WASHINGTON, Feb. 28, 2013 (GLOBE NEWSWIRE) -- As many as 5.3 million Americans who live in the 16 states that have either decided not to expand or are leaning towards not expanding their Medicaid programs may not qualify for coverage through the Affordable Care Act (ACA), according to a new analysis from KPMG LLP, the audit, tax and advisory firm. This figure also includes the seven states that are undecided about expansion.
The KPMG analysis, which uses publicly-available data, points out that the ACA was intended to create an interwoven system of coverage that would include Medicaid and private coverage – both subsidized and unsubsidized. Planners intended for expanded Medicaid eligibility and the subsidies (in the form of advance premium tax credits or APTCs) would work in tandem, along with other changes, to provide coverage to millions of previously-uninsured individuals.
But because Medicaid expansion is now optional (following last summer's Supreme Court decision), there is a gap in the ACA: in states that choose not to expand, there are some 5.3 million individuals who fall above their state's Medicaid eligibility level but below 100 percent of the federal poverty level and thus aren't eligible for the APTCs to help offset the cost of purchasing coverage through a health benefit exchange. The 5.3 million represents about 17 percent of the 32 million Americans originally projected to gain coverage through the ACA. (By comparison, the KPMG analysis estimates 10 million are projected to qualify for Medicaid coverage in the 27 states and District of Columbia that intend to expand Medicaid to 133 percent of the federal poverty level, or are leaning toward expanding.)
Paul Hencoski, a KPMG principal and the national lead partner for Health and Human Services, said, "State officials face a difficult decision on whether to expand their Medicaid programs. But our analysis clearly indicates that in states that don't expand Medicaid coverage, millions won't be able to obtain coverage and the ACA's intended benefits are diluted."
The impact on future budgets is a concern for state officials on either side of the argument. For state officials considering expanding Medicaid to 133 percent of the federal poverty level, there is uncertainty. For example, while the federal government will pay 100 percent of the costs of the newly-covered Medicaid population for the first three years of expansion, beginning in 2017, this cost share will gradually phase down to just 90 percent by 2020. KPMG projects this change will result in an average cost share of more than $200 million per year for a typical state. The report also notes that the law provides no guarantees for what the federal cost share might be beyond 2020.
"Although expansion creates budget uncertainties," said Hencoski, "some governors who have made the decision to expand cite the projected positive impacts associated with individuals having better access to quality healthcare, reduced overall medical expenditures, and likely increased economic activity. These impacts, however, are difficult to quantify so expansion is not a clear-cut decision."
States that choose not to expand Medicaid also face a range of complicated operational, budgetary, and policy considerations that affect both the state and federal government. Hencoski cites three in the analysis.
About KPMG LLP
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