Under the plan announced by President Joe Biden after negotiations with key Democratic lawmakers in Congress, those in the gap would qualify for ACA marketplace subsidies for four years starting in January. They would get additional cost-sharing protections starting in 2023 that would bring their out-of-pocket costs close to zero.
To encourage existing Medicaid expansion states to maintain their coverage levels, the bill would raise the 90% federal matching rate for the expansion population to 93% from 2023 through 2025.
To help pay for that coverage and incentivize holdout states to expand Medicaid, starting in 2023 the plan would permanently cut billions in special federal Medicaid funding to the non-expansion states that helps hospitals with disproportionately high rates of uninsured or Medicaid patients.
Those cuts have unsettled hospital industry officials, who worry that losing those special funds would mean less money to pay for services. “We always are in favor of coverage expansion,” said Beth Feldpush, senior vice president of America’s Essential Hospitals, which represents hospitals that treat many poor and uninsured patients. “Our concern is it is paired with cuts to the safety net, and … that is a double-edged sword.”
The American Hospital Association has estimated those funding cuts would total as much as $7.8 billion over 10 years. Industry groups say hospitals need the extra Medicaid funding to handle the more than 25 million people who would remain uninsured even after the coverage expansion.
One benefit for hospitals and health care providers is that marketplace health plans generally pay higher reimbursement rates than Medicaid — but they also often come with higher deductibles that can be difficult for patients to pay and providers to collect.
The massive spending package hinges on Sen. Joe Manchin (D-W.Va.), whose support is critical. Democrats can’t afford to lose one party member vote in the 50-50 Senate, where Vice President Kamala Harris would break any ties and the GOP stands firmly against any government expansion. But Manchin has not yet said whether he will vote for the package.
Consumer advocates are ecstatic that Congress may no longer wait for Republican-controlled legislatures and governors to expand Medicaid. Republican leaders have cited a host of reasons for resisting, including that their states can’t afford the 10% match and that nondisabled adults don’t deserve Medicaid. States could not block the coverage expansion because it falls outside of Medicaid, which is jointly funded by the federal and state governments.
“This is a big deal,” said Anne Swerlick, a public interest attorney in Tallahassee who has lobbied Florida’s legislature to expand Medicaid. “It would make an extraordinary difference in the quality of life for tens of thousands of Floridians caught in the gap. In many instances, it will be a lifesaver.”
Sen. Raphael Warnock (D-Ga.), a key lawmaker advocating for the provision, said Congress needs “to close the coverage gap in Georgia and the 11 other states where hardworking families wake up every day without health care coverage their neighbors in 38 other states enjoy.” But on Wednesday, he said he and Georgia’s other congressional Democrats oppose the cuts to special Medicaid funding for hospitals.
While most states expanded Medicaid in 2014, no state legislature has adopted it since Virginia’s in 2018.
Those that haven’t adopted it are in the South, save for Wyoming, Kansas, South Dakota and Wisconsin.
In Georgia, Gov. Brian Kemp and other GOP leaders have sought federal approval for a partial Medicaid expansion, which would require work or other activities for eligibility. But the Biden administration has so far resisted this approach.
R.D. Williams, CEO of Hendry Regional Medical Center in Clewiston, Florida, said the Democrats’ plan would cover about 60% of the uninsured who use his hospital, which serves one of the poorest parts of the state. “It will definitely have an impact,” he said.
Expanding coverage, he said, would help many patients better manage their health by getting access to primary care doctors and specialists. Medicaid enrollees make up 25% of Williams’ patients, while more than 30% have no coverage. “Our largest payer group is the uninsured,” he said.
However, Williams said he was still trying to figure out how much money he might have to give up in Medicaid funding under the bill. Those cuts would occur unless Florida expands Medicaid.
Elijah Manley, 22, of Fort Lauderdale, Florida, racked up more than $2,000 in bills after going to a hospital emergency room for COVID-19 treatment last year. Without insurance, he has no way to pay and fears it will hurt his credit. He’s been uninsured since he aged out of Medicaid when he turned 21.
Manley works part time in a bar and also is one of several Democrats running for a special primary election for a state House seat in January. He hopes Congress will pass a plan that gives him access to free or low-cost insurance so he doesn’t have to think twice about going to the doctor.
It’s been nearly a decade since the Supreme Court in 2012 narrowly upheld the ACA but made its Medicaid expansion provision optional for states.
Joan Alker, director of the Georgetown University Center for Children and Families, said the Democrats’ plan should motivate states to expand Medicaid because they could do so without losing their special Medicaid funding.
“If it moves states, that would be great, but it ain’t going to happen,” said Chip Kahn, president of the Federation of American Hospitals, which represents for-profit hospitals.
Mississippi hospitals welcome the Democrats’ plan despite concerns about funding cuts.
“Hospitals would prefer a straight-up Medicaid expansion, but at this point a thirsty man is not going to be really choosy about whether it’s bottled water, mineral water or tap water,” said Richard Roberson, a vice president at the Mississippi Hospital Association. “An opportunity for some coverage is better than nothing.”
The Medicaid gap has contributed to the financial problems of rural hospitals in Georgia, leading to recent closures, said Sen. Jon Ossoff (D-Ga.). On people stuck in the coverage gap: “It’s unfair, and folks are suffering and dying needlessly.”
Phil Galewitz is a reporter for Kaiser Health News. Andy Miller, a former AJC reporter, is editor of Georgia Health News.