In the two weeks since the U.S. Supreme Court issued a decision on the constitutionality of the Patient Protection and Affordable Care Act (known to many as "Obamacare," "Affordable Care Act" or "ACA") numerous articles and opinion pieces have been released discussing the rationale and motivations of the justices. A thorough analysis of the decision would exceed the space limits of this column, so for this week, we will briefly look at the decision, what changes may come, and the options Georgia faces.
What survived and what was struck
As you may know, the health care overhaul, signed into law in 2010, was left largely untouched by the Supreme Court. The justices left intact the requirement of most adults to obtain an acceptable insurance policy by January 2014 or face a tax/penalty. Also by this date, employers with more than 50 employees who do not offer insurance coverage would face penalties. Health insurance exchanges, which we will discuss later, would be put in place to help find coverage and subsidies for those eligible.
The portion of the law that was struck down was the requirement of states to expand coverage of individuals in Medicaid programs. The federal government currently requires states to cover certain eligibility groups under the Medicaid program. These "mandatory" populations include pregnant women and children under the age of 6 with family incomes below 133 percent of the federal poverty level (FPL) and older children with a family income below 100 percent of FPL.
For comparison, 133 percent of the FPL is approximately $31,000 and 100 percent of the FPL is approximately $23,000 for a family of four. Most persons with disabilities and elderly people receiving assistance through the Supplemental Security Income (SSI) program are covered as are individuals with incomes less than 50 percent of FPL (around $6,000).
Under the current Medicaid requirements, individual adults who don’t fall under any of the above categories are not required to be covered. If a state covers these mandatory groups and certain types of services, the federal government shares the cost of the program. In Georgia, the federal government covers approximately 65 percent of costs, with the remaining 35 percent covered by the state. Currently, Georgia budgets $2.6 billion for its portion to match $5.5 billion in federal funds.
The Affordable Care Act expands this mandatory eligibility to include all individuals under 133 percent of the federal poverty level ($33,000 family of four income). Even adults without children are covered under the legislation. For only this expanded population, the federal government will pick up 100 percent of the expense between 2014 and 2016. The federal portion will gradually reduce to 95 percent in 2017, 94 percent in 2018, 93 percent in 2019, and by 2020, the federal government will share costs at 90 percent, with the state picking up the difference.
The Affordable Care Act originally stipulated states that did not expand their eligibility jeopardized the loss of all of their Medicaid funding, even for those populations that are currently being served. The high court noted that losing federal Medicaid funds would require draconian reductions to state budgets. Because of this, the Supreme Court struck the requirement for states to expand their eligibility. States now have the option to choose whether they will opt in or out.
What will Georgia do?
Georgia’s elected officials still have time to decide whether to expand Medicaid eligibility. Governor Deal recently announced that he would prefer to wait and see how the presidential election is decided before making any decisions.
But if the law is not repealed, there are concerns that will influence the decision on how to proceed. One concern is the cost to the state. The Department of Community Health has estimated that Georgia would have to spend an estimated additional $76 million in FY2014 and $220 million in 2015 in new costs. These costs are estimates based on increased administrative costs and new applications from individuals currently eligible but not presently enrolled. This is on top of the $300 million deficit that Georgia’s Medicaid program is already projected to face in FY2014 and the dramatic cuts already implemented as a result of the recession.
Next week: Part Two – Georgia’s Three Concerns
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