World and Nation

US advises states to expand Medicaid or risk losing funds

WASHINGTON — The Obama administration is putting pressure on states to expand Medicaid, telling them they may lose federal money if they delay.

But at the same time, federal health officials have also told states that if they choose to expand Medicaid, they are free to reverse the decision at any time.

The officials have set forth their position in letters to state officials — the first definitive guidance since the Supreme Court ruled in June that the expansion of Medicaid was an option, not a requirement, for states.

The expansion of Medicaid is a major part of President Barack Obama’s health care law, originally expected to account for half of the 32 million people who were to gain coverage. Congress required states to expand Medicaid to cover people under the age of 65 with income less than or equal to 133 percent of the federal poverty level (up to $25,390 for a family of three).

Chief Justice John G. Roberts Jr. said Congress had put “a gun to the head” of states by requiring them to expand Medicaid or risk losing all federal money for their existing Medicaid programs.

“States,” he said, “must have a genuine choice.”

Citing that decision, Cindy Mann, the federal official in charge of Medicaid, said, “A state may choose whether and when to expand, and if a state covers the expansion group, it may decide later to drop the coverage.”

Since the creation of Medicaid in 1965, the federal government and the states have shared the costs. The federal share now averages 57 percent.

Mann said that while “there is no deadline” for expanding Medicaid, states would pay a price for delay.

Under the new law, she said, the federal government will pay the entire cost of Medicaid coverage for newly eligible beneficiaries for three years, from 2014 to 2016. The federal share will decline to 95 percent in 2017, 94 percent in 2018, 93 percent in 2019 and 90 percent in 2020 and later years.

The federal payment rates “are tied by law to the specific calendar years noted,” Mann said. So if a state defers the expansion of Medicaid to 2016, the federal government will pay 100 percent of the costs for only one year. After 2016, the federal share will drop to the levels specified by Congress, and states will be responsible for the remainder.

“I am hopeful that state leaders will take advantage of the opportunity provided to insure their poorest families with these unusually generous federal resources,” said Mann, a deputy administrator of the Centers for Medicare and Medicaid Services.