Chapter 10: Government Health Insurance Programs: Medicaid, CHIP, and Medicare

Medicaid Spending

In 2019, Medicaid spent over $613 billion, accounting for approximately 16% of total national health expenditures in the United States. Not all populations and services are equal when it comes to cost. Generally, children and adults are fairly inexpensive to cover, whereas older adults and individuals with disabilities use more, as well as more expensive, services. Over half of Medicaid spending goes to care for older adult and disabled beneficiaries even though they constituted only one-fifth of all enrollees. Dual eligibles—beneficiaries enrolled in both Medicaid and Medicare—are particularly expensive. While they constitute 20% of enrollees, they account for 34% of spending.

Benefits

Medicaid benefits are structured in the same way as Medicaid eligibility: Some are mandatory and some are optional, and the newly eligible individuals under the ACA expansion have their own set of rules.

Nondiscrimination

Requirement Purpose: States may not discriminate against a beneficiary based on diagnosis, illness, or type of condition by limiting or denying a mandatory service. Section 1937 Changes to the Requirement: - DRA doesn't include language changing Medicaid nondiscrimination rules, and ACA includes nondiscrimination protections regarding age, expected life span, diagnosis, disability, medical dependency, quality of life, or other health condition.

CHIP Eligibility

CHIP originally allowed states to cover children up to 200% FPL, but CHIPRA expanded coverage to 300% FPL with the enhanced matching rate (KFF, 2012b). e If states go above 300% FPL, they receive the state's regular Medicaid match rate instead of the enhanced CHIP rate. Twenty-one states cover children in families with incomes between 200% and 249% FPL, and 27 states and the District of Columbia cover children in families with incomes at or above 250% FPL. Under the ACA, states must cover all children ages 6 to 19 years up to 133% FPL in their Medicaid program, and children in families with incomes up to 133% who are currently in CHIP programs must be moved to the state's Medicaid program. States also have an MOE requirement under CHIP. They are required to maintain their 2010 eligibility levels through 2027 for children in families with income at or below 300% FPL.

Traditional Medicaid Benefits

Historically, Medicaid programs have offered a rich array of benefits, including preventive services, behavioral health services, long-term care services, supportive services that allow people with disabilities to work, institutional services, family planning services, and more. the coverage provided by traditional Medicaid generally has been more generous than the typical private insurance plan, particularly in the case of children. One of the broadest service categories is the early and periodic screening, diagnosis, and treatment (EPSDT) package of services for beneficiaries younger than 21 years. As the E in EPSDT indicates, this package of benefits provides preventive care to children to catch problems before they advance and offers early treatment to promote healthy growth and development. EPSDT benefits include periodic and as-needed screening services, comprehensive health exams (to detect both physical and mental health conditions), immunizations, lab tests, health education, vision services, hearing services, dental services, and any other measure to correct or ameliorate physical or mental defects found during a screening, whether or not those services are covered under a state plan. the EPSDT correct or ameliorate standard means a state must provide coverage for preventive and developmental treatment, as well as for services needed to treat a specific diagnosis. Combined with the requirement to provide services regardless of state plan limitations, the correct or ameliorate standard means that almost any accepted treatment should be covered under EPSDT.

Medicaid

Medicaid is the country's federal-state public health insurance program for the indigent. The Medicaid program is designed to ensure that funds are available to provide healthcare services to a poorer and generally less-healthy group of beneficiaries; to do so, Medicaid has several features that are not found in private health insurance plans.

Alternative Benefit Plan (Section 1937 Plan) Requirements

- Align with an approved benchmark or benchmark equivalent - Provide essential health benefits - Include early and periodic screening, diagnosis, and treatment for children up to age 21 years - Cover federally qualified health center/rural healthcare services - Cover nonemergency transportation to medical care - Cover family planning services and supplies - Comply with mental health parity law - Comply with traditional Medicaid cost-sharing rules - Don't cover care for beneficiaries in institutions for mental diseases - Exempt certain medically frail populations from benefit limits

