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Sequestration Might Be Least Bad Outcome for Healthcare

Philip Betbeze, for HealthLeaders Media, July 20, 2012

The group of experts also discussed Medicaid expansion. Thanks to the recent Supreme Court decision on the Patient Protection and Affordable Care Act, while the individual mandate to obtain health insurance or pay a tax was upheld, the Court also decided that states have the option of refusing to participate in the law's signature Medicaid expansion, designed to assist in providing coverage to the nation's millions of uninsured.

Significantly, the law's provision to penalize states for not participating was struck down. Much of the resistance to expansion seems overtly political, with key large states with Republican governors, such as Florida and Texas, insisting they will not participate.

But the panel of experts also said that some of the reluctance stems from the fact that although the law currently funds the entire cost of that Medicaid expansion for three years, and federal funding is cut to 90% of the cost to states thereafter, there are no guarantees beyond 2020.

There is some fear on the part of states that if they do make this commitment, they can't necessarily assume that the 100% and 90% figures will remain in perpetuity. The fundamental fear is that if they sign on expecting those rates, any changes could put them at serious financial risk beyond 2020.

Federal dollars funded pre-PPACA Medicaid at about 57% of costs, with the states picking up the rest of the bill. Such an outcome following an expansion could put an unsustainable burden on the states.

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