The Effects of the Medicaid Expansion on State Budgets: An Early Look in Select States
Appendix A: Coverage Initiatives prior to the ACA
Prior to the ACA, coverage for adults was limited. Parent eligibility in many states was below the poverty level. Adults without dependent children were ineligible for Medicaid regardless of their income; states could only cover adults without dependent children through waivers. As of January 2013, nine states provided coverage for low-income adults comparable to full Medicaid benefits; an additional 16 states provided such adults with limited benefit coverage under Medicaid.1 Provided below is a summary of coverage initiatives the case study states had in place prior to the Medicaid expansion; individuals in each of these programs were transitioned to the new coverage group and eligible for full federal financing under the Medicaid expansion.
Connecticut: Prior to the ACA, Connecticut provided medical assistance under the State Administered General Assistance (SAGA) program, which is state-funded.2 Under provisions in the ACA, states were given the option to implement the Medicaid expansion ahead of January 1, 2014 at the state’s regular matching rate. Connecticut was the first state to take up this option, implementing a state plan amendment to cover non-elderly, non-disabled adults up to 56 percent FPL without an asset test (there was a $1000 asset test under the SAGA program.) The state experienced significantly higher enrollment than expected. Even though the federal government was paying half of the cost, the state’s 50 percent share of expenditures for the new, low-income adult program exceeded the cost for medical assistance under the original SAGA program as enrollment grew substantially above projections. In January 2014, the state implemented the full Medicaid expansion, increasing income eligibility up to 138 percent FPL; the federal share for these expenditures increased to 100 percent.3
New Mexico: New Mexico implemented its 1115 waiver to cover uninsured adults up to 200 percent FPL in 2002 under the State Coverage Initiative. The coverage provided was more limited than Medicaid, cost-sharing and premiums were above Medicaid-allowable levels, and enrollment into the program was closed in 2008 due to budget constraints. The waiver program, originally approved as a HIFA waiver, was first financed with CHIP funding and then converted to Medicaid funding. In January 2014, the state ended the SCI program, transitioning two-thirds of those served by the program to the new Medicaid expansion group, under which the federal match increased from approximately 75 percent to 100 percent. The other one-third of SCI enrollees had incomes above 138 percent FPL and qualified for subsidies to purchase coverage in the Marketplace.
Washington: Washington had for decades provided coverage for low-income uninsured adults through its Basic Health Program, which was funded with state-only dollars. During the economic downturn, the state faced notable budget shortfalls. After the ACA was passed, Washington was able to obtain federal matching funds under a Section 1115 waiver program to act as a bridge to the Medicaid expansion. This conversion to a Medicaid waiver allowed the state to collect federal dollars at the state’s regular matching rate for the program (as well as the Disability Lifeline program and the Alcohol and Drug Abuse Treatment and Support Act or ADATSA program, both of which were also previously state-funded.) In January 2014, the state transitioned these adults to the Medicaid expansion group, where the federal match increased from 50 to 100 percent.