CHIP Benefits

All CHIP programs must cover well-baby and well-child care, dental care, behavioral health care, and vaccines. The Mental Health Parity and Addiction Equity Act of 2008 mandates that behavioral health service requirements regarding cost-sharing, service limits, and treatment limits are not more restrictive than the same requirements for medical/surgical services. Mandates that behavioral health service requirements regarding cost-sharing, service limits, and treatment limits are not more restrictive than the same requirements for medical/surgical services. States with separate CHIP programs may choose a benefit package based on (1) one of three approved benchmarks; (2) a benchmark-equivalent plan that is actuarially equivalent to an approved benchmark; or (3) HHS Secretary-approved coverage. Benchmark-equivalent plans must include inpatient and outpatient hospital services, physicians' surgical and medical services, lab services, and X-ray services. HHS Secretary-approved coverage is the most common choice for states, meaning that there is significant variation in CHIP benefits across the country. States may also provide additional benefits such as prescription drug coverage, vision services, hearing services, and other services needed by children.In 2018, 79% of CHIP beneficiaries in 32 states were enrolled in managed care.

Amount, Duration, and Scope, and Reasonableness Requirements

Although states have a great deal of flexibility in designing their Medicaid benefit packages, states have always had to follow several federal requirements prior to the DRA. These rules, collectively referred to as "amount, duration, and scope" and "reasonableness" requirements, were intended to ensure that all Medicaid beneficiaries in a state received adequate, comparable, and nondiscriminatory coverage. Private insurers typically are not drawn to Medicaid's population because of the likelihood that these individuals would have relatively high healthcare needs. In addition, private insurers use a variety of tools (such as limited open-enrollment periods, experience rating, medical condition-based limitations, and narrow medical necessity standards) to limit their financial exposure. Medicaid, on the other hand, was designed as a healthcare entitlement program, with the goal to provide services to a needy population that would otherwise be uninsurable through commercial plans

Children's Health Insurance Program

Congress created the Children's Health Insurance Program (CHIP) in 1997 as a $40 billion, 10-year block grant program, codified as Title XXI of the SSA. When the program expired in 2007, Congress tried to extend it by passing two versions of the Children's Health Insurance Program Reauthorization Act (CHIPRA). In 2009, Congress again passed CHIPRA, and newly elected President Obama signed it into law as one of his first acts in office. CHIPRA included $33 billion in federal funds for children's coverage and extended the program and its funding through 2013. The ACA further extended the program until 2019, but only included funding through fiscal year 2015. In April 2015, Obama signed the Medicare Access and CHIP Reauthorization Act of 2015, which provided an additional 2 years of funding (through 2017) for CHIP. After a short lapse in funding, Congress extended funding until 2023 through the HEALTHY KIDS Act of 2018 and until 2027 through the Bipartisan Budget Act of 2018. CHIP is designed to provide health insurance to uninsured low-income children whose family income is above the eligibility level for Medicaid in their state. Overall, CHIP has been successful at insuring low-income children, enrolling more than 9.6 million children in 2019 (KFF, 2019c). Nonetheless, 5.2% of children younger than 19 years remained uninsured as of 2019, and many of them live in low-income families (U.S. Census, 2020, p. 6). some of the decrease in CHIP enrollment is due to children moving from CHIP to Medicaid as parents lost employment and wages. However, at least some of that loss should have been offset by newly eligible children who had been in families with higher incomes prior to the pandemic.

