CHICAGO (Reuters) - Now that the U.S. Supreme Court has ruled on healthcare reform, the front line of the battle moves to the states. Some are vowing to resist implementation of the Affordable Care Act (ACA), while others are moving full speed ahead. And the stakes for uninsured Americans are enormous.
In states that do not implement their own public insurance exchanges, the federal government will step in. Federally sponsored exchanges will provide access to insurance for middle-income residents without employer-provided health insurance to buy policies with costs offset by subsidies.
The outlook for lower-income people is less certain, because the ACA aims to cover them through Medicaid - a program that currently serves mainly adults with very low incomes and seldom adults with children. The new ACA funding will serve all households with income near the federal poverty level - about $30,000 in annual income for a family of four.
The Urban Institute estimates that 15.1 million Americans fall into this category. The federal government will pay 100 percent of the cost of expanding Medicaid for the first three years and 90 percent afterwards.
But the Supreme Court's ruling gives states the option not to participate in the expansion and low-income residents in states that opt out would be left high and dry. For example, the Urban Institute estimates that Florida, whose governor is on record as unwilling to expand Medicaid, has 1.3 million residents who could be covered under the law. Texas, whose governor is also against expansion, has 1.7 million potential beneficiaries.
In the public exchanges, applicants will be eligible for federal subsidies on the cost of coverage if they make less than 400 percent of the federally defined poverty level - currently $92,000 for a family of four. For this group, the subsidy uses a sliding scale to hold costs as a share of income between 2 percent and 9.5 percent. Those subsidies will be available even to residents of states such as Florida and Texas through the federally sponsored exchanges that are offered there.
Heather Howard, director of the State Health Reform Assistance Network at Princeton University's Woodrow Wilson School of Public and International Affairs, notes that governors and legislatures also will face pressure from hospitals and other providers in their states worried about the continued high cost of charity care if low-income residents continue to go without insurance coverage.
"I still think that after people take a breath and think about this, it will be hard for states to turn down the money," she says.
PROGRESSIVE CASE STUDY
To get a sense of what's at stake, consider Maryland - a state that has been moving aggressively to implement the ACA since President Obama signed it in 2010. The state expects to hit all the federal deadlines to be ready to go in January 2014.
An estimated 730,000 Maryland residents do not have health insurance, according to Joshua M. Sharfstein, M.D., secretary of the state's department of health and mental hygiene and chairman of the board the state created to implement its public exchange. Sharfstein expects half of those people will be insured under the ACA - half through commercial policies bought in the state exchange and half through Medicaid. The remainder will be made up of undocumented immigrants, citizens who decline to buy policies or people who are exempted under terms of the law.
Sharfstein estimates the ACA will bring in $500 million to $1 billion in federal subsidies to the state annually to help pay for the expanded coverage. Sharfstein also expects that the law will be a big net positive for the state's overall budget over the coming decade as it sharply reduces the cost of free care to the uninsured.
"People in our state really want to see this work," Sharfstein says. "We may not all agree about the law, but we have people across the state very engaged, ranging from health advocates to the insurance industry and businesses. We all agree it's better for the state to set up its own exchange."
LONG-TERM CARE EXPANSION
Maryland is an early adopter of a little-noticed feature of the ACA that allows states to shift its Medicaid system delivery of long-term care services away from institutional settings such as nursing homes and into community and home-based care.
"Medicaid has always covered institutional care like nursing homes," says Charles Milligan, a deputy secretary of health for Maryland who directs the state's Medicaid program. "It's been slower to cover community-based long-term care. The ACA gives us some big opportunities to re-balance that."
Maryland began rolling out additional slots in community-based programs in the state's fiscal year that started on July 1st. Other expanded services will be rolled out in the fall, Milligan says.
Maryland received a federal grant of $106 million to help re-balance services and will receive enhanced federal reimbursements for patients that it serves through community-based programs.
This part of the law has the potential to be a major game-changer in the way long-term care is financed in the United States because Medicaid is the nation's largest source of long-term care funding. This year, the program will pay for 43 percent of all long-term care, according to the Kaiser Family Foundation. The program provides services not only to truly poor people, but also middle class people who run out of money or spend themselves down" to obtain coverage.
"Many people don't need around-the-clock institutional care," says Maureen Fitzgerald, director of disability services for The Arc, a national community-based advocacy and service organization for people with intellectual and developmental disabilities. "They might need someone to come in the morning to help them get dressed and have a meal - that might be all they need until the evening."
Nursing home care costs average $74,800 per year, according to Kaiser. Fitzgerald says community-based care can be provided for $7,000 to $12,000 annually.
"Spreading those services around a community might allow you to serve two or three people for the price of one person in a nursing facility," she adds.
Milligan expects Maryland to save an average of 30 percent in annual per-patient spending through the shift to community-based services.
(The writer is a Reuters columnist. The opinions expressed are his own. For more from Mark Miller, see link.reuters.com/qyk97s)
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