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Medicaid at Fifty

Abstract and Keywords

This chapter examines the evolution of Medicaid as a component of U.S. healthcare financing. It begins with an overview of Medicaid’s aims, parameters, and impact on health and healthcare, with particular emphasis on how Medicaid developed into an indispensable mechanism for financing healthcare for patients and treatments excluded by both private health insurance and Medicare. It then considers the significance of Congress’s decision to rest health reform for the poor on Medicaid and discusses three fundamental challenges faced by the program: the politics of size, scope, and power-sharing; aligning Medicaid with the broader aims of health reform; and preserving access to the courts by private individuals who claim that state conduct violates federal rights and protections. The chapter concludes with an assessment of the future of Medicaid.

Keywords: Medicaid, healthcare financing, health, healthcare, health insurance, Medicare, health reform, politics, courts, Patient Protection and Affordable Care Act

I Executive Summary

Medicaid is arguably the most unique and complex component of U.S. healthcare financing. Unencumbered by the risk principles that govern private health insurance, Medicaid assumes tasks essential to any healthcare system but beyond the limits of private insurance: insuring people who cannot afford even modest out-of-pocket costs; operating as a safety net, under continuous open-enrollment principles that enable access at the point of illness and disability; coverage that extends beyond the limits of private health insurance and that reaches long-term services and supports; financial support for related social programs; and infrastructure support for providers serving impoverished and medically underserved communities. Structured as a federal/state legal power-sharing arrangement, Medicaid and its basic aims were preserved and strengthened by the Affordable Care Act (ACA). Medicaid’s multiple aims give the program its astounding parameters and help explain its many challenges: the continuing political battle over its size and scope; federal/state power-sharing in a health reform era; aligning Medicaid with a restructured, subsidized private insurance market; and preserving Medicaid as a privately enforceable guarantee.

II Introduction

This chapter examines Medicaid’s role, evolution, and future. It begins with a discussion of Medicaid’s aims, parameters, and impact and considers the impact of the Patient Protection and Affordable Care Act (hereinafter the Affordable Care Act (ACA)). It concludes with an assessment of Medicaid’s major challenges and reflects on its future.

Medicaid has been termed the “workhorse” of the U.S. healthcare system.1 Its unique capabilities, coupled with its relatively low cost in relation to private insurance2 explain why, (p. 766) as part of the ACA, Congress chose to preserve Medicaid as the pathway to coverage for low-income and medically vulnerable Americans.

Medicaid is foundational to American healthcare financing. But the program is burdened by size and political and operational complexities that stem from the breadth of its aims and the federal/state power-sharing arrangement on which it rests. Medicaid constantly faces a raft of legal, political, and operational challenges and an incessant drumbeat of calls for radical overhaul or repeal.3 Yet Medicaid survives; indeed, with the enthusiastic backing of the insurance industry, Medicaid became the foundation for the ACA’s coverage expansions.4

The policy significance of Congress’s decision to rest health reform for the poorest Americans on Medicaid was not lost on Chief Justice John Roberts, even if his legal analysis was flawed. In NFIB v. Sebelius,5 the Chief Justice, writing for the Court, concluded that restructuring Medicaid to cover all nonelderly low-income adults amounted to an unconstitutional coercion on the states. Rather than nullifying the expansion altogether, took the lesser step of barring the Secretary of Health and Human Services from enforcing the expansion as a mandatory condition of state participation in traditional Medicaid. The Chief Justice’s coercion opinion rested on a legally flawed characterization of the adult Medicaid expansion as a “new” program in which states were forced to participate as a condition of receiving traditional program funding. Justice Ginsburg unmasked this erroneous legal reasoning by closely examining the statute itself,6 which expresses the ACA Medicaid expansion simply as an amendment grafted onto a fifty-year-old statute. Regardless however, the Chief Justice was quite correct when he observed the transformational impact of the expansion, which, in his words, fundamentally altered Medicaid from “a program to care for the neediest among us [into an] element of a comprehensive national plan to provide universal health insurance coverage.”7

With the ACA amendments, Medicaid’s position as the principal source of health insurance for the poor was reinforced. Medicaid is designed to perform like health insurance in that it pays for a wide range of (overwhelmingly private) healthcare providers for covered care and treatment furnished to eligible people enrolled in the program. But Medicaid is also structured to operate unencumbered by the risk principles that undergird private insurance such as medical underwriting or the use of exclusionary coverage terms that bar payment for long-term patients, treatments, and conditions. Although the ACA takes the monumental step of barring insurers from denying access to coverage based on health status or preexisting condition, the law’s coverage reforms preserve the basic design of commercial insurance products. This design restricts enrollment to specified time periods unrelated to the need for healthcare. It also restrains financing to the relatively limited continuum of healthcare needs shared among most working-age adults and their by-and-large healthy children. In other (p. 767) words, even after the ACA, private insurance continues to offer limited access and limited protection at best against the cost of caring for children and adults with serious and disabling health problems. Furthermore, even those services that private insurance does cover are subject to considerable patient cost-sharing; standard “silver level” health plans sold in the health insurance Marketplace are capped at a 70% actuarial value8 for all but the lowest income populations.9

Medicaid steps into this breach, with concepts of coverage and protections against heavy cost-sharing that extend beyond the furthest reaches of private insurance. To be sure, certain components of Medicaid function like the private health insurance market. A prime example is Medicaid managed care organizations that, like private insurers, sell health plans to Medicaid agencies and now account for three-quarters of all Medicaid beneficiaries.10 Furthermore, states are now in the process of moving even heavily health-burdened beneficiaries into managed care arrangements. In reality however, these companies tend to operate differently from normal insurers; they offer higher levels of coverage and gear their services and networks toward heavily impoverished populations facing elevated health risks.11 In sum, whereas private insurance of necessity operates under the principles of financial risk avoidance, Medicaid has been built to embrace risk, covering populations and services outside commercial insurance norms.

But Medicaid’s size and complexity also have led to a cascade of political problems, culminating in the constitutional challenge to the ACA’s adult Medicaid expansion, famously characterized by the Chief Justice in NFIB v. Sebelius as a “gun to the head.”12 Medicaid remains a poorly understood program, despite the fact that it has consistently emerged as the solution of choice to a host of difficult problems. Some of these problems, such as the need for long-term care, are present in any healthcare system. Others are the direct result of a national choice to rest healthcare financing largely on a private insurance base. To be sure, health insurers now must sell to everyone who can afford coverage, but they remain free to select their geographic and product markets, and by and large, to design their products.13 This autonomy, even in the wake of the ACA, effectively enables insurers to bypass the nation’s poorest communities in favor of wealthier prospects,14 to shape their products to avoid hard and costly cases,15 and to (p. 768) select provider networks oriented to more affluent customers.16 In a time of market restructuring and concerns over whether the market, so restructured, can withstand risk, Medicaid endures as a powerful backstop to the entire system.

III Medicaid’s Missions, Parameters, and Impact

a. A Thumbnail Sketch of Medicaid

Within a single legislative authority, Congress has built a program encompassing several distinct missions. Codified at Title XIX of the Social Security Act, Medicaid has grown exponentially in response to critical external influences—a broad legislative mandate, the rise of poverty, the erosion of private health insurance, an aging society, and the underlying cost of healthcare. While Congress has reined in Medicaid at certain points, in fact lawmakers have not only left its basic parameters untouched but repeatedly have broadened its scope as new needs emerged. In 1966 Medicaid covered 4 million people and cost federal and state governments a combined $1 billion; by 20154 the program reached over 70 million people at an overall cost of roughly $450 billion, about 57% of which was federal expenditures; by 2022 the program is projected to reach 80 million people.17

Medicaid is administered by the states and funded jointly by the state and federal governments. Enacted pursuant to Congress’s “Spending Clause” powers, Medicaid entitles states to federal funding as long as they comply with program requirements. Its structure is as a series of mandates and options for participating states. States must cover certain groups of people, while other groups are optional.18 Individuals must be given the opportunity to apply whenever they need help, and states must determine eligibility and furnish medical assistance coverage and services with reasonable promptness and must offer retroactive coverage.19 States must cover certain benefits and have the option to offer many others.20 In general, cost-sharing must be nominal and premiums are banned for the most part.21 With (p. 769) certain exceptions for “safety net” providers, described below, states are given broad latitude over provider payment levels and methods.22

Since its enactment, Medicaid also has acted as a purchaser of both public and private insurance. States use Medicaid to buy Medicare for the poorest Medicare beneficiaries, making them dually eligible for both Medicare and Medicaid. In these situations, Medicaid finances services and cost-sharing that Medicare does not cover, such as Part A and B deductibles and copayments, eyeglasses, hearing aids, and long-term care. Most states now use Medicaid to buy coverage through managed care arrangements,23 as well as employer-sponsored coverage where available and cost-effective. At least two states have received permission to conduct special demonstrations under § 1115 of the Social Security Act, discussed elow, to use Medicaid to purchase private health insurance through the health insurance Marketplace.

