Repeal of ACA Medicaid Expansion: Critical Questions for States

By Jocelyn Guyer, Managing Director | Deborah Bachrach, Partner | Patricia Boozang, Senior Managing Director | Cindy Mann, Partner

Much of the post-election debate over the potential repeal of the Affordable Care Act (ACA) has focused on the fate of the Marketplaces, the mandate, and popular insurance reforms such as the ban on preexisting conditions. Increasingly, however, it is clear that repeal could include elimination of the Medicaid expansion to low-income adults, with far-reaching implications for coverage, state budgets, and congressional proposals to finance any Medicaid restructuring. Repeal—particularly without a plan for replacement—leaves states vulnerable to the loss of funds with no assurance that they will be able to maintain coverage, benefits, or payment rates to providers or to continue other key features of the Medicaid program.

In a new issue brief for the Robert Wood Johnson Foundation, Manatt Health reviews the available information on the potential repeal of the Medicaid expansion and highlights 12 critical questions for states as Congress and the new administration debate when and how to repeal the ACA:

1. How likely is it that the repeal effort will include the Medicaid expansion?
2. What would repeal of the Medicaid expansion look like?
3. What process will Congress use for repeal and replace?
4. What are the likely implications for coverage?
5. What is the likely impact on state budgets of eliminating the Medicaid expansion?
6. What happens to the money that the federal government saves by eliminating expansion? Can it be used to finance a new approach to coverage?
7. Will states be able to secure the regular matching rate to cover (or continue to cover) low-income adults?
8. Will states be able to use a Medicaid 1115 waiver to cover low-income adults?
9. What might replace the Medicaid expansion provisions of the ACA?
10.  Will states that already expanded Medicaid be able to keep their funding?
11.  Will states that have not yet expanded Medicaid be able to receive new funding in the future to cover the costs of low-income adults?
12.  What questions should states ask about the implications of repealing the Medicaid expansion?

Looking Ahead

The Medicaid expansion brought nearly $56 billion in federal funding to the 31 states and Washington, D.C. in calendar year 2016, including more than $1 billion in at least 20 states. In a real-time look at the effect of expansion on state budgets for the Robert Wood Johnson Foundation, a Manatt analysis found that expansion allowed states to reduce state general funds and local spending on uncompensated care, mental health and substance use disorder programs, and a range of other initiatives, as well as to increase revenue from hospital and issuer taxes.¹ The unraveling of expansion funding can be expected to have the opposite effect, creating disruption to state budgets and potentially requiring new tax revenues or cuts to other state and local programs.²

In the weeks and months ahead, it will be important for states and other stakeholders to work closely with Congress and the new administration to ensure that the implications of the repeal of Medicaid expansion are fully understood and key questions are answered.

_{¹For example, the expansion has allowed individuals with disabilities to secure coverage as low-income adults without going through the time-consuming and challenging process of receiving a disability determination. Without the expansion, many such individuals may again seek a disability determination as a route into Medicaid coverage.}

_{²State Health Reform Assistance Network. "States Expanding Medicaid See Significant Budget Savings and Revenue Gains." (March 2016.) Available online at http://www.rwjf.org/content/dam/farm/reports/issue_briefs/2016/rwjf419097.}