Benchmark Benefit Options

DRA Benchmark Plans: - Federal Employees Health Benefits program - State employee health plan - Largest commercial non-Medicaid health maintenance organization in the state - HHS secretary-approved plan DRA Benchmark-Equivalent Plan: Full actuarial value for the following services: - Inpatient and outpatient hospital - Physician (surgical and medical) - Laboratory and X-ray - Well-baby and well-child - Other appropriate preventive services (defined by HHS secretary) Additional DRA Optional Benchmark-Equivalent Services 75% actuarial value for the following services: - Prescription drugs - Mental health - Vision - Hearing New Benchmark Options Effective 2020: - The 2017 essential health benefit (EHB) benchmark plan from any state. - An existing state benchmark with one or more EHB categories replaced by a benchmark from another state. - A new benchmark meets the "typical employer plan" requirement. Benchmarks provide a state with a standard to follow when designing its Medicaid package of benefits; this system does not mean that Medicaid beneficiaries are enrolled in the plans identified as benchmarks. Furthermore, a state may instead choose to offer "benchmark-equivalent" coverage that includes certain basic services. These services must have the same actuarial value as the services provided by one of the three benchmarks listed earlier (i.e., the value of the services must be similar). States may choose to supplement their benchmark-equivalent plans with additional services. These additional services are required to be worth only 75% of the actuarial value of the same service provided in a benchmark plan. The DRA was later amended to require states to ensure that EPSDT services are available to children up to age 21 years, to cover nonemergency transportation to medical appointments, and to cover family planning services and supplies. The list of populations excluded from the DRA is quite lengthy and includes medically frail beneficiary groups with high expenditures, such as the disabled, dual eligibles, and terminally ill hospice patients (SSA, § 1937). Very few states have used DRA options for populations other than Medicaid expansion. Under the ACA, ABPs are offered in accordance with section 1937 rules. The ACA requires section 1937 plans to provide EHB coverage and comply with the Mental Health Parity and Addiction Equity Act, which requires parity between physical and mental health/substance abuse benefits. ABPs must comply with additional Medicaid rules that include coverage for federally qualified health centers and rural healthcare services; compliance with traditional Medicaid cost-sharing rules, which significantly limit the level of cost-sharing required of beneficiaries; and a prohibition against coverage for beneficiaries in institutions for mental diseases.

Intro

Employer-sponsored health insurance plays a significant role in financing health care; in addition, private insurers have flexibility in designing health insurance coverage and selecting who they will cover, and there are many reasons why private insurers do not have incentive to cover high-risk populations. There are numerous other important health insurance and direct service programs funded by federal, state, and local governments. Just a few examples include the Ryan White Care Act, which provides HIV/AIDS services to infected individuals and their families; the Women, Infants, and Children Supplemental Nutrition Program, which provides nutritional supplements and education to poor women and their children; and the Indian Health Service, which provides federal health services to American Indians and Alaska Natives. The Patient Protection and Affordable Care Act (ACA) made wide-ranging changes to Medicaid, CHIP, and Medicare. the ACA included a significant Medicaid eligibility expansion, altered which children are eligible for Medicaid and CHIP, added new benefits to Medicare, and included a host of changes intended to produce savings in the Medicare program. Overall, the ACA expansion has created a two-tier Medicaid program, with newly eligible individuals falling under one set of eligibility, financing, and benefit rules, and the rest of Medicaid beneficiaries adhering to different standards. The difference between entitlement and block grant programs. Medicaid and Medicare are entitlement programs, whereas CHIP is a block grant program. In an entitlement program, everyone who is eligible for and enrolled in the program is legally entitled to receive benefits from the program. In other words, the federal or state governments cannot refuse to provide program beneficiaries with all medically necessary and covered services due to lack of funds or for other reasons. Opponents of entitlement programs focus on the open-ended budget obligation that entitlements create. With healthcare costs straining federal and state budgets, critics would prefer to establish a cap on the funds spent on entitlement programs such as Medicaid. It is impossible to determine how many people will enroll in the program or how many and what kind of healthcare services they will use in any given year, so governments cannot establish exact budgets for their Medicaid program. Entitlement programs are often contrasted with block grant programs, such as CHIP. A block grant is a defined sum of money that is allocated for a particular program (often, but not always, from the federal government to the states) over a certain amount of time. Proponents of block grant programs laud the limited and certain fiscal obligation and reduced role of government in providing health insurance. Opponents of block grant programs object to the lack of legal entitlement to services and the finite amount of funds available to provide health insurance.