States participate in Medicaid voluntarily, the last entrant being Arizona in 1982, which launched its program as a § 1115 demonstration.24 (Over thirty years later Arizona retains its federal demonstration, a testament to the tendency of § 1115 demonstrations to operate in perpetuity). State Medicaid plans must be approved by the Secretary of Health and Human Services (HHS), and the federal/state Medicaid administration relationship is a constant loop of plan amendments, Secretarial reviews, and disputes over payment and amendment approvals. A vast body of federal/state litigation exists, a reflection of the frequently contentious relationship between the parties.25 States rail at federal oversight and the federal government criticizes state mismanagement. Yet, each side depends on the other: the states, for vast amounts of funding, and the federal government for program management, budget controls, and the delivery of healthcare.

Federal funding is open-ended. The level of federal funding varies by state in accordance with state wealth and ranges from 50% to 74% of each dollar spent on “medical assistance.”26 Federal funding for program administration ranges from 50% to 90%.27 Federal payments for adults falling within the ACA’s Medicaid eligibility expansion categories are set at 100% during the 2014–2016 time period, declining gradually to 90% in 2020.28 Payments for beneficiaries covered under Medicaid’s traditional eligibility pathways—dependent children and caretakers, persons with disabilities, pregnant women, the elderly, and other specified pre-ACA populations—remain at the normal federal medical assistance percentages (FMAP); (p. 770) states thus pay a higher percentage of costs for people who were eligible prior to the ACA expansion, even if they enroll after the effective date for the expansion (January 1, 2014).

Because of the simplified enrollment process and the mandate to enroll in affordable insurance,29 Medicaid enrollment has risen even in states that have opted out of the adult expansion, as permitted under Sebelius.30 This fact has further stoked state resentment over the ACA, since even the most recalcitrant state has felt the effects of the reforms. The very fact of the ACA’s existence has brought forth individuals who were entitled to Medicaid previously yet had never enrolled, a phenomenon referred to as the “woodwork effect.”31

Medicaid’s structure as a program that embraces financial risk arises from its inherent structure, which is open-ended and targeted on high-need populations and services.32 Unlike its small companion Children’s Health Insurance Program (CHIP), which is subject to aggregate federal funding caps,33 Medicaid offers as much financing as states need to support the programs they run, and more than half of all spending is for optional populations and services. Thus, states effectively control Medicaid’s size, growing or shrinking their programs (in terms of eligible persons, covered services, provider payment rates, and level of administration complexity) as political, economic, and social circumstances dictate.34 Indeed, even conservative states maintain Medicaid programs that are large, if not relative to other states, then certainly in relation to their other social welfare spending activities. In all states, Medicaid plays a pivotal role in addressing critical population health challenges from reducing infant mortality to community integration of persons with disabilities, responding to disasters natural and man-made disasters,35 and building and sustaining a healthcare infrastructure in medically underserved communities.

b. Medicaid’s Multiple Missions

Medicaid’s missions have been expanded but never reduced.

(p. 771) Affordable health insurance for very low income people.

From its 1965 enactment, Medicaid has provided health insurance for very poor people, offering comprehensive coverage with virtually no cost-sharing. Cash welfare recipients comprised the original poverty group; this meant that equally impoverished individuals and families who failed to meet welfare eligibility standards (presence of a dependent child and deprivation of parental support) were excluded. Over the years however, poverty-based Medicaid eligibility was expanded to include low-income children and pregnant women.36 But other than as persons with disabilities, pregnant women, or recipients of Aid to Families with Dependent Children (AFDC) consisting of deeply impoverished parents or other caretaker relatives and their minor children,37 indigent nonelderly adults could not qualify for coverage (unless they resided in states operating Medicaid under § 1115 demonstration authority, discussed below).38

The ACA added mandatory coverage of nonelderly adults with family incomes up to 133% of the federal poverty level,39 while establishing a “maintenance of effort” requirement that, for a specified time period, prevents rollbacks in Medicaid eligibility for children and adults except under limited circumstances.40 However, the impact of Sebelius has been profound. By barring the HHS Secretary from enforcing the mandatory coverage expansion, the Court set the stage for states to opt out of covering all nonelderly low-income adults. As of Fall 2015, twenty states still had not expanded their programs to cover all low income nonelderly adults.41 Because premium tax subsidies are not available through the ACA’s private health insurance Exchanges until household income reaches 100% of the federal poverty level,42 (p. 772) consequently, in states that reject the Medicaid expansion43 the poorest nonelderly adults who do not fit into Medicaid’s traditional eligibility categories are completely excluded from coverage. The twenty states that to date have rejected the eligibility expansion accounted for over 3 million adults with Medicaid-level incomes, who fall into a “coverage gap”44 created by the Court-sanctioned state rejection of the expansion, a move that effectively has left millions without affordable coverage. Medicaid-eligible adults in nonexpansion states are, of course, excused from the federal tax penalty, since insurance is unaffordable.45 But this is small comfort indeed.

As of fall 2016 virtually all Deep South states had rejected the expansion, accounting for 90 percent of those in the coverage gap; their residents experience the highest concentrations of poverty and constitute a disproportionate percentage of impoverished African American adults.46 They also bear the heaviest burden of poor health arising from conditions especially amenable to medical treatment.47 The economic implications are also enormous, underscoring the fact that ideology—not common sense—has fueled states’ decisions. One authoritative study has estimated that the opt-out states will lose $423 billion in federal funding between 2013 and 2022, a figure that grows more startling in light of the fact that in order to qualify for these funds, the states collectively would have had to spend only $31 billion over the ten-year time period.48

A source of accessible and comprehensive healthcare financing for uninsured and underinsured people with significant healthcare needs.

Three aspects of Medicaid fundamentally distinguish it from private health insurance and give the program its true power as a source of healthcare financing. First, Medicaid is continuously accessible. Unlike private health insurance, which is structured to avoid adverse risk selection, Medicaid has no fixed “open enrollment” periods; benefits—whether primary or secondary to private insurance coverage—are available whenever the need for healthcare arises. Thus, while much was made of the initial open enrollment period under the ACA, which began October 1, 2013, Medicaid remains continuously accessible and is not restricted to special enrollment periods.49

(p. 773) Second, many Medicaid eligibility categories expressly turn on various types of medical need, medical vulnerability, and disability: pregnancy; a breast or cervical cancer diagnosis; and severe disability sufficient to prevent substantial gainful employment, as defined in the Social Security Act.50

Third, Medicaid coverage is singularly comprehensive, and cost-sharing is nominal. The definition of “medical assistance” spans preventive, acute, and long-term institutional and community-based care.51 While states have the flexibility to impose cost-sharing, this flexibility is tempered, and many types of beneficiaries (e.g., most pregnant women and children, women with breast or cervical cancer, and certain persons receiving long-term care) are by and large shielded from even nominal cost-sharing.

These features combine to make Medicaid the indispensable mechanism for financing healthcare for the poorest patients, as well as treatments excluded by both private health insurance and Medicare. Some beneficiaries who depend on the program for costly treatment and long-term care rely solely on Medicaid as their only source of health insurance. But for millions, Medicaid acts as a supplemental insurer both to Medicare52 and private insurance.

