Medicaid Expansion: Essential Background

 

What is the expansion?

  • The Medicaid expansion would offer coverage to all adults in NH, between the ages of 19 and 65, who are not currently eligible for Medicaid and whose incomes are up to 138% of the Federal Poverty Level: $15,400 a year for a single person and $32,000 for a family of four. (NOTE: NH's current Medicaid eligibility for low-income adults is limited to categories: parents on FANF, pregnant women, and people with disabilities.)

Who are we talking about?

  • We’re talking about the lowest-income and most vulnerable NH adults who don’t have access to quality affordable health insurance coverage.
  • The expansion population includes low-income working NH residents who, for example, serve meals in restaurants, sweep and vacuum the floors in workplaces, fix your car, cut your hair, work in a full range of local shops and stores in our communities, provide in-home services to seniors and people with disabilities, and teach and care for our kids at child care centers. They are friends and neighbors and family members and colleagues - who lack access to quality affordable health coverage - in communities across NH.

How many people are we talking about?

  • According to the Lewin Group – independent experts commissioned by the NH Department of Health & Services to analyze the impact of Medicaid expansion on NH – the Medicaid expansion would provide coverage to 58,000 NH residents. 

How is the Medicaid Expansion financed?

  • The federal government will pay 100% of the coverage cost of the Medicaid expansion for the first 3 years beginning in 2014, ratcheting down to 90% of the coverage cost in the 7th year (2020) and thereafter.
  • It’s important to point out that the State of NH will incur some administrative expense and, after the first 3 years, will be responsible for a state matching fund payment that will never exceed 10% of the cost of the coverage (see above).
  • Experts also agree that the Affordable Care Act overall (and not just the Medicaid expansion) will create a “woodwork / welcome mat effect” that is likely to result in the new enrollment of a limited number of people who are currently eligible for but not enrolled in Medicaid.  These new enrollees will be at the standard 50%-50% federal-state match for current eligibles (and not the 100% federal financing that is available for expansion eligibles), and so will result in some cost to the state.
  • However, and in addition, experts agree that the Medicaid expansion will be a direct cause of State budget savings (e.g., in the NH Departments of Corrections and Administrative Services) that will provide meaningful offset to the general fund cost of the expansion. It’s important to note that these budget offsets do not include any change in eligibility or benefits for current Medicaid beneficiaries.  

So how much federal revenue would NH receive, and how much would it cost NH?

  • According to the Lewin Group, the Medicaid expansion would pump a staggering $2.5 billion worth of federal funds into NH’s economy over the first 7 years. NH’s contribution to the expansion (including any “welcome mat effect”), after budget offsets created by the expansion, would be a net cost of $18.4 million over the first 7 years (less than three-quarters of 1% of the overall cost of the expansion). However, Lewin also concludes that if our state is able to implement Medicaid managed care, the expansion can be accomplished at no net State cost over the entire 7 year period studied by Lewin.
  • In our state’s upcoming fiscal biennium (with 18 months of Medicaid expansion, starting on January 1, 2014, during the 100% federal financing period), according to Lewin, the return on expansion also is startling: $422 million in federal revenues for NH’s economy, and – after budget offsets created by the Medicaid expansion – a net savings to the State general fund of $4.9 million.  The Medicaid expansion would have zero general fund cost to NH in the upcoming fiscal biennium.


*To download this backgrounder, please click here.
 

For policy-oriented talking points on the Medicaid expansion, click here.