Program Administration

Medicaid is jointly designed and operated by the federal and state governments. The Centers for Medicare and Medicaid Services (CMS) is the federal agency in charge of administering the Medicaid program. Each state, the District of Columbia, and certain U.S. territories, a as defined in the Social Security Act (SSA) of 1935, have the option to participate in the Medicaid program, and all have chosen to do so. The federal government sets certain requirements and policies for the Medicaid program through statutes (SSA, Title 19), regulations (Grants to States, 1988), a State Medicaid Manual (Medicaid.gov, n.d.h), and policy guidance such as letters to state Medicaid directors. Each state has its own Medicaid agency that is responsible for implementing the program in the state. States file a Medicaid State Plan with the federal government outlining the state's own eligibility rules, benefits, and other program requirements; this plan is effectively a contract between states and the federal government and between states and program beneficiaries. The federal and state governments jointly set rules concerning who is covered and which services are provided by Medicaid. The federal government outlines which populations must be covered (mandatory populations) and which ones may be covered (optional populations), as well as which benefits must be covered (mandatory benefits) and which ones may be covered (optional benefits). states have significant flexibility to determine how Medicaid will operate in their particular state. states must cover mandatory populations and benefits, and they may choose to cover any combination of optional populations or benefits, including the choice not to offer any optional coverage at all. In addition, states may seek a waiver from federal rules, allowing states to experiment with coverage and benefit design while still drawing federal funds to operate their program.

Medicaid Financing

Medicaid is responsible for a significant portion of health care spending in the United States, accounting for $1 out of every $6 dollars spent on health care. The Medicaid program is jointly financed by the federal and state governments, with about 64% of the total program costs paid for by the federal government and the rest by the states. States have found their share of Medicaid costs to be increasingly burdensome, encompassing 29% of state funds nationally in 2019. Program financing occurs through a matching payment system that divides the amount paid by the federal and state governments. The matching rate for most medical services, called the Federal Medical Assistance Percentage (FMAP), is determined by a formula that is tied to each state's per-capita income. Poorer states—those with lower per-capita incomes—receive more federal money for every state dollar spent on Medicaid, while the wealthier states receive less. In addition, the federal government periodically allows for temporary FMAP increases in times of national emergencies (e.g., Hurricane Katrina) or as incentives for specific providers (2-year increase for primary care providers). To assist states during the COVID-19 pandemic, FFCRA included a 6.2% FMAP increase as long as states did not reduce eligibility standards. Medicaid is also partially financed through beneficiary copayments, coinsurance, and premiums. In most cases, states may not charge cost-sharing for emergency services, family planning services, pregnancy-related services, or preventive services for children. In addition, states can charge only nominal cost-sharing for individuals under 100% FPL, such as $4 for a physician visit or $8 for nonemergency use of an emergency department. changes allow for higher cost-sharing for individuals who earn over 100% FPL, although out-of-pocket costs may not exceed 5% of a family's income. From 2014 to 2016, the federal government paid 100% of the cost of financing newly eligible enrollees. While the federal government's share will decrease over time, it will still cover 90% of the cost in 2020 and beyond. In 2019, the federal government paid almost $85 billion of the $94 billion tab for expansion enrollees. Expansion enrollees accounted for 20% of Medicaid beneficiaries and 16% of Medicaid spending that year. From 2014 to 2016, the federal government paid 100% of the cost of financing newly eligible enrollees. While the federal government's share will decrease over time, it will still cover 90% of the cost in 2020 and beyond. In 2019, the federal government paid almost $85 billion of the $94 billion tab for expansion enrollees. Expansion enrollees accounted for 20% of Medicaid beneficiaries and 16% of Medicaid spending that year.

Medicaid Waivers

Medicaid waivers provide still another level of flexibility for states. There are several different types of waivers under Medicaid; here, we focus only on the broadest one—the "section 1115" waiver. Under section 1115 of the SSA, states may apply to the secretary of HHS to waive certain requirements of health and welfare programs under the SSA, including both Medicaid and CHIP. The Medicaid statute describes one main purpose of the program as furnishing medical assistance to those who cannot afford necessary care. Medicaid waiver approvals have been a primary means for administrations from both parties to alter the Medicaid program to meet their priorities. resident Carter focused on cost control, President Reagan expanded home and community-based care for individuals with disabilities, President Obama pursued delivery reforms, and President Trump supported work requirements and other enrollment and eligibility restrictions. As of December 2021, 46 states have approved 64 waivers. Waivers can be used to assist states during public health and national emergencies. One of the most important aspects of a waiver is the "budget neutrality" requirement. A state must show that the waiver project will not cost the federal government more money over a 5-year period than if the waiver had not been granted.

Medically Needy

Medicaid's medically needy category is an option that has been picked up by 34 states as of 2019. this category is intended to cover individuals who have extremely high medical expenses. These individuals fit within a covered category but earn too much money to be otherwise eligible for Medicaid. in 2009, this population accounted for only 5% of Medicaid beneficiaries but 11% of Medicaid expenditures. Medically needy programs have both income and asset requirements. states subtract the costs of individuals' medical expenses from their income level.