Medicaid’s role as a primary and supplemental insurer of persons with disabilities has evolved over the decades. In addition to establishing mandatory eligibility groups, the original 1965 legislation also created eligibility options, including an option to cover “medically needy” persons who spend down their income on medical care. This optional coverage group consists of individuals whose characteristics link them to an eligibility category (age, disability, blindness, welfare eligibility status, or status as an impoverished child), but whose incomes and resources exceed state-specified levels before their medical spending. As of 2012, thirty-four states maintained medically needy programs.53 The utility of the medically needy program in financing community care for persons with disabilities has been severely hampered over the decades by a provision, enacted in 1967 in response to rapidly rising state Medicaid expenditures, that caps the medically needy income level at 133% of a state’s AFDC payment standard.54 AFDC payments, never high to begin with, plummeted over the decades; in 2012, the average cash welfare payment under the successor Temporary Assistance for Needy Families (TANF) program had sunk to as little as 20% of the federal (p. 774) poverty level or less.55 As a result, the medically needy program has become virtually useless for treatments other than catastrophic institutional care bills.

Congress ultimately stepped into the breach of its own creation, expanding coverage options for children and adults with disabilities that are de-linked from the medically needy spend-down system and available even to families with reasonable incomes (for example, working parents with a child with a disability). In situations such as this, most states make Medicaid available (especially in the case of children with disabilities living at home) to families under special income eligibility rules, without the need to spend down. This eligibility innovation was first championed by President Ronald Reagan in response to Katie Beckett,56 a little girl facing unnecessary institutionalization because, without incurring enormous spend-down exposure, her middle-class family could not qualify for the Medicaid coverage necessary to keep her at home. (Medicaid ironically would have paid her nursing home bills, since at the point of institutionalization Katie would have been treated as residing apart from her parents and thus without disqualifying income or assets).

In addition to expanding eligibility, the Medicaid reforms aimed at helping children and adults with disabilities remain in their communities also permit states to expand coverage to include services such as personal attendants, home modifications, special equipment, respite care, and other items essential to community-based long-term care. (Room and board costs in nonmedical institutions and supportive housing are excluded however).57 The sheer reach of Medicaid for persons with disabilities is underscored by who receives help: one-third of Medicaid beneficiaries with disabilities receive Medicaid to supplement private or public insurance coverage.58

The ACA preserves Medicaid’s disability coverage provisions but with one important proviso: Supplemental Medicaid is unavailable to people who receive subsidized coverage from a private health insurance Exchange, since with certain limited exceptions, Medicaid is considered “minimum essential coverage” (MEC), which disqualifies individuals from premium subsidies.59 To be sure, Medicaid coverage unquestionably satisfies the ACA’s MEC requirement. But the impact of not exempting Medicaid’s disability-based eligibility groups from persons otherwise excluded from subsidies because they obtain MEC through Medicaid is potentially enormous. As long as states continue to extend Medicaid to optional disability eligibility groups whose household incomes exceed premium subsidy thresholds, failing to exempt these groups from the MEC exclusion means that states must bear all costs on a first dollar basis. This in turn creates an incentive to states to eliminate optional eligibility categories, causing a significant number of beneficiaries to lose coverage while shifting substantial financial risk into the Exchange. The jury is still out, of course, on whether this will come to pass.

(p. 775) Medicaid’s support for the healthcare safety net.

Medicaid is the principal financial support for healthcare “safety net” hospitals and clinics, a somewhat elusive term that has been defined to mean hospitals and clinics that by mission, custom, or law, disproportionately treat low-income, uninsured, and publicly insured patients.60 Using the most rigorous definition, the healthcare safety net would focus on public hospitals, federally funded community health centers, and other types of publicly funded health clinics receiving federal, state, or local funding.61

The relevance of healthcare safety net providers in a post-health reform world remains high, given the millions of people who will remain uninsured for one reason or another (e.g., undocumented persons, the poor in states that have rejected the Medicaid expansion, people who cannot afford insurance or who experience periodic breaks in coverage).62 The safety net also remains vital for millions of low-income insured people who reside in medically underserved communities that experience heightened poverty, health risks, and a shortage of primary healthcare.63 Furthermore, safety net providers remain the only reliable source of treatment for uncovered services such as adult dental and vision care, neither of which is considered an “essential health benefit” under the ACA, the standard that applies to health plans sold in the individual and small group markets, including plans that qualify for premium subsidies.64

Medicaid contains special features designed to lend additional support to safety net providers, including special payment rules for community health centers (known as “federally qualified health centers” (FQHCs)) and rural health clinics, as well as annual supplemental state payments (through a special federal pool) to hospitals that treat a “disproportionate” share of low-income and Medicaid-insured patients (known as disproportionate share hospitals (DSH) hospitals).65

The ACA leaves the Medicaid payment formula for health centers and rural health clinics untouched; indeed, in order to shield health centers from cost-shifting by qualified health plans, the ACA even extends Medicaid’s FQHC payment rules to all health plans governed by the essential health benefit coverage standard.66 But on the assumption that millions of low-income people would gain insurance coverage, the ACA slashed federal Medicaid (and Medicare) DSH funding by 50% at the point of what Congress thought would be full (p. 776) implementation of the law, including the adult Medicaid expansion. In the wake of Sebelius and the state Medicaid expansion opt-out crisis, the administration sought to soften the blow by modifying the DSH funding reduction formula while delaying the effective date of the reductions.67 This move was later ratified by Congress in 2013, which codified the delay while leaving it on the books.68

Support for public education and social welfare programs.

Medicaid’s final mission—one that tends to be understood only by those familiar with its inner workings and interactions with the rest of the social welfare fabric—is its relationship to social welfare programs such as special education for children, child welfare, programs for children and adults with developmental disabilities or mental illness; food and nutrition programs; social and health supports for persons with HIV/AIDS and people who are homeless; school health services; and early childhood development and child care. All of these programs intersect with Medicaid because they serve virtually the same populations; Medicaid funds necessary healthcare (often in community settings, a marked departure from commercial insurance), while education and welfare programs pay for necessary social and educational services.69

c. Medicaid’s Role for Selected Populations and Services

Reflecting its major missions, Medicaid’s population and health system reach is enormous. Together, Medicaid and CHIP insured one-third of U.S. children under eighteen in 2010.70 Medicaid finances nearly half of all U.S. births, a testament to pervasive childhood poverty.71 Medicaid plays a similarly dominant role in long-term care, financing 40% of total national expenditures72 and 40% of all public-sector spending on mental healthcare.73 Medicaid (p. 777) supplements Medicare for over 9 million low-income Medicare beneficiaries and insures some 9 million beneficiaries with disabilities (6 million of whom receive Medicaid only).74

As the principal means by which the healthcare safety net is financed, Medicaid has fueled the growth of healthcare access points into medically underserved communities characterized by high poverty and elevated health risks. Community health centers best illustrate this growth. In 1986, fewer than seven hundred health centers served about 8 million patients; but despite relatively flat funding under their base discretionary grant funding, Medicaid revenues have propelled their growth. In 2014, twelve hundred health centers operating in approximately 9000 locations served 22.5 million patients. This exponential growth is the result of two basic policies: Medicaid eligibility expansions for both traditional populations and newly eligible populations in expansion states; and special payment rules that bar deep discounting of Medicaid payments to health centers, thereby preserving grant funds to pay for the nearly 30% of all health center patients who are uninsured.75

d. Medicaid’s Parameters

Its multiple missions give Medicaid astounding parameters. Medicaid is the nation’s largest public health insurance program and the third largest program in the domestic federal budget, accounting for 7% of all federal spending in 201376 and one-sixth of all U.S. healthcare spending.77 Approximately two-thirds of total Medicaid spending is invested in primary, preventive, and acute-care services, but a considerable proportion of even these expenditures involve care for beneficiaries with disabilities and thus reflect far greater utilization than one would assume for a healthy population. One-third of program spending is dedicated to institutional and noninstitutional long-term care services.

