States May Opt Out of Medicaid Expansion, Court Rules

There are a number of items besides federal funding that states will need to consider in making their expansion decision. The Supreme Court ruling doesn't address other Medicaid provisions in the ACA beyond the expansion penalty, so those provisions, including a mandated increase in primary care reimbursement rates and mandated decreases in disproportionate share hospital (DSH) funding, would continue to apply according to Matt Salo, executive director of the National Association of Medicaid Directors.

"Since all these other things will apply, states will have to consider if they will change their decision." Salo added that states will also have to determine how their decision to expand or not will play into the establishment of the health insurance exchanges.

Health plans will be keeping a watchful eye on state decisions. There has been growing interest among insurers in the potential expansions, which would add an estimated 13 million to the Medicaid rolls. Without the penalty to promote that expansion the potential market may be much smaller and not as financially lucrative.