Schneider Senate Update: Medicaid Expansion Calls for Careful Analysis

By State Sen. Charles Schneider

One topic that I’ve been getting a lot of questions about is expanding Medicaid eligibility. This is a big decision that could have significant financial implications for our state. Thus, it’s a decision that we must consider carefully.

Under the Affordable Care Act (ACA), states have the option to expand Medicaid eligibility to people with incomes up to 138 percent of the federal poverty level (FPL). The federal government will cover 100 percent of the cost for new enrollees from 2014 to 2017, then gradually reduce the percentage until 2020 at which time it drops to 90 percent. That may sound like a good deal on the surface, but there are several questions we need answers to in order to understand the real fiscal impact.

For example, we need to know whether or not there will be savings from reduced state spending on people who are uninsured. The ACA cuts federal payments to hospitals for providing uncompensated care on the assumption that hospitals will need to provide less charity care. If these cuts don’t end up covering hospitals’ true cost, they may pressure the state to make up the difference.

We also need to take into account the cost of adding people to Medicaid who are already eligible but not enrolled. The existing federal Medicaid match rates will apply to this population, not the generous 100 percent match rate. 

What do you think? Should Iowa lawmakers expand Medicaid? Tell us below in the comments.

Additionally, we need to know what the administrative costs will be. Even though the federal government will match 100 percent of the benefit costs for newly eligible enrollees during the first three years, the state will still be on the hook for a portion of the additional administrative expense.

We should also compare the alternatives, which include improving and extending IowaCare. Another alternative is to utilize the new federal exchange subsidies for newly eligible enrollees with incomes between 100 percent and 138 percent of the FPL.

This decision is more complicated that just looking at the percentage of benefit costs the federal government will cover for newly eligible enrollees. Let’s take time to do our homework and get it right.

Upcoming Legislative Forums

March 2, 9:30-11 a.m., Waukee City Council Chambers

March 16, 9-10:30 a.m., West Des Moines City Hall

April 6, 9:30-11a.m., Waukee City Council Chambers 

(Sen. Charles Schneider, R-West Des Moines, represents District 22 in the Iowa Senate. The district includes Waukee, Clive, Windsor Heights and part of West Des Moines. Contact him at Charles.Schneider@legis.iowa.gov or 515-281-3371.)