Medicaid covered 58 million people on a full-year basis in 2013.78 But if one counts all of the people whom Medicaid actually touches over the course of a year, the number is much higher, reaching 72 million people covered by Medicaid at some point during the year.79 Children and adults make up about 75% of total enrollment and account for about one-third of total spending. By contrast, beneficiaries who are elderly or persons with disabilities represent about one-quarter of program enrollment and two-thirds of program spending.80

States are heavily dependent on Medicaid, which accounts for 44% of all federal grant funding received. When total program expenditures (both federal and state) are counted, (p. 778) Medicaid represents nearly 25% of state budgets.81 Medicaid’s primacy as a source of federal funds transfer has, of course, grown even more pronounced as healthcare spending has continued to outstrip overall economic growth, and as federal funding for other key social welfare programs has stagnated or declined in real-dollar terms.

Medicaid’s growth is driven by a combination of factors that have their root in the program’s fundamental design combination of open-ended financing coupled with eligibility and coverage rules that embrace risk and the high cost of healthcare generally. But it is also the case that states manage Medicaid aggressively, precisely because of its size. In order to control Medicaid’s growth—driven largely by enrollment rather than factors such as increased utilization or rising prices—states use an array of cost-containment strategies ranging from strict coverage limits for adults to more sophisticated program management tools such as managed pharmacy benefits and managed care plans offering coverage for a fixed per-capita rate. Because of these aggressive management techniques, Medicaid’s future per-capita growth is projected to be slightly below the average per capita growth rate for the U.S. economy as a whole.82

Managed care represents a prominent approach to coverage. Following a slow start throughout Medicaid’s early years, the shift to managed care happened rapidly in the 1990s as a result of Clinton administration initiatives, with a heavy focus on parents with children; increasingly, however, managed care is being designed to serve high-cost populations.83 As of 2014, over half of all states were in the managed care planning or implementation phases, in order to develop integrated financing and delivery systems for beneficiaries dually eligible for Medicare and Medicaid.84 In this latest managed care transition, one sees the same types of speed bumps that affected the 1990s transition for private insurance85; this shift is more complicated of course, because of the high-need population involved.86

e. Medicaid’s Impact on Health and Healthcare

An extensive research literature documents Medicaid’s impact on health and healthcare. Medicaid has significantly lowered the U.S. infant mortality rate,87 chiefly in its impact on the growth of advanced newborn care capabilities. But compared to low-income uninsured (p. 779) children, children enrolled in Medicaid also are significantly more likely to have a usual source of care and receive well-child care and significantly less likely to have unmet or delayed needs for medical care, dental care, and prescription drugs.88 Research shows an association between Medicaid expansion and reductions in mortality among low-income adults,89 as well as comparable birth outcomes when results are risk-controlled.90

One widely cited study, using a natural randomized approach, examined Medicaid’s impact on health and healthcare, compared to being uninsured. Researchers found that Medicaid was associated with more consistent primary care, increased use of preventive care such as mammograms and cholesterol checks, and increased use of outpatient and hospital care and prescription drugs.91 The research also documented Medicaid’s success in nearly eliminating catastrophic out-of-pocket medical expenditures (defined as costs exceeding 30% of income) and ability to significantly reduce medical debt (more than 20%).92 The study found that adults who gained Medicaid had better self-reported physical and mental health than those who remained uninsured. But consistent with other studies attempting to find short-term health outcomes within a small population,93 the study detected no short-term improvements in diabetes control, high blood pressure, or high cholesterol, results potentially attributable to numerous behavioral, economic, and health system factors.94 Other studies taking a larger, more epidemiologic approach to the evidence have documented Medicaid’s impact on adult mortality over time.95 Critics have cited research showing Medicaid’s lack of impact on patient health outcomes and its association with worse health outcomes,96 although the degree of selection bias present in the studies (given Medicaid’s tendency to enroll people at the time of greatest health need) raises reliability questions.97

(p. 780) IV Medicaid’s Major Challenges

Going forward, Medicaid faces three fundamental challenges, some of which relate to the ACA, others of which have percolated for decades.

a. The Politics of Size, Scope, and Power-sharing

Medicaid’s size and scope subject it to endless controversy. Indeed, the Sebelius dissent would have sunk the adult expansion—even as an option—on the basis of Medicaid’s size alone.98 This size and financial impact mean that the federal and state governments are in a constant battle for control, reaching an apex of sorts in Sebelius and the Court’s unprecedented unconstitutional coercion holding despite the extraordinarily favorable financial terms attached to the adult expansion. Because of Sebelius (fully half the states joined the suit as plaintiffs), the expansion survived but effectively only as an option. Federal funding was preserved, but at the cost of state autonomy to reject coverage for the poorest Americans.

The federalism debate has raged for years. Put simply, what states naturally want is open-ended financing with minimal obligations, restrictions, and oversight. For its part, the federal government is divided. Liberals want to maintain Medicaid as an open-ended legal entitlement but with strict coverage standards as the quid pro quo. Conservatives desire an end to open-ended financing, with the trade-off being elimination of most (but not all) requirements. The result has been an unending political battle pitting these three viewpoints against one another like a bad but enduring piece of theater.

Medicaid block grant proposals “have been the leitmotif of Medicaid policy for the last three decades.”99 In recent years, Medicaid spending reduction proposals have moved beyond conventional block grants. A different proposal, which first surfaced during the epic 1995–1996 Medicaid block grant battle between Congress and President Clinton (which the governors settled by pulling the plug on support for capped funding),100 would substitute per capita spending limits for Medicaid’s open-ended financing structure. Medicaid would continue to grow in terms of population size, but per-beneficiary spending would be subject to annual limits, much like a premium. Ultimately the per capita cap proposal faded but like the perennial block grant idea, is expected to re-emerge, especially as part of a more comprehensive effort following a Republican victory the 2016 Presidential elections to deal with the Affordable Care Act more broadly.101 Critics of per capita caps have focused on many (p. 781) issues: Medicaid’s already-low annual growth rates, which would necessitate real-dollar spending reductions in order to achieve federal savings; the potential for low-spending states to suffer relatively deeper losses (sinking a Medicaid reduction proposal typically involves triggering interstate warfare about how to allocate reduced federal funds)102; impossible administrative problems such as continually having to reconcile actual federal payments to dated information about beneficiary characteristics; and the inability, under even per capita spending caps, to rapidly respond to changes in medical technology, shifting demographics, and sudden surges in medical care need brought on by man-made or natural crises.

While legislative battles over big Medicaid reform tend to fall apart owing to the impact on state budgets of federal limits on funding, § 1115 of the Social Security Act has come to act like a sort of pressure outlet that enables states to depart from federal rules without paying the consequences. Enacted as a special demonstration authority in 1962,103 § 1115 authorizes the HHS Secretary to undertake demonstrations that “in [her] judgment” are “likely to assist in promoting the objectives” of Medicaid (as well as other state grant-in-aid programs authorized under the Act).104 Section 1115 demonstrations can be federally solicited or sought by states. Under long-standing policy dating back to the Carter administration, § 1115 demonstrations must be budget neutral, costing the federal government no more than the federal sums projected under a state’s standard Medicaid program,105 although projecting what “normal” spending would look like is difficult given Medicaid’s many state options.

Even in the case of § 1115 however, states have protested federal oversight and the structural limits of federal demonstrations. As broad as it is, § 1115 enables the Secretary to waive only certain aspects of the statute. For example, the HHS Secretary cannot alter the federal matching formula in order to give states a more favorable return on their own investments, although she can permit states to modify many program requirements while still receiving the funding to which they are entitled.

