Summary: How is Medicaid Expansion impacting healthcare in general, healthcare exchanges/subsidies in particular?

In keeping up with the holiday traditions, we are highlighting the 12 days of Obamacare. As such, on the 7^th day of Obamacare, Obama gave to me:

Medicaid Expansion

Increased Age for Children

Affordable Healthcare

No Pre-existing

Preventive care

Healthcare Exchanges

And an Individual Mandate

Medicaid expansion is one of the most monumental pieces of legislation to be enacted since the creation of Medicare and Medicaid. The Affordable Care Act was enacted in 2010 with provisions becoming effective through 2015. Effective 2014, individual states were given the option of whether or not to expand Medicaid. As of the last most recent numbers, almost half of the states opted to expand while the other chose not to.

How does Medicaid expansion affect you if you movw out-of-state?

What this means is a virtual nightmare if you are on Medicaid and you change residence from one state to another. You may have been eligible in one state and not eligible in the next or vice versa. Medicaid expansion includes making eligible for Medicaid individuals who earn from 100% to 138% of the poverty level (Medicaid previously was eligible to those up to 100% of the poverty level).

The option to expand Medicaid as well as whether or not to setup a state-run exchange are 2 provisions which, in my opinion, should have been set at the federal level. The amount of disparity now present among states is mind boggling. About half of the states setup state-run exchanges while the other half defaulted to the federal exchanges. The exchanges are now based in large part upon income level in terms of both whether or not a federal subsidy is available and whether or not an individual is eligible for Medicaid. These 2 issues add to the complexity of the healthcare system and further create hardships for anyone who changes state residence within the year. More than likely, although not yet put to the test, if an individual moves to a different state within a tax year and was part of either the exchanges or Medicaid, they would in all probability have to file all new insurance paperwork to determine both subsidies and/or Medicaid eligibility.

What is the answer?

Simple question but the answer is not so simple of an answer. Ideally, or at least in theory, having Medicaid and the exchanges uniform throughout the country and administered by standard federal regulations could work. However, the likelihood of this happening is slim to none. Additionally, the expense to accomplish would be massive.

Let’s talk taxes and Medicaid Expansion

Here’s an example of what might happen in 2015 when you file your taxes:

You are single.

You spent half the year in California and half the year in another state.

You were part of the public exchanges.

You qualified for Medicaid in California but not the other state.

You qualified for a subsidy but it differed widely between California and the other state.

You earned more income in 2014 than anticipated. Did you know that if you earn more than anticipated, you could have to pay all or a portion of the subsidy you received? How does one budget for that?

This example isn’t so farfetched and this is a relatively simple scenario. Throw in a family of 4 instead of single. Throw in dual eligibility between Medicare and Medicaid. Throw in an extra state of residence.

Who benefits?

Can you imagine filing your taxes on your own, let alone the normal issue of state and/or local income taxes.  Accountants certainly have ample opportunity to raise filing fees due to the increased complexity which will also add to the out of pocket expenses for many Americans.

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