Medicaid Provider Reimbursement

Not only do reimbursement rates vary by state, they also vary by whether services are provided in a fee-for-service (FFS) or managed care setting and by which type of provider (e.g., physicians, hospitals) renders a service. c In 2019, almost half (49%) of payments went to managed care organizations (MCOs), mostly to comprehensive managed care plans.

CHIP Structure and Financing

States have three options regarding how their CHIP is structured: 1. States may incorporate CHIP into their existing Medicaid program by using CHIP children as an expansion population. 2. States may create an entirely separate CHIP program. 3. States may create a hybrid program in which lower-income children are part of Medicaid and higher-income children are in a separate CHIP program. In 2020, two states had a separate program, eight states and the District of Columbia had a Medicaid expansion program, and 40 states had a hybrid program. federal CHIP funds are disbursed on a matching basis, although the federal match is higher for CHIP than for Medicaid. It is known as the E-FMAP, for enhanced-FMAP. The ACA included a significant but temporary increase in the CHIP match for states. As of 2021, the standard E-FMAP formula will be used, with a matching rate ranging from 65% to 88%.

The Future of Medicaid

The stresses of the pandemic have shifted the focus of state Medicaid policies toward increasing provider support, addressing social drivers of health, improving long-term services and supports, and expanding telehealth. they are envisioning Medicaid as a program that more closely mirrors private insurance plans in terms of their use of risk, cost-sharing, comparatively limited benefits and in their lack of extra protections that ensure fairness, and access to care. While the high number of Medicaid enrollees in expansion states speaks to the need for an affordable insurance option for many low-income individuals, the cost of the expansion is already making states question their ability to support a larger Medicaid program. Nonetheless, Medicaid remains quite popular with the public, with 75% of respondents having a favorable view of the program and 76% supporting expansion.

Immigrants

There are also special Medicaid eligibility rules relating to immigrants. The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) severely restricted immigrant eligibility for Medicaid (and most of the same rules in PRWORA were later applied to CHIP eligibility in 1997). PRWORA instituted a 5-year bar, meaning that most immigrants who come to the United States after August 22, 1996, are not eligible for Medicaid (or CHIP) for the first 5 years after their arrival. After 5 years, legal immigrants are eligible on the same basis as U.S. citizens, while undocumented immigrants remain ineligible for full Medicaid (or CHIP) benefits. both legal and undocumented immigrants who are otherwise eligible for Medicaid may receive emergency Medicaid benefits without any temporal restrictions. Immigrant eligibility eased slightly when CHIP was reauthorized through the Children's Health Insurance Program Reauthorization Act of 2009. States now have the option to cover legal immigrant children and/or pregnant women through Medicaid and CHIP in the first 5 years that they are in the United States. both legal and undocumented immigrants who are otherwise eligible for Medicaid may receive emergency Medicaid benefits without any temporal restrictions. Immigrant eligibility eased slightly when CHIP was reauthorized through the Children's Health Insurance Program Reauthorization Act of 2009. States now have the option to cover legal immigrant children and/or pregnant women through Medicaid and CHIP in the first 5 years that they are in the United States. some proponents believe that healthcare resources should go first to U.S. citizens, not noncitizens. Opponents of the restrictions assert that most immigrants pay taxes once they arrive in this country and therefore deserve to receive the full benefits of those taxes restricting immigrants' access to health care may be a public health hazard for all members of the community because contagious diseases do not discriminate by immigration status. opponents contend that having higher numbers of uninsured individuals in the United States will further strain the ability of providers to care for all vulnerable populations in a community and lead to rising healthcare costs because uninsured immigrants are much less likely to obtain preventive care or early treatment for illnesses or injuries. As of 2019, 36 states and the District of Columbia cover legal immigrant children under Medicaid and/or CHIP. Sixteen states use CHIP funding to cover pregnant women under the unborn child option, which allows for coverage regardless of immigration status. Also, 23 states cover legal immigrant pregnant women under Medicaid without the 5-year bar. Two states and the District of Columbia use state-only funds to cover pregnant women who qualify based on income, but not immigration status (Brooks et al., 2017). Even with these reforms and the ACA, of the 28 million individuals who remain uninsured as of 2018, 24% were noncitizens. Among all noncitizens, undocumented immigrants are most likely to be uninsured