The Obama administration has used § 1115 as an enticement to foster adoption of the Medicaid expansion effectively made optional in Sebelius.106 The most notable demonstration perhaps has been that undertaken by Arkansas, which expands Medicaid to the low-income adult population while enrolling the non-“medically frail”107 expansion population into qualified health plans sold in the health insurance Marketplace.108 By allowing Arkansas to utilize an (p. 782) approach that depends on private health plans rather than the traditional Medicaid managed care market, a Democratic governor was able to convince his conservative legislature to accept the adult Medicaid expansion, making Arkansas one of only two Southern states (the other being Kentucky) to have adopted the adult expansion. But since private insurance is about 50% more expensive than Medicaid, how the demonstration is budget neutral is a mystery, resting in part on inflated estimates of the cost of the expansion without demonstration authority and in part on theories regarding the impact of expanded enrollment on program efficiencies.

In sum, there are literally hundreds of Medicaid § 1115 demonstrations; evaluations of their impact on access, quality, and program efficiency are almost nonexistent. In many cases the demonstrations enable states to expand coverage or try alternative delivery arrangements. In others however, demonstration authority has been used to reduce eligibility or coverage; indeed, several of the ACA expansion demonstrations impose requirements (such as, in the case of Indiana, payment of premiums and a 6-month exclusion for non-payment) far harsher than would be permissible under traditional program rules. In some cases, beneficiaries have successfully challenged § 1115 demonstrations as exceeding the Secretary’s authority given the absence of any real research design or credible evaluation methodology.109 By and large, however, demonstrations flourish either because what is being attempted makes some sense (e.g., managed care reforms110 or expanded eligibility)111—or because § 1115 becomes a convenient political escape hatch for states.

b. The Operational Challenges of Aligning Medicaid with the Broader Aims of Health Reform

The Affordable Care Act was not only about getting people insured; its loftier purpose is to improve the quality and efficiency of healthcare. To this end, stability of enrollment over time represents a central legislative reform, as do investments in underlying health system reform such as health information technology, payment incentives and performance measurement, and greater clinical and financial integration.

Like all payers, Medicaid struggles with how it can use its financial clout to incentivize better care. In Medicaid’s case, the challenge is tougher because provider payment levels already are so low that provider participation outside of the safety net typically is inadequate and there is no excess to cut. Indeed improving Medicaid may require greater investment in certain types of health care; the ACA took a modest, temporary step in this direction through a two-year, federally funded payment increase in Medicaid primary care rates,112 but the enhancement ended in 2014, and as of 2015, only 15 states had elected to continue paying for primary care at enhanced rates, omitting specialty care, which arguably poses more serious (p. 783) access problems.113 The American Recovery and Reinvestment Act separately incentivized Medicaid adoption of health information technology (HIT) by certain provider groups, and progress continues, although slowly.

In sum, Medicaid struggles with system reform, as do other payers, but it has fewer tools given the health, social, and economic characteristics of beneficiaries, already-low payment rates, the concentration of beneficiaries in medically underserved communities. Some states have attempted large-scale § 1115 demonstrations (known as delivery system reform incentive payment programs) that seek to introduce large-scale system change,114 but transforming care for entire communities and measuring impact are tall orders, indeed.

Medicaid transformation is further complicated by churning, that is, the constant movement of low-income populations between Medicaid and premium subsidies as incomes fluctuate. Estimates put the potential for cross-market churn during a year at 50% of the population with family incomes below 200% of the federal poverty level,115 and even in states that have rejected the adult expansion, churn is likely.116 This is an enormous issue for healthcare quality, since unless the same plans with the same networks participate in both programs, people whose coverage churns may lose their regular source of healthcare. The populations most vulnerable to churn turn out to be younger healthier workers and their children, whose stable participation is crucial to the success of the ACA.117 Various strategies for reducing churn or mitigating its effects have been offered: smoother administration to reduce breaks in coverage118; the use of § 1115 demonstration authority to enable twelve-month continuous (p. 784) Medicaid enrollment119; the use of premium assistance à la Arkansas to maintain constant enrollment in qualified health plans; and multimarket health plans that use a common provider networks and available for sale in both the Medicaid and exchange markets. Experts also suggest use of the ACA’s Basic Health Program option,120 a special option, which the administration was slow to implement, that enables states to substitute what is effectively a broadened Medicaid program for individuals and families with incomes up to 200% of the federal poverty level in lieu of Marketplace premium subsidies (essentially the Arkansas model in reverse).121

c. Medicaid and the Courts

The continuing legal drama that surrounds Medicaid goes beyond federal-state relations and touches on the fundamental question of whether private individuals will have access to the courts in the case of states whose program administration allegedly violates federal protections. This question has been simmering in the courts for decades, as an increasingly conservative Supreme Court has sought to narrow the circumstances in which beneficiaries and providers can proceed with private enforcement actions.122

The enforcement cases raise two distinct issues: first, whether the Medicaid statute creates enforceable rights; and second, whether, even in the absence of an enforceable right, private individuals can bring actions to halt unlawful state action violating federal Medicaid standards if the federal government has not sufficiently enforced them. One example of a federal operational requirement held by numerous courts not to constitute an individually enforceable right123 is the Medicaid requirement (known as the equal access guarantee) that states “assure that payments are consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population in the geographic area.”124 State adherence to this guarantee is viewed by many as crucial to reasonable access to care, given the critical provider shortage.125

(p. 785) Both types of cases—those raising rights issues and those raising questions of federal duties—are complex because the Medicaid statute itself contains no express federal right of action, which would expressly enable a private right of action. A liberal Court used to infer a private right of action from the nature of a statute, but these days are over; the Court now insists on an express right of action.126 In some cases, this right of action can be found in 42 U.S.C. § 1983, an ancient statute dating back to the post–Civil War era that permits individuals to seek judicial intervention in cases involving federal rights secured under the Constitution or by statute.127 But, as it turns out, very few provisions of Medicaid—other than the core entitlement to coverage—are viewed by courts as creating a “right” within the meaning of § 1983, and the Court sets a very high bar for when it will consider a right to exist.128

In cases that involve a Medicaid operating rule rather than a right, litigants have turned to the Constitution’s Supremacy Clause, arguing that the Supremacy Clause itself creates a right of action to vindicate injuries arising out of states’ failure to follow binding federal laws. In this regard, the “equal access” cases have assumed major prominence. In Armstrong v Exceptional Child Center, Inc. the United States Supreme Court rejected this argument and went further, concluding that the Medicaid statute itself evidences Congress’s desire to bar the courts from exercising their inherent equitable powers to intercede in cases brought by providers (and presumably beneficiaries as well) to enjoin potentially unlawful state payment arrangements pending full judicial review.129 With this decision, Armstrong effectively narrows the Court’s landmark decision in Ex Parte Young,130 which provides for judicial redress in the case of private interests facing imminent harm from unlawful state conduct. Whether Armstrong will in fact unleash suits against the federal government under the federal Administrative Procedure Act for approving unreasonably low payment arrangements remains to be seen. To date, federal agency action to ensure adequate payments has been shown to be strikingly absent.131

V Concluding Thoughts

Medicaid’s ability to survive as the nation’s largest means-tested legal entitlement is essential, not only for the tens of millions of people who depend on it but also as the legal and operational foundation of health reform. Medicaid is immense and incredibly complex. Yet as Medicaid begins its second half century it survives, precisely because, by filling enormous holes and absorbing financial risk, it is essential to a market-driven health economy. Indeed, Medicaid makes the healthcare market possible. States overwhelmingly depend on its revenues; the poor and medically vulnerable depend on its coverage; and the healthcare industry depends on Medicaid as a $400-plus billion dollar shock absorber.

(p. 786) The policy and political battles over Medicaid endure, and the judicial battles proceed. But as long as the United States continues to rely heavily on market solutions to the allocation of healthcare resources, it needs Medicaid or a program just like it. And so those committed to the ultimate success of the Affordable Care Act also must root for Medicaid. Do we allow Medicaid to falter, or do we invest in its implementation and fuller integration into a reformed health system? For now, the situation might be best characterized as slow-motion forward movement, coupled with a cautious wait-and-see outlook.


(1) Alan Weil, There’s Something About Medicaid, 22 Health Aff. 13 (2003).

