenses.

“It is sad that as we look to expand coverage to more people, we are taking a step backward and taking away coverage to a significant amount of low income adults,” said Linda Katz, policy director with the Economic Progress Institute, a Providence, R.I.-based advocacy group.

Kaiser Health News collected enrollment data from the four states. The changes they plan still need federal approval, which is expected.

Rhode Island is expanding Medicaid under the health law’s provision to cover all childless adults making up to 138 percent of the poverty level. That will add about 45,000 people to the program. These expansion costs are fully covered by the federal government through 2016 and then the state will pay a small portion but no more than 10 percent.

At the same time, though, Rhode Island is scaling back its Medicaid eligibility for parents of minor children from the current income threshold of 175 percent of the poverty level to 138 percent, affecting 6,700 people. They will be directed to shop for coverage on the state’s insurance marketplace, also called an exchange.

Rhode Island, like other states, expects this shift to reduce state spending. That’s because states split the cost of Medicaid with the federal government, which picks up about 57 percent of Medicaid spending. But the subsidies in the marketplace are funded totally by the federal government.

Meanwhile, in Maine, not everyone being cut from Medicaid will have access to the subsidies to buy private insurance.

About 10,000 childless adults in the state, a little less than a third of those losing Medicaid coverage, won’t qualify for those federal subsidies because they have incomes below the poverty level, $11,490 for an individual. The health law makes those subsidies available only to people with incomes between the poverty level and four times that amount. The law was written that way because it was assumed all states would expand Medicaid eligibility to cover everyone with incomes up to 138 percent of the poverty level, but the Supreme Court last year made that provision optional. Only about half the states are expanding Medicaid for 2014. Many states led by Republicans have balked at expanding Medicaid, citing how spending for the program has outpaced inflation and even a modest increase in spending over the next decade could be difficult.

Stacey Jacobsohn, 52, of Augusta, Maine, is worried about losing her Medicaid coverage particularly since she had a stroke last year. With a $5,000 annual income, she said she will have to rely on her doctors to cut their prices so she can keep seeing them. “It’s going to be very hard for me,” she said. “It’s a lot of fear right now.”

For the past four years, states have been limited in their ability to reduce the size of their Medicaid programs because of a requirement called “maintenance of effort,” which first took effect in the 2009 federal stimulus law that provided billions of dollars to states during the recession as long as they didn’t restrict standards for eligibility. That restriction was extended in the 2010 Affordable Care Act. But that provision ends for adults in 2014. That’s why Maine next year will be able to reduce its Medicaid coverage for childless adults. In addition, Maine next year plans to reduce eligibility for parents and caretakers from 133 percent of the poverty level to 100 percent of the poverty level, which affects 15,000 adults.

Medicaid Cuts
Four states are reducing eligibility in their Medicaid program for some groups next year.
State Number of people being cut
Maine 35,000
Rhode Island 6,700
Wisconsin 92,000
Vermont 19,000
Of these, all will be eligible for federal subsidies in exchanges except for 10,000 childless adults in Maine with incomes below 100 percent of the federal poverty level. They won’t be eligible.

Maine Gov. Paul LePage, a Republican, says his state can’t afford its current Medicaid program nor take on an expanded one, even if all the costs are paid for the first three years by the federal government. LePage this year vetoed a measure passed by the legislature to expand Medicaid under the health law’s provision. Supporters of the measure could not get enough votes to override his veto. “Adding non-disabled individuals to our welfare program when we are failing to provide core services to thousands of disabled and elderly Mainers is unacceptable,” LePage said in his veto message.

In the other two states, the Medicaid cutbacks are the result of the expiration of federal waivers that allowed for demonstration programs designed to expand coverage. In Vermont, about 19,000 people will fall off the Medicaid rolls as the state ends two such initiatives geared toward helping people with incomes as high as 300 percent of the poverty level, or a little more than $34,000.

Mark Larson, commissioner of the Vermont Department of Health Access, said the programs are ending to save the state dollars since those populations next year can qualify for federal assistance to buy coverage in the state exchange.

Wisconsin would cut more people from Medicaid than any other state as part of a plan advanced by Republican Gov. Scott Walker and still awaiting federal approval. About 92,000 people – 87,000 parents and caretaker relatives, and 5,000 childless adults with incomes above the federal poverty level — would lose the Medicaid coverage they previously had as a result of a wavier and be sent to the online insurance marketplace. At the same time, the state is planning to add 100,000 Wisconsin childless adults with incomes below the poverty level to Medicaid.

“The governor’s reforms balance the need to maintain a strong and sustainable health care safety net with ensuring the greatest number of people possible can afford to remain in the private health insurance market and maintain their independence,” according to a statement by the Wisconsin Department of Health.

Many of the 92,000 Wisconsin adults losing Medicaid coverage already pay small monthly premiums. It’s unclear how much those rates will increase in the online marketplace.

“The products designed for the marketplace were never designed for people in these low-income categories,” said Donna Friedsam, health policy program director at the University of Wisconsin. “Even with the federal subsidies, the cost sharing will still be quite onerous.”