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January 13, 2021

What the New Biden Administration May Mean for Medicaid

Author Affiliations
  • 1Department of Health Law, Policy, and Management, Boston University School of Public Health, Boston, Massachusetts
JAMA Health Forum. 2021;2(1):e201497. doi:10.1001/jamahealthforum.2020.1497

The Medicaid program provides health insurance coverage to more than 68 million low-income Americans. Over the past 4 years, the Trump administration aimed to reduce spending and enrollment in Medicaid through work requirements, monthly premiums, proposed block granting, and repealing the Affordable Care Act (ACA), upon which the authority and funding for Medicaid expansion rests. Although the upcoming Supreme Court ruling on the constitutionality of the ACA may have important consequences for Medicaid, recent Democratic victories in the Georgia Senate runoff elections, resulting in a narrow Senate majority, pave a more plausible path forward for Biden’s health care agenda. Still, securing the necessary support from all Democratic senators remains challenging, as the narrow majority suggests legislators will likely rely on the budget reconciliation process, which can limit large-scale changes. However, the results of the Georgia runoff elections have opened new possibilities for how the incoming Biden administration could seek to reshape the federal government’s approach to Medicaid, not only by counteracting the challenges it has endured during the Trump administration but by supporting policies to expand access to health care. If implemented, policy changes proposed by President-elect Biden could have far-reaching implications for the Medicaid program, millions of low-income Americans, and safety-net providers across the United States.

Expanding Coverage, Reducing Barriers

At the heart of these proposed reforms would be a Medicare-like public option offered through the ACA Marketplace. People in the coverage gap, who earn too much to qualify for Medicaid in states that did not expand Medicaid but too little (less than the federal poverty level) to receive premium subsidies in the Marketplace, would receive coverage free of premiums and cost-sharing. This change would not require state funding or approval in the 12 states yet to expand Medicaid eligibility, effectively bypassing the legal challenge that caused expansion to be ruled optional by the Supreme Court in 2012. The public option would cover “the full scope of Medicaid benefits,” and qualifying individuals would be automatically enrolled1 through interactions with other public programs and institutions, such as the Supplemental Nutrition Assistance Program or public school systems. In addition, Medicaid expansion states could move their Medicaid expansion populations into the public option at the 90% match rate for federal funding that expansion states currently receive.

However, the public option may be too large-scale of a change to push through the reconciliation process. Other more feasible strategies to close the coverage gap may be possible, however, including extending Marketplace premium subsidies to those in the coverage gap in nonexpansion states or increasing the Federal Medical Assistance Percentage to entice remaining states to expand. President-elect Biden could also encourage states to adopt public options of their own by expanding on the existing Basic Health Plan framework. However, these state-level policies would likely need to be coupled with Medicaid expansion in order to close the Medicaid coverage gap and may be unevenly adopted across states.

Implications for Medicaid Enrollees and Safety-Net Providers

A premium-free public option would expand health insurance coverage to more than 4.8 million low-income Americans in nonexpansion states, filling a critical gap left by the ACA. It would also begin moving the nation away from a federalist approach to a Medicaid policy in which states decide who and what is covered beyond limited federal standards.2

For existing Medicaid enrollees and health care providers, a state’s decision to move the expansion population into the public option would have important consequences. First, this change would likely mean Medicare-like reimbursement rates for providers. Medicaid payment rates are significantly lower than Medicare rates, which results in fewer providers accepting Medicaid.3 Thus, shifting Medicaid enrollees into the public option may improve access. For safety-net providers, who serve a disproportionate share of Medicaid patients, improved reimbursement would translate to more revenue, which could be invested into better serving their patient populations.4

Second, a public option would simplify the process of enrolling in health insurance. Automatically enrolling eligible persons into Medicaid or a public option could greatly improve take-up among those who are eligible but not enrolled, which has historically been a challenge for Medicaid.5

Third, a public option could partially reduce the issue of insurance “churning,” another long-standing challenge for Medicaid programs in which individuals transition in and out of Medicaid coverage because of income or eligibility changes.6 Churning has negative effects on administrative costs, access, and continuity of care. By providing an alternative to Medicaid in which coverage is not lost when income increases, enrollees would be less likely to lose coverage and become uninsured.

Beyond a public option, the Biden administration will likely halt the approval of Medicaid 1115 waivers that include work requirements or premiums. They may also revoke existing waivers, although this has limited precedent and would take time. In addition, the new administration could provide novel opportunities for states to optimize Medicaid care delivery, such as permanently expanding telehealth access created during the COVID-19 pandemic and encouraging new value-based payment models. Biden has also proposed expanding access to home- and community-based services through elimination of wait lists and enhanced federal funding.

What Could Go Wrong? Potential Concerns

If enacted, these proposed changes to Medicaid will not be without consequence or controversy. If enrollees who would otherwise be eligible for Medicaid are shifted into a public option, this could mean more costs to states, assuming reimbursement is indexed to Medicare rates. It also remains unclear whether the scope of benefits under a public option would be as generous as Medicaid benefits in some states, and the negotiation of a benefit package could be a significant legislative hurdle. For those remaining with traditional Medicaid coverage, coordination between Medicaid programs and the public option will also be critical to minimize any harmful effects of insurance transitions.

Finally, Medicaid programs are uniquely tailored to meet the needs of low-income, diverse patient populations. If low-income adults are shifted into a plan not administered or overseen by Medicaid, ensuring the plan can meet the complex physical, behavioral, and social needs of patients is essential. If a public option ultimately includes competing privately administered plans,7 similar to Medicare Advantage, including plans that participate in the Medicaid managed care market could mitigate this issue.

Ultimately, the key to much of the Biden administration’s legislative agenda for health care will depend on support from ideologically diverse Democrats in Congress. Despite Democratic control of the executive and legislative branches of government, in the absence of support from the full Democratic party, Biden’s ability to shape Medicaid policy may still lie more closely in budget reconciliation, incremental legislation, executive orders, waiver approvals, and other state-led efforts than in advancing comprehensive federal legislation to overhaul the health care system.

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Article Information

Open Access: This is an open access article distributed under the terms of the CC-BY License. © 2021 Cole MB et al. JAMA Health Forum.

Corresponding Author: Megan B. Cole, PhD, MPH, Boston University School of Public Health, Department of Health Law, Policy, and Management, 715 Albany Street, Boston, MA 02118 (mbcole@bu.edu).

Conflict of Interest Disclosures: None reported.

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