(2) Medicaid per capita costs about two-thirds of comparable plans sold in the private insurance market ($6000 versus $9000 in 2012 dollars) because it deeply discounts provider payments. See Congressional Budget Office, Estimates of the Insurance Coverage Provisions of the Affordable Care Act Updated for the Recent Supreme Court Decision (2012).

(3) A Google search of the words “Medicaid is broken” yields more than 4 million entries. (Google search conducted on May 26, 2014).

(4) See John E. McDonough, Inside National Health Reform (2011).

(5) NFIB v. Sebelius, 132 S. Ct. 2566, 2607 (2012).

(6) To see the Court’s error, compare 42 U.S.C. § 1396a(a)(10)(A)(i), both before and after the ACA’s 2010 amendments. Far from establishing a new program, the ACA simply amended a single provision of the statute.

(7) Sebelius, 132 S. Ct. at 2606.

(8) 42 U.S.C. §§ 18022 (c) and (d) (2014).

(9) 42 U.S.C. § 18071 (c)(1)(B)(i) (2010).

(10) Centers for Medicare and Medicaid Services, 2011 Medicaid Managed Care Enrollment Report: Summary Statistics as of July 1, 2011 1, available at

(11) For an overview of Medicaid managed care, see Medicaid and CHIP Payment and Access Commission, Report To Congress: The Evolution of Managed Care in Medicaid (June 2011).

(13) Congress specified ten classes of essential health benefits as a bare minimum for insurers’ product. 42 U.S.C. § 18022(b). Implementing federal regulations, 45 C.F.R. § 156 et seq., provide very little amplification.

(14) Julie Appleby & Jay Hancock, Thousands of Mississippi Consumers May Not Be Offered Insurance Subsidies, Kaiser Health News (June 29, 2013), (reporting on the refusal of private insurers to sell in thirty-six of Mississippi’s eighty-two counties).

(15) Federal regulations defining essential health benefits do not stop insurers from discriminating against persons with disabilities. Sara Rosenbaum & Joel Teitelbaum, A Lost Opportunity for Persons with Disabilities? The Final Essential Health Benefits Rule, Health Aff. (Mar. 11, 2013),

(16) The ACA establishes only limited network and access requirements, and the administration has implemented even these requirements with a light hand. Compare 42 U.S.C. § 18031(c)(1)(C) (requiring health plans sold in exchanges to contract with “those essential community providers, where available”) with implementing federal regulations that narrow the obligation. See 45 C.F.R. § 156.120; cciio & cms, 2015 Letter to Issuers in the Federally-Facilitated Marketplace (2014), available at

(17) Department of Health and Human Services, 2013 Actuarial Report on the Financial Outlook for Medicaid i-iv; Table 3 at 24 (2013).

(18) The ACA’s low-income adult expansion remains on the books as a mandate, 42 U.S.C. § 1396a(a)(10)(A)(i)(VIII), but enforcement is prohibited under Sebelius.

(19) 42 U.S.C. §§ 1396a(a)(8) and 1396a(a)(34) (2014).

(20) 42 U.S.C. §§ 1396a(a)(10) and 1396(d) (2014).

(21) 42 U.S.C. §§ 1396a(a)(14) and 1396o(a)(3) (2014).

(22) 42 U.S.C. § 1396a(a)(13) (creating a broad provision for determination of payment rates for services). But see 42 U.S.C. §§ 1396a(a)(13)(A)(iv) and 1396r-4 (varying rates for disproportionate share hospital payments); 42 U.S.C. § 1396b(2)(A)(i) (updating payment policies to rural health clinics and federally qualified health centers).

(23) Sara Rosenbaum & Benjamin D. Sommers, Using Medicaid to Buy Private Health Insurance—The Great New Experiment?, 369 New Eng. J. Med. 7, 9 (2013).

(24) 42 U.S.C. § 1315a (2010).

(25) This extensive litigation is reported in CCH Medicare/Medicaid Guide.

(26) 42 U.S.C. § 1396b (2014); Centers for Medicare and Medicaid Services, CMS Financial Report Fiscal Year 2012 6 (2012). Family planning services and supplies are reimbursed at a 90% rate.

(27) 42 U.S.C. § 1396b (2013).

(28) 42 U.S.C. § 1396d(y) (2013), added by PPACA § 2001(a). Special rules apply to states that, prior to enactment of the ACA, already had extended coverage to some or most low income adults through the Social Security Act’s §1115 demonstration process. 42 U.S.C. § 1396d(z) (2013), added by PPACA § 2001(a).

(29) The personal responsibility requirement extends to the poor, but they are exempt from the tax penalty. 26 U.S.C. § 5000A(e)(1) (2010).

(30) See, e.g., Vikki Wachino et al., Kaiser Family Foundation, How Is the ACA Impacting Medicaid Enrollment? (2014), available at (last visited Aug. 16, 2014).

(31) See Stan Dorn et al., Medicaid Expansion Under the ACA: How States Analyze the Fiscal and Economic Trade-Offs, Urban Institute (2013), available at

(32) See 42 U.S.C. § 1396(f)(2) (2014) (authorizing sums “necessary to carry out the provisions of this section.”)

(33) 42 U.S.C. § 1397dd (2013) (providing for annual capped authorization of funding for CHIP). See generally Children’s Health Insurance Program Financing,,

(34) Laura Snyder et al., Kaiser Family Foundation, Why Does Medicaid Spending Vary Across States: A Chart Book of Factors Driving State Spending (2012), available at

(35) See Sara Rosenbaum, U.S. Health Policy in the Aftermath of Hurricane Katrina, 295 jama 437, 437–440 (2006).

(36) 42 U.S.C. § 1396a(a)(10(A)(i)(IV), (VI), and (VII) (2013) (mandatory coverage); 42 U.S.C. § 1396a(a)(10)(A)(ii) (2013) (optional coverage groups). See Ian T. Hill, The Role of Medicaid and Other Governmental Programs in Providing Medical Care for Children and Pregnant Women, 2 U.S. Health Care for Children 115 (1992).

(37) AFDC was replaced in 1996 by the Temporary Assistance to Needy Families (TANF) block grant. Pub. L. 104-193 (104th Cong., 2d sess.). Medicaid eligibility remains mandatory for TANF recipients as well as for individuals satisfying states’ July 1996 AFDC eligibility standards. 42 U.S.C. § 1396a(a)(10)(A)(i)(I) (2013) and 42 U.S.C. § 1396u-1 (2013). See Kaiser Family Foundation, State Health Facts on Medicaid and CHIP, (last visited Aug. 16, 2014).

(38) For a description of Medicaid demonstrations involving coverage of low-income adults, see Kaiser Family Foundation, An Overview of Recent Section 1115 Medicaid Demonstration Waiver Activity (2012), available at

(39) 42 U.S.C. § 1396a(a)(10)(A)(i)(VIII) (2013). The actual eligibility standard is 138% of the federal poverty level under amendments enacted in the Health Care and Education Reconciliation Act, Pub. L. 111-152 (111th Cong., 2d sess.), § 1004(e), simultaneous with ACA passage. The amendment added a five-percentage-point income disregard to the 133% standard for both children and adults.

(40) 42 U.S.C. § 1396a(a)(74) (2014) and 42 U.S.C. § 1396gg (2013). For adults, the Medicaid maintenance of effort requirement lasts until the “Secretary determines that an exchange established by the state … is fully operational …” For children, the maintenance of effort period lasts through FY 2018. States may reduce adult coverage earlier under certain conditions. See Kaiser Family Foundation, Understanding the Medicaid and CHIP Maintenance of Eligibility Requirements (2012), available at

(41) The Coverage Gap: Uninsured Poor Adults in States that Do Not Expand Medicaid—An Update Kaiser Family Foundation (October 23, 2015)

(42) See 26 U.S.C. § 36B(c) (2013), defining the term “applicable taxpayer” for purposes of subsidy eligibility as taxpayers with household incomes between 100% and 400% of the federal poverty level.

