States may now have a patchwork of programs to deal with the welfare or healthcare needs of the uninsured, provided they have no other source of coverage. If a state expands its Medicaid program, the need for those patchwork programs—providing food, medicines, housing—would go away, or at least be greatly reduced, and much harder to start up again. It could mean saying no to other sources of federal or state or philanthropic funds that the states could never get back.
Compounding the problem is that while federal funds pledge to pay for 100% of the Medicaid expansion for the first three years, after that the funding begins to drop to 90%, forcing states to pick up the tab for a large number of patients it didn't have to pay for before.
Salo says that while he's glad CMS has clarified this issue, there are dozens of remaining questions about how the expansion programs will work. "The question that remains unanswered, which is still the most important one, is whether states can expand to a federal poverty level to a partial level below 138%?" he asks.
Take a hypothetical state that covers citizens with Medicaid up to an income level of 70% of the federal poverty level.
"If a state says no, we're not expanding, the exchange subsidies will kick in at 100% of the federal poverty level, but there will still be a gap for people who earn incomes below 100%, and they will have nothing," he says. In this example, anyone earning between 71% and 99% of the federal poverty level will have no coverage and will not be eligible for health insurance exchange subsidies.