Reform Alert - News from the Blues' Office of National Health Reform

How health care reform will change Medicaid

Updated: June 16, 2014 - Medicaid and CHIP enrollment data

Jan. 4, 2011

The Patient Protection and Affordable Care Act will vastly expand Medicaid, the federal health and long-term care program for low-income Americans that is already the nation’s largest health care program.

Michigan’s Medicaid program has approximately 1.43 million* enrollees and a budget of nearly $10 billion for the 2011 fiscal year. The state will add an estimated 450,000 new Medicaid enrollees by 2015.**

Effective April 1, 2010, the law allows state Medicaid programs to cover childless adults with incomes up to 133 percent of the Federal Poverty Level (FPL) at the state’s regular federal match rate. Some states, including Michigan, have received federal waivers to provide basic coverage for very low-income childless adults. In Michigan, individuals qualify if they are up to 45 percent of the FPL, or have an annual income of about $5,000.

Effective Jan. 1, 2014, the law expands Medicaid eligibility to individuals that:

  • Are under age 65 
  • Are not eligible for Medicare 
  • Are not pregnant 
  • Have incomes up to 133 percent of the FPL. Based on 2010 data, 133 percent of FPL equates to $14,404 for an individual or $29,326 for a family of four. 

Currently, individuals must meet certain criteria, income standards and asset tests to be eligible for Medicaid. The federal government sets mandatory and optional eligibility categories, but states design their own programs, causing a wide variation in eligibility among state Medicaid programs.

The health care reform law will standardize the eligibility and income standards among state Medicaid programs. Eligibility will be determined without an asset test for most individuals.

The Congressional Budget Office projects that the law will increase collective enrollment in Medicaid and the Children’s Health Insurance Program by about 16 million people by 2019. For the first three years of the Medicaid expansion, the federal government will cover the costs of the newly eligible Medicaid population. In 2017, federal funding will decrease to 95 percent and drop to 90 percent in 2020.

Effective Jan. 1, 2014, state Medicaid programs must offer insurance premium assistance for Medicaid-eligible residents who are offered employer-sponsored health care coverage. Employers of low-income workers could be encouraged to offer group health insurance coverage if workers receive premium assistance from Medicaid.

Medicaid benefits

States must maintain current eligibility levels until the new health insurance exchanges are functional in January 2014.

The law adds a few new mandatory and optional benefits to Medicaid. Like eligibility standards, the federal government sets certain mandatory benefits that states must cover if they establish a Medicaid program.

Likewise, the government lists optional benefits that states may cover. The law adds family planning services to the list of optional benefits and also adds two mandatory benefits: coverage for free-standing birth centers and tobacco cessation for pregnant women. The Michigan Medicaid program currently provides family planning services, smoking cessation programs and coverage for services provided by midwives at a licensed birthing hospital.

Temporary primary care reimbursement increase

Medicaid reimbursement rates for primary care providers will increase to address concerns that the expansion of Medicaid eligibility will lead to access issues.

The federal government will finance the reimbursement rates, which will match Medicare rates for 2013 and 2014. It is unclear if states will fund the reimbursement increase when the federal funding ends in 2015.


* Source: 2009 U.S. Census data for Michigan Medicaid enrollees

** Source: 2010 Centers for Healthcare Research and Transformation Issue Brief; Impact of Health Reform on Coverage in Michigan

The information on this website is based on BCBSM's review of the national health care reform legislation and is not intended to impart legal advice. Interpretations of the reform legislation vary, and efforts will be made to present and update accurate information. This overview is intended as an educational tool only and does not replace a more rigorous review of the law's applicability to individual circumstances and attendant legal counsel and should not be relied upon as legal or compliance advice. Analysis is ongoing and additional guidance is also anticipated from the Department of Health and Human Services. Additionally, some reform regulations may differ for particular members enrolled in certain programs such as the Federal Employee Program, and those members are encouraged to consult with their benefit administrators for specific details.