(43) In states that expand Medicaid, premium subsidies begin at 138% of the federal poverty level. 26 U.S.C. § 36B(b)(3)(A) (2011). Recently arrived legal immigrants, ineligible for Medicaid for five years, can qualify for premium subsidies even if their incomes are below the threshold. 26 U.S.C. § 36B(c)(1)(B) (2011).

(44) The Coverage Gap: Uninsured Poor Adults in States That Do Not Expand Medicaid – An Update, supra note 41. (noting that the median eligibility level is 46% of poverty for states that have rejected the Medicaid expansion).

(45) See Medicaid Expansion & What It Means For You,, (last visited Aug. 15, 2014).

(46) The Impact of the Coverage Gap in States Not Expanding Medicaid by Race and Ethnicity, Kaiser Family Foundation (Dec. 17, 2013),

(47) Brief of Jonathan H. Adler and Michael F. Cannon as Amici Curiae Supporting Appellants, Jacqueline Halbig, et al. v. Sebelius, et al., (2014) (No. 13-623), available at

(48) Stan Dorn et al., What Is the Result of the States Not Expanding Medicaid?, Urban Institute (Aug. 2014),

(49) See, supra note 45.

(50) For a discussion of Medicaid’s role for more than 9 million with disabilities, see Medicaid and CHIP Payment and Access Commission, Report to the Congress on Medicaid and CHIP (2012), available at

(51) See 42 U.S.C. § 1396d(a) (2013) (defining the term “medical assistance”); see also 42 U.S.C. § 1396a(a)(14) (2014) and 42 U.S.C. § 1396o (2010) (cost-sharing requirements).

(52) For example, in 2012, 9.4 million elderly and disabled Medicare beneficiaries also received Medicaid. This figure includes both “full duals” who receive complete Medicaid coverage as well as those with slightly higher incomes who receive Medicaid coverage for Medicare premiums and cost-sharing. See generally Katherine Young et al., Kaiser Family Foundation, Medicaid’s Role for Dual Eligible Beneficiaries (2013), available at

(53) Kaiser Commission on Medicaid and the Uninsured, The Medicaid Medically Needy Program: Spending and Enrollment Update (2012), available at

(54) For a history of early Medicaid, see Robert Stevens & Rosemary Stevens, Welfare Medicine in America: A Case Study of Medicaid (2004).

(55) Ife Floyd & Liz Schott, TANF Benefits Continued to Lose Value in 2013, Center on Budget and Policy Priorities (Oct. 21, 2013),

(56) Katie Beckett died at the age of thirty-four in 2012. Dennis Hevesi, Katie Beckett, 34; Inspired Shift on Care, N.Y. Times Mag., May 23, 2012.

(57) Eligibility groups and service and benefit options are described in Report to the Congress on Medicaid and CHIP, supra note 50, at 17–27.

(59) Individual Shared Responsibility Provision—Minimum Essential Coverage, Internal Revenue Service (Apr. 2, 2014), available at

(60) See Institute of Medicine, America’s Health Care Safety Net: Intact but Endangered (Marion Ein Lewin & Stuart Altman eds., 2000).

(61) See generally The Health Care Safety Net in a Post-Reform World (Mark A. Hall & Sara Rosenbaum eds., 2012) (discussing safety net issues post-ACA).

(62) For a discussion of coverage instability and breaks in coverage, see Pamela Farley Short et al., Realizing Health Reform’s Potential: Maintaining Coverage, Affordability, and Shared Responsibility When Income and Employment Change, Commonwealth Fund (May 19, 2011),

(63) See Peter Shin et al., A Profile of Community Health Center Patients: Implications for Policy, Kaiser Family Foundation (Dec. 23, 2013),

(64) 42 U.S.C. § 18022(b) (2014).

(65) Prior to 1990, states’ federal funding for disproportionate share hospitals payments was open-ended; Congress capped payments in the wake of aggressive state efforts to maximize revenues for public hospitals. See Alison Mitchell, Cong. Research Serv., Medicaid Disproportionate Share Hospital Payments (2013), available at

(66) 42 U.S.C. § 18022(g) (2013).

(67) See Medicaid Program; State Disproportionate Share Hospital Allotment Reductions, 78 Fed. Reg. 57, 293–57, 313 (Sept. 18, 2013) (laying out the methodology for final DSH payment reductions covering FY 2014 through FY 2020).

(68) See, e.g., Medicare Access and CHIP Reauthorization Act § 412 Pub. L. 114-110 (2015), 114th Congress, extending the delay in the DSH reduction to 2025 and removing reductions for 2014–2016.

(69) See, e.g., Medicaid and HIV/AIDS, Kaiser Family Foundation (Mar. 5, 2013), (over 230,000 Medicaid beneficiaries who are HIV-positive); Brooke Lehmann et al., Center for Children and Families, Child Welfare and the Affordable Care Act: Key Provisions for Foster Care Children and Youth (2012) (describing Medicaid’s role in the child welfare system); U.S. Gen. Accounting office, Medicaid and Special Education: Coordination of Services for Children with Disabilities is Evolving (1999), available at

(70) The ACA expanded mandatory eligibility for children ages 6–18 from 100% to 133% of poverty. 42 U.S.C. § 1396a(l) (2013). This amendment was left untouched by the Court in Sebelius, which concerned itself only with adults, presumably because children were not part of the “new” program. NFIB v. Sebelius, 132 S. Ct. 2566, 2582 (2012).

(71) Anne Rossier Markus et al., Medicaid Covered Births, 2008 Through 2010, in the Context of the Implementation of Health Reform, 23 Women’s Health Issues 273, 279 (2013).

(72) Five Key Facts About the Delivery and Financing of Long Term Services and Supports, Kaiser Family Foundation (Sept. 13, 2013),

(73) Peter Cunningham et al., The Struggle to Provide Community-Based Care to Low-Income People with Serious Mental Illness, 25 Health Aff. 694, 694 (2006).

(74) Medicaid and CHIP Payment and Access Commission, supra note 50, Table 1-1 at 13.

(75) Peter Shin et al., Health Center Patient Trends, Enrollment Activities, and Service Capacity: Recent Experience in Medicaid Expansion and Non-Expansion States Kaiser Family Foundation, December 2, 2015. [forthcoming, August 2014].

(76) Cong. of the U.S. Congressional Budget Office, The 2013 Long-Term Budget Outlook (2013) .

(77) Kaiser Family Foundation, Medicaid and Its Role in State/Federal Budgets & Health Reform (2013).

(78) Medicaid and CHIP Payment and Access Commission, MACStats: Medicaid and CHIP Program Statistics (2013).

(79) The 2013 Long-Term Budget Outlook, supra note 76, at 37–40.

(80) Id.

(81) Id.

(82) John Holahan & Stacey McMorrow, Medicare and Medicaid Spending Trends and the Deficit Debate, 367 New Eng. J. Med. 393, 393–394 (2012).

(83) See Medicaid and CHIP Payment and Access Commission, Report to the Congress: The Evolution of Managed Care in Medicaid (2011), available at$File/MACPAC_June2011.pdf.

(84) State Demonstration Proposals to Integrate Care and Align Financing and/or Administration for Dual Eligible Beneficiaries, Kaiser Family Foundation (Mar. 2014),

(85) Medicaid and CHIP Payment and Access Commission, Report to the Congress: June 2012 73–78 (2012).

(86) Nina Bernstein, Pitfalls Seen in a State’s Turn to Privately Run Long-Term Care, N.Y. Times Mag., Mar. 7, 2014.

(87) Karen Davis & Cathy Schoen, Health and the War on Poverty: A Ten-Year Appraisal 107–110 (1978).

(88) Genevieve M. Kenney & Christine Coyer, National Findings on Access to Health Care and Service Use for Children Enrolled in Medicaid or CHIP, Urban Institute (Aug. 2, 2012),; Tom M. Selden & Julie L. Hudson, Access to Care and Utilization Among Children: Estimating the Effects of Public and Private Coverage, 44 Medical Care 434, 440–442 (2006); U.S. Dept. of Health and Human Services, Health, United States, 2012 17–21 (2013).

