Before the Affordable Care Act (ACA) was enacted, Section 1115 Medicaid Demonstration Waivers were used by several states to expand medical coverage to adults and support Medicaid programs operations in ways that were against the federal rules (Indiana Family and Social Services Administration, 2013). Indiana started enrolling adults in January 2008 in its new Healthy Indiana Plan (HIP). The plan allowed the state, under Section 1115 waiver demonstration authority, to offer a benefits package to the low-income adults and previously uninsured residents using the Medicaid funds (Indiana Family and Social Services Administration, 2013)
After the ACA was enacted, it paved the way for the possible expansion of Medicaid covering all adults with no disabilities and earning an income below 138 percent of the FPL. Medicaid expansion, however, was left to be a state option following the ruling of the Supreme Court in relation to ACA (Indiana Family and Social Services Administration, 2013). Most of the states using waivers to expand coverage to adults went for the option of transitioning their existing waiver coverage and Medicaid expansion to new coverage in accordance with the Affordable Care Act. This move meant that such states are eligible for receiving enhanced federal matching funds to cover this coverage.
In an act to avoid missing out on the waivers coverage, Indiana acquired waiver extension on September 2013. However, the waiver had to be amended in relation to who qualified for the coverage. The extension had been facilitated by the Centers for Medicare and Medicaid Services (CMS) and it extended the plan meaning that the existing coverage could not be disrupted as the state continued to consider its possible coverage options. While many adults in Indiana were covered by this temporarily persevered coverage, it also left a large number of residents, who in the normal scenario could be eligible under the full Medicaid expansion of the ACA, without access to the new coverage plan. These implications of the waiver extension left the stakeholder and providers in dilemma as to whether to implement the ACA Medicaid expansion or not (Indiana Family and Social Services Administration, 2013).
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Strengths and Weaknesses
1. The Affordable Care Act Medicaid expansion means that the state will receive an increase of about 24% in federal funding, in addition to an increase in state funding by about 1.3 percent (Agabin and Coffinm, 2015). These benefits are as a result of savings following reduced uncompensated healthcare costs. The Affordable Care Act is likely to result in additional savings from increased federal financing and coverage (Agabin and Coffinm, 2015).
2. The enactment also means that individuals whose income is beyond 100% FPL will receive premium tax credits to assist them access new Health Insurance Marketplaces coverage established by the Affordable Care Act.
3. The act does not limit parents in relation to open enrollment periods or enrollment caps. They will be allowed to enroll in the HIP as long as they meet the contributions requirements.
4. It will also allow Indiana to amend the current waiver to adjust its eligibility criteria for both childless adults and parents in cases where expenditures are likely to exceed state funds (Agabin and Coffinm, 2015)
Weaknesses
1. The ACA Medicaid expansion approach means that the state will no longer need to get a Section 1115 waiver in order to cover adults. The waiver under the original Healthy Indiana Plan was aimed at reducing uninsured residents. Before the Affordable Care Act, states were allowed to cover only adults who did not have children and get federal Medicaid funds by having a Section 1115 waiver ((Barbaresco, Courtemanche and Qi, 2015). The expanded waivers mean higher cost-sharing, or enrollment caps limiting the costs and limited benefit packages. The Affordable Care Act (ACA) will expand the Medicaid and consequently, the need for fundamental changes in the role of the waivers because of the significant federal funding. According to the CMS guidance, states are not eligible for heightened marching funds from the act in the event that there is a partial expansion or a cap on enrollment.
2. When the Medicaid expansion period elapses, and if it will not be extended, it will mean that coverage gaps will only remain for the poor adults. The HIP extension currently preserves coverage for parents and adults under the program. However, following the fact that program enrollment is limited, a good number of poor adults who are uninsured and who would have been eligible for Medicaid expansion coverage, will not access the coverage. Poor adults who are not in the waiver will also not be eligible for Medicaid and Marketplace coverage tax credits (Barbaresco, Courtemanche and Qi, 2015).
3. The waiver under the Affordable Care Act (ACA) allows for higher-cost sharing compared to the previous situation under the Medicaid program. It also limits the state from accessing the enhanced federal matching funds associated with the new coverage given to states that have implemented the Medicaid expansion.
Impact on Providers and Stakeholders
The enactment of the Affordable Care Act (ACA) allows small business and healthy individuals to seek cheaper premiums as well as payers selling limited duration insurance to support associated health plans. Financial services companies and providers of high-cost insurance plans also enjoy modest gains. The people who will are negatively affected are the middle-class consumers with comprehensive coverage on the Affordable Care Act exchanges. Payers and providers mostly depend on patients who are covered by the Affordable Care Act or Medicaid and it becomes challenging to them when the state laws are more skeptical. The state has also done away or delayed some of the provisions that could be used to raise revenue under the ACA and this has worsened the situation of providers and payers (Barbaresco, Courtemanche and Qi, 2015).
- Agabin N., & Coffin J., (2015). Undocumented and uninsured: after effects of the Patient Protection and Affordable Care Act. J. Med. Pract. Manag. 30:345–48
- Barbaresco S., Courtemanche C., and Qi Y. (2015). Impacts of the Affordable Care Act dependent coverage provision on health-related outcomes of young adults. J. Health Econ. 40:54–68
- Indiana Family and Social Services Administration (2013). Healthy Indiana Plan 1115 Waiver Extension Application. Retrieved from http://www.in.gov/fssa/hip/files/April122013HIPWaiverExtensionApp.pdf.
