HMS, Inc., a wholly-owned subsidiary of HMS Holdings Corp. (NASDAQ: HMSY), today released its comments on what the Supreme Court Decision on the Affordable Care Act (ACA) means for States.
On June 28, 2012, the Supreme Court upheld the Affordable Care Act and most of the law’s provisions as constitutional. The long-awaited decision resolved many issues, but created several more — especially for states that now need to move forward.
What does the decision mean for states?
Answering that question requires revisiting the Act. Upheld provisions include the individual mandate, implementation of state health insurance exchanges, and such program integrity requirements as Medicaid Recovery Audit Contracts — the vehicle for states to contract with a vendor in order to identify and to recover improper Medicaid payments.
Though the Medicaid expansion provision of the Act was found to be constitutional, the Court ruled that the federal government could not withhold funding for existing Medicaid populations if a state elected not to expand its Medicaid qualification requirements to 133% of the Federal Poverty Level (FPL). The ruling also created a potential gap in subsidies between Medicaid and state health exchanges. In a no-expansion state with an income threshold for Medicaid eligibility that falls below 100% of the FPL, people who don’t qualify for Medicaid but fall short of 100% of the FPL — typically adults with no dependents — would not be eligible for federal subsidies in the exchange. In an expansion state, there would be seamless integration of subsidies between Medicaid and the exchange.
In short, states can choose to expand their Medicaid populations as per the Affordable Care Act guidelines or not. Now states must weigh the arguments for and against the expansion of their Medicaid populations.
On the pro side, Medicaid expansion would mean many of the state’s most needy uninsured would have health insurance coverage paid for almost exclusively by the federal government from 2014 to 2016. Supporters argue this would result in better care, close the subsidy gap outlined above, and reduce uncompensated expenses that are currently borne by states and providers.