Eligibility

Traditionally, Medicaid has covered low-income pregnant women, children, adults in families with dependent children, individuals with disabilities, and older adults. About 43% of all Medicaid beneficiaries are children, and another 40% are individuals with disabilities and older adults. Approximately 11 million people are called dual enrollee or dual-eligible older adults, meaning they qualify for both Medicaid and Medicare. Although most dual enrollees are eligible for full Medicaid benefits, a small portion of them receives only premium and/or cost-sharing assistance to help them pay for Medicare, and not full Medicaid benefits. Members of ethnic or minority groups are more likely than Caucasians to have coverage through Medicaid. about 41% of Medicaid beneficiaries are White, non-Hispanic; almost 30% are Hispanic; and 20% are Black. While Medicaid covers both children and adults, coverage for children and pregnant women typically has been more generous than coverage for non-pregnant adults. Prior to ACA implementation, Medicaid covered 75% of children who lived below the poverty line, but only 35% of adults below that income level. While half the states provided coverage to pregnant women up to 200% of the federal poverty level, the median income eligibility limit for working parents was 61%, and many states did not cover childless adults at all. Traditionally left out of the program have been low-income adults without disabilities, women who are not pregnant, and the near-poor who earn too much money to qualify for Medicaid. the ACA included a significant eligibility expansion. As of July 2020, there were 18 million more Medicaid enrollees than prior to passage of the ACA. States that adopted the ACA Medicaid expansion option experienced an average enrollment increase of 42% as compared to non-expansion states, with 27 states increasing enrollment by at least 25%. Medicaid enrollment trends are responsive to national and state policy decisions, economic conditions, and significant national events. the COVID-19 pandemic resulted in increased Medicaid enrollment as more individuals lost employment and became eligible for the program. In addition, the Families First Coronavirus Response Act (FFCRA) gave states additional federal Medicaid funds as long as they met certain "maintenance of eligibility" requirements, incentivizing states to keep coverage conditions stable. Medicaid and CHIP enrollment increased from 71.3 million in February 2020 to 80.5 million in January 2021. This increase stands in contrast to declining Medicaid and CHIP enrollment from 2016 to 2019 (Hinton et al., 2021). The prior enrollment loss was likely due to a variety of factors, including an improving economy, additional renewal barriers, tighter eligibility verification standards and new document requirements, reduced outreach assistance, and immigration policies that may have deterred individuals from enrolling or renewing coverage.

FFS Reimbursement

When reimbursing FFS care under Medicaid, states are required to set their payment rates to physicians at levels that are "sufficient" to ensure Medicaid patients have "equal access" to providers compared to the general population. Medicaid reimbursement rates are lower than Medicare or private insurance rates. In 2016, Medicaid paid physicians 38% less than Medicare. A 2014-2015 national review found that 71% of physicians would be willing to accept new Medicaid patients as compared to 85% and 90% of physicians who would accept new Medicare and privately insured patients, respectively. Acceptance of new Medicaid patients varied greatly by physician specialty; 88% of general surgeons were willing to take on new Medicaid patients compared to just 36% of psychiatrists. Physicians who treat Medicaid patients are demographically different from those who serve privately insured patients. Medicaid patients are more likely to be seen by physicians who are younger, work in large practices, are graduates of foreign medical schools, are graduates from lower-ranked medical schools, and are not board-certified. From 2013 to 2015, approximately 20% of physicians saw 60% of Medicaid patients. For 2013 and 2014, primary care payment rates equaled 100% of Medicare payment rates, with the federal government covering the cost of the increased reimbursement. On average, this change resulted in a 73% increase in Medicaid payments, but there was wide variation across the country.

