The Lesser Known Parts of the ACA and Medicaid

August 20, 2012

Since the Supreme Court ruling on the Affordable Care Act (ACA), the discussion about Medicaid has largely focused on a choice states now have: whether or not to expand coverage to those at or below 138 percent of poverty. This issue is extremely important because of the impact it could have on those who are uninsured today.

However, there is a lesser-known, more technical provision in the ACA that could also have an impact on the numbers of uninsured: eligibility and enrollment process changes. Specifically, in addition to expanding Medicaid, the ACA simplifies eligibility standards for the existing Medicaid program, which should make enrollment easier for clients.

Medicaid enrollment processes in many states are complex and have been a deterrent to enrollment for many. As part of the work CHRT is doing with the Washtenaw Health Initiative, we looked in-depth at the enrollment process in Michigan today to determine what could be done to simplify it, now and in preparation for 2014. As we dug into this issue, the full complexity of the eligibility process became clearer, surprising even those of us who have worked in the Medicaid enrollment world.

We found that in Michigan today there are 40 different ways to qualify for Medicaid—all with different eligibility nuances and administrative requirements. It was so hard for us to put the full picture together that we decided to document it and make it available for others to use.

It is an understatement to say that navigating Medicaid today is complex, both those for those who might be eligible and for those who have to administer the eligibility and enrollment process. There are no fewer than 23 programs in Michigan related to an individual’s eligibility for cash assistance, 16 programs related to eligibility for supplemental security income (SSI), and one emergency services program for certain immigrants. Today, these programs involve income tests, assets tests, special deductions, and income disregards.

In 2014, those eligibility categories collapse into just three: those at or below 138 percent of poverty (assuming the state decides to accept the Medicaid expansion), those eligible under parts of the existing program with higher income standards, and those who are medically needy and receiving SSI.

And regardless of whether a state decides to expand eligibility for Medicaid, the ACA will simplify and standardize eligibility. Income eligibility will be determined using a method based on an income tax definition known as “modified adjusted gross income” (MAGI), which means no more asset tests or special deductions. The ACA also requires the upfront use of electronic data matches to eliminate the need for applicants to provide documentation. All of these changes will make the enrollment process easier and reduce the time it takes to get health coverage.

To the best of our knowledge, these parts of the ACA were unaffected by the Supreme Court’s decision on the Medicaid expansion. Both the Congressional Research Service and Centers for Medicare and Medicaid Services have said they believe that the Supreme Court’s decision affected only the penalty that would be applied if a state chose not to expand Medicaid.

So, assuming this view holds, all states will need to convert their eligibility processes to these more simplified approaches, regardless of their expansion decision.

What does this mean in Michigan? Well, today, of the approximately 1.2 million people who are uninsured, about 11% are already eligible for Medicaid but not enrolled. The complexity of the enrollment process is clearly a deterrent for many of them (not to mention its impact on the extremely over-burdened case workers in the Department of Human Services). Eliminating these barriers to coverage could mean that more than 132,000 of them could become enrolled, even if nothing else happens to expand coverage in the state.

That’s a pretty remarkable impact for a “technical” change to Medicaid enrollment.