(89) See, e.g., Benjamin D. Sommers, Katherine Baicker, & Arnold M. Epstein, Mortality and Access to Care Among Adults After State Medicaid Expansions, 367 New Eng. J. Med. 1025, 1025 (2012); Benjamin D. Sommers, Sharon K. Long, & Katherine Baicker, Changes in Mortality After Massachusetts Health Reform: A Quasi-experimental Study, 160 Annals Internal Med. 585, 590 (2014).

(90) Emmanuel A. Anum et al., Medicaid and Preterm Birth and Low Birth Weight: The Last Two Decades, 19 J. Women’s Health 443, 450 (2010).

(91) Katherine Baicker et al., The Oregon ExperimentEffects of Medicaid on Clinical Outcomes, 368 New Eng. J. Med. 1713, 1719 (2013) .

(93) For a discussion of the complexities of health outcomes research focusing on insurance reforms, see Institute of Medicine, Insuring America’s Health (2004).

(94) Katherine Baicker & Amy Finkelstein, The Effects of Medicaid Coverage—Learning from the Oregon Experiment, 365 New Eng. J. Med. 683, 684 (2011); Amy Finkelstein et al., The Oregon Health Insurance Experiment: Evidence from the First Year, NBER Working Paper No. 17190 (2011), available at

(95) Sommers, Baicker, & Epstein, supra note 89, at 1025.

(96) Avik Roy, The Medicaid Mess: How Obamacare Makes it Worse Manhattan Institute for Policy Research (2012), (last visited Apr. 1, 2014).

(97) Austin Frakt et al., Our Flawed But Beneficial Medicaid Program, 364 New Eng. J. Med. e31(1), 1–2 (2011).

(98) See the dissent’s discussion of Medicaid’s size in NFIB v. Sebelius, 132 S. Ct. 2566, 2657–2660 (2012).

(99) A Medicaid Block Grant Program: Implications for People with Disabilities, National Council on Disability 27 App. A, (last visited May 26, 2014).

(100) See Jeanne M. Lambrew, Making Medicaid a Block Grant Program: An Analysis of the Implications of Past Proposals, 83 Milbank Q. 41, 46 (2005); David G. Smith & Judith D. Moore, Medicaid Politics and Policy: 1965–2007, at 227 chap. 6 (2008).

(101) See Amanda Cassidy, Health Policy Brief: Per Capita Caps in Medicaid, Health Aff. (Apr. 18, 2013),; Edwin Park & Matthew Broaddus, Center on Budget and Policy Priorities Medicaid Per Capita Caps Would Shift Costs to States and Place Low-Income Beneficiaries at Risk (2012), available at

(102) See Lambrew, supra note 100, at 45.

(103) Public Welfare Amendments of 1962, Pub. L. No. 87-543, 76 Stat. 172 (1962). See Bruce C. Vladeck, Medicaid 1115 Demonstrations: Progress through Partnership, 14 Health Aff. 217, 217 (1995).

(104) 42 U.S.C. § 1315(a) (2010).

(105) Robin Rudowitz et al., The ACA and Recent Section 1115 Medicaid Demonstration Waivers, Kaiser Family Foundation (Feb. 5, 2014),

(106) Id.

(107) An estimated 20% of all newly eligible adults are expected to be medically frail. Andy Allison, Arkansas Medicaid Director, Princeton Annual Conference, Council on Economics and Health Policy (May 13–14, 2014). Conference proceedings available at The remainder, according to Dr. Allison, can be expected to be healthy, thereby enhancing the stability of the Marketplace.

(108) Rosenbaum & Sommers, supra note 23.

(109) See, e.g., Beno v. Shalala, 30 F.3d 1057, 1072-73 (9th Cir. 1993); Newton-Nations v. Betlach, 660 F.3d 370, 380 (9th Cir. 2011).

(110) John Holahan et al., Insuring the Poor Through Section 1115 Medicaid Waivers, 14 Health Aff. 199, 200 (1995).

(111) Massachusetts’ health reform law was built on that state’s § 1115 Medicaid demonstration program. See Jonathan Oberlander, Health Reform Interrupted: The Unraveling of the Oregon Health Plan, 26 Health Aff. w96, w96 (2007).

(112) Payments to Primary Care Physicians, Pub. L. No. 111-152, § 1202 (2010).

(113) See Advisory Board Company, At Least 15 states will continue bump in Medicaid pay for primary care: 23 states have indicated they will not extend the pay hike, See, also, Medicaid and CHIP Payment and Access Commission, supra note 11, at 41–66 chap. C and D, which attempts to articulate more refined access standards and methods for measuring access sufficiency. Proposed rules that would have established a limited forecasting requirement for state programs were never finalized. Medicaid Program; Methods for Assuring Access to Covered Medicaid Services, 76 Fed. Reg. 26342–26364 (May 6, 2011).

(114) See, e.g., Redesigning the Medicaid Program: DSRIP Program, N.Y. State Dept. of Health, available at (last visited May 29, 2014); Delivery System Reform Incentive Payment Program, State of N.J. Dept. of Health, (last visited May 29, 2014); Delivery Systems Reform Incentive Payments, Cal. Dept. of Health Care, available at (last visited May 29, 2014). See generally Lower Costs, Better Care: Reforming Our Health Care Delivery System, Centers for Medicare and Medicaid Services (Feb. 28, 2013), available at

(115) Benjamin D. Sommers & Sara Rosenbaum, Issues in Health Reform: How Changes in Eligibility May Move Millions Back and Forth Between Medicaid and Insurance Exchanges, 30 Health Aff. 228, 233 (2011).

(116) Benjamin D. Sommers et al., Medicaid and Marketplace Eligibility Changes Will Occur Often in All States; Policy Options Can Ease Impact, 33 Health Aff. 700, 705 (2013) .

(117) Id.

(118) The ACA envisioned a single point of application and enrollment for any form of subsidy, but to appease states, the administration permitted retention of a separate Medicaid enrollment system. The result has been enormous application backlogs and litigation over state Medicaid enrollment failures. See Sebelius: Feds May Cut Medicaid Pay So States Clear Enrollment Backlog, Inside Health Policy (Apr. 14, 2014); Rebecca Adams, The Hidden Failure of Obama’s Health Care Overhaul, Roll Call (June 3, 2014, 6:00 AM), (a 2.9 million enrollee backlog); Preliminary Injunction Order, Wilson v. Gordon, No. 3-14-1492 (M.D. Tenn., Sept. 2 2014).

(119) Cindy Mann, Dept. of Health & Human Services, Letter Re Facilitating Medicaid and CHIP Enrollment and Renewal in 2014 (2013), As of June 2014, only New York State had adopted this coverage stabilization option.

(120) 42 U.S.C. § 18051 (2010).

(121) Mathew Buettgens et al., Urban Institute, Churning Under the ACA and State Policy Options for Mitigation (June 2012), available at

(122) 42 U.S.C. § 1396a(a)(30)(A) (2014). See Sara Rosenbaum et al., Law and the American Health Care System 424–426 (2d ed. 2012) & 71–73, (Supp. 2014).

(123) See, e.g., Sanchez v. Johnson, 416 F.3d 1051, 1068 (9th Cir. 2005).

(124) 42 U.S.C. § 1396a(a)(30)(A) (2014).

(125) Medicaid and CHIP Payment and Access Commission, supra note 85, at 2.

(126) See Alexander v. Sandoval, 532 U.S. 275 (2001).

(127) See Maine v. Thiboutot, 448 U.S. 1, 1 (1980); Wilder v. Virginia Hospital Ass’n, 496 U.S. 498 (1990).

(128) See Gonzaga Univ. v. Doe, 536 U.S. 273, 290–291 (2002).

(129) Armstrong v Exceptional Child Center, Inc. 135 S. Ct. 1378 (2015).

(130) Ex parte Young, 209 U.S. 123, 166–168 (1908).

(131) WOS v. E.M.A., 133 S. Ct. 1391 (2013).