A Tool to Help States with the ACA’s Medicaid Simplification

The recent Supreme Court decision put the spotlight on Medicaid’s role in the Affordable Care Act (ACA).  With Medicaid front and center, states are publicly weighing their options on the question of “to expand or not to expand,” but the expansion itself is just one small part of the major Medicaid reforms in the ACA. Although questions remain, and further guidance is needed about how far-reaching the Supreme Court decision was on Medicaid aspects of the law, many expertsagree that whether states decide to expand Medicaid eligibility or not, they are still required to make major updates to their Medicaid programs by 2014.
One of the most substantial ACA Medicaid changes is the requirement that states collapse numerous current eligibility categories into just four groups for the non-disabled population with income below 133 percent of the Federal Poverty Level (FPL):

• Children,
• Pregnant Women,
• Parents and Caretaker Relatives, and
• Adults (the category for the Medicaid expansion).

The ACA establishes a  new, uniform income methodology for these four groups, called the Modified Adjusted Gross Income (MAGI), which generally aligns with the tax credit income standard that will be used in health insurance exchanges.
NASHP, through support from the Robert Wood Johnson Foundation’s State Health Reform Assistance Network, recently developed the 2014 Medicaid Eligibility Transition Toolkit for Statesto help states think through the transition to these new MAGI groups. The toolkit provides a framework for states to systematically examine the state’s policy choices and determine the effect of the transition on each current group of eligibles and on newly eligible populations.
The toolkit consists of:

1. A spreadsheet that states can fill out to “crosswalk” each existing Medicaid eligibility category and currently uninsured populations to its corresponding 2014 coverage group.
2. Instructions on how to fill out the spreadsheet.
3. A sample spreadsheet for a generic “State A” that highlights common issues many states may recognize as they complete their individual crosswalks.
4. An issue brief that analyzes many issues states will spot as they map their categories to 2014.

Simplifying eligibility is a lot more complicated than it sounds. Take an average state: Arkansas, for example. Of Arkansas’ 55 Medicaid eligibility categories (as of 2009), at least 15 categories are not tied to a person’s status as aged, blind or disabled.  In 2014, Arkansas will need to undertake a process to collapse these 15 categories, along with the new expansion group, down to four. While the ACA is designed to keep coverage the same for currently eligible groups, the toolkit can help states spot several cases where benefits, matching rates, and other criteria may change, and lays out several options for states to consider in making these choices.
States are especially likely to face choices affecting groups that are not currently receiving comprehensive Medicaid coverage, and groups that currently include people with incomes above 133 percent FPL. For example, 23 states currently provide family planning services under a Medicaid waiver, and eight states provide these services through a state plan amendment. Most of these state programs offer coverage to individuals with family income up to 200 percent FPL for a limited set of services, and the state receives a 90 percent match rate. In 2014 there are several possible scenarios:

• A state could choose to expand Medicaid to childless adults and create an Adult category, and those people under 133 percent FPL currently in family planning could go into this new MAGI group for comprehensive Medicaid coverage.
• A state could put individuals between 133 and 200 percent FPL into: (1) the exchange with subsidies (2) a Basic Health Program or (3) an optional Medicaid expansion group that goes beyond 133 percent FPL.
• A state could decide to keep the limited family planning coverage option available as a last resort for people for whom coverage will still be too expensive or otherwise unavailable.

The toolkit is designed to help states spot difficult issues and weigh the various options, and to help make the initial challenge of redesigning policies less daunting.
What transition issues is your state working through as you plan for consolidating current eligibility categories into MAGI groups in 2014? Let us know in the comments below.