Now That SCOTUS Ok’d Subsidies, It’s All About Medicaid Expansion

Forbes, June 25, 2015

News that the U.S. Supreme Court has once again upheld the Affordable Care Act, ruling that subsidies are valid to purchase private coverage in all states no matter what government exchange an American uses, the focus on future growth will be Medicaid, the expanded program for the poor that is also a key part of the health law.

The King v. Burwell case didn’t take into consideration expanded Medicaid coverage gaining popularity among millions of Americans. Although Medicaid expansion ideas vary, more Republican leaders in states are embracing the idea than two years ago and the popularity can be seen in health plan enrollment reports this year and those that are expected in the coming weeks from the second quarter.

Furthermore, a ruling upholding Obamacare once again is likely to dampen the opposition to a financial proposition that benefits states. That was already happening before today’s decision and President Obama today said he would begin working to convince states to take advantage of the law’s Medicaid expansion.

“I’m going to work as hard as I can to convince more governors and state legislatures to take advantage of the law, put politics aside and expand Medicaid and cover their citizens,” President Obama said in a speech at the White House after Justices ruled, 6-3, to uphold the law once again.

The federal government traditionally picks up a little more than half the cost of Medicaid. But funding under the health law is unlike past efforts to expand Medicaid in that the federal government will pick up the full tab this year as well as 2016. The state gradually has to pick up some costs in 2017, but by 2020, the federal government is still picking up 90% or more of the Medicaid tab.

Earlier this Montana’s bipartisan legislature, led by key Republicans, voted to expand Medicaid under the health law. Though Montana’s expansion still faces federal approval, there are still 28 states plus the District of Columbia that have expanded the health insurance program for poor Americans under the health law. This year, for example, Indiana’s Medicaid expansion began Feb. 1 and Pennsylvania’s began Jan. 1. Both states were led by Republican governors when decisions were made to expand.

It’s been a boon to health insurance companies, which are expecting to report solid growth next month in their Medicaid membership from the second quarter.

Anthem (ANTM), which is attempting to purchase Cigna (CI), has said the bulk of its growth this year as well as new business from the health law is coming from Medicaid. Earlier this year, Anthem said medical enrollment grew by 1 million members, or nearly 3 percent to 38.5 million by the end of the first quarter compared to 37.5 million at the end of 2014. Anthem CEO Joe Swedish has said the company added 429,000 new customers in the first quarter covered under its Medicaid plans, which contract with states to provide benefits to poor Americans.

“Having health care coverage is always a good thing, both for those who qualify for Medicaid and the near poor who are hovering above the poverty line,” said Jeff Myers, president and chief executive officer of Medicaid Health Plans of America, the trade group representing big Medicaid players like Aetna (AET), Centene (CNC), UnitedHealth Group (UNH) and Anthem (ANTM).  “With subsidies remaining in place for states using the federal exchange, we’re happy to see the Affordable Care Act continue to help provide access to care to those previously uninsured in the private insurance marketplace.”

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