Managed Care Reimbursement

managed care has become an increasingly important part of the Medicaid program. In 2018, 83% of all Medicaid beneficiaries—mostly children and parents—obtained their care through MCOs, with 69% in comprehensive managed care plans. In addition, seven states used a "medical home" or primary care case management (PCCM) model that year, while five other states offered both types of MCOs. PCCM models pay a provider to coordinate care for beneficiaries, whether it is only primary care services or a range of services, such as physical, behavioral, long-term care, social supports, and so on. managed care enrollment increased in 2020, most likely due to loss of employment during the pandemic and maintenance of effort requirements to obtain the temporary FMAP increase. States may require managed care enrollment for all beneficiaries except children with special healthcare needs, Native Americans, and Medicare recipients. States are required to pay MCOs on an "actuarially sound basis," a term that is not defined in the Medicaid statute.

Medicaid Eligibility Expansion Under the ACA

As of 2014, all non-Medicare-eligible individuals younger than 65 years, with incomes up to 133% FPL, b are eligible for Medicaid in states that choose to expand their programs. individuals eligible through the expansion only have to satisfy an income threshold and do not have to meet a resource test or fit within a preapproved category. In addition, in traditional Medicaid, states have significant flexibility to determine how individual income and other personal resources are calculated. Under the ACA expansion, however, all states are required to accept newly eligible individuals using the federal income level calculation and without accounting for other assets. The ACA Medicaid expansion was intended to be mandatory in all states, but the Supreme Court's decision in National Federation of Independent Business v. Sebelius (2012) held that the federal government could not force states to expand Medicaid in this way. The American Rescue Plan Act of 2021 (ARPA) included financial incentives to entice the remaining states to expand Medicaid. Under ARPA, newly expanding states would receive a 2-year, 5% bump in the matching rate for their traditional Medicaid population. These funds are not only projected to offset the cost of expanding Medicaid, but also provide those states with a significant amount of additional revenue. numerous studies have shown that Medicaid expansion has positive effects on mortality, cancer, chronic diseases, disabilities, sexual and reproductive health, behavioral health, state economies, health disparities, and social drivers of health. In nonexpansion states there are approximately 2 million poor adults who remain ineligible for Medicaid and who are also too poor to obtain subsidies to purchase health insurance through their state exchanges. the ACA also requires that children ages 6 to 19 years be covered up to 133% FPL, instead of up to only 100% FPL as under pre-ACA rules.

Traditional Medicaid Eligibility Requirements

Eligibility requirements (as well as financing rules and benefits) differ for the groups that have been traditionally covered by Medicaid and those that are covered under the ACA expansion option. To help clarify these differences, when referring to the rules that existed prior to the ACA, we use the term traditional Medicaid, and when referring to rules that attach to the ACA, we use the term expansion Medicaid. It is important to remember that states may follow both traditional and expansion Medicaid rules; the ACA expansion did not replace traditional Medicaid, but rather added to it. Under traditional Medicaid rules, everyone must meet all five of the following requirements to be eligible: - Categorical: An individual must fit within a category (e.g., pregnant women) covered by the program. - Income: An individual/family must earn no more than the relevant income limits, which are expressed as an FPL percentage (e.g., 133% of the FPL). - Resources: An individual/family must not have nonwage assets (e.g., car, household goods) that exceed eligibility limits. - Residency: An individual must be a U.S. resident and a resident of the state in which they are seeking benefits. - Immigration status: Immigrants must meet certain requirements, including having been in the country for at least 5 years (for most immigrants).

Benefits for Expansion Population Under the ACA

Expansion Medicaid populations receive their benefits through an Alternative Benefit Plan (ABP). The ABP structure is based on a law called the Deficit Reduction Act (DRA) of 2005.

Comparability

Requirement Purpose: - All categorically needy beneficiaries in the state are entitled to receive the same benefit package in content, amount, and duration, and scope. Section 1937 Changes to the Requirement: - States may apply benchmark or benchmark-equivalent packages to some, but not all, populations.

Statewideness

Requirement Purpose: - In most cases, states must provide same benefit package in all parts of the state. Section 1937 Changes to the Requirement: - States may apply benchmark or benchmark-equivalent packages to some, but not all, populations.

Reasonableness

Requirement Purpose: - State must provide all services to categorically needy beneficiaries in sufficient amount, duration, and scope to achieve its purpose. Section 1937 Changes to the Requirement: - Staates have to meet only amount, duration, and scope requirements found in the named benchmark or benchmark-equivalent plan.