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It actually works out to be an enormous savings to New York, to the tune of $2.3 billion per year.

New York expanding Medicaid, and expects to save billions

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The U.S. Supreme Court upheld the constitutionality of most of the Affordable Care Act just last month, including the individual mandate. But New York has been working to implement the law for more than a year. The state has already gotten $88 million from the federal government to be one of the first to create a health insurance exchange. Yesterday, we spoke with Danielle Holahan, the project director for New York's health insurance exchange planning.

Danielle Holahan described a website similar to Travelocity, where people will be able to shop for health insurance plans. She expects the cost of a policy to be lower than it is today, in part because of the individual mandate. She said, "The mandate, as research shows, has the effect of bringing healthier lives into the insurance market, and that, on average, brings premiums down. So we saw that premiums would come down for that reason. And then, as sort of a second help, we have the federal tax credits, that would offset the premiums and make it affordable for people. Certainly more than zero if they don't have coverage today, but it should be affordable and they'll be getting what we think is a pretty valuable benefit for it."

Another big piece of the Affordable Care Act is the expansion of Medicaid, the government health care system for people with low incomes. Medicaid is administered at the state level. The Affordable Care Act would have required states to expand it, so more people would qualify for coverage. But the Supreme Court ruled that states don't have to expand Medicaid. Some states, such as Florida, are saying they won't. But Holahan tells Julie Grant that New York is also ahead of the game on Medicaid, and it's going to be lucrative.

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Julie Grant
Reporter and Producer

Danielle Holahan says that New York doesn’t have much work to do to meet the Medicaid expansion requirements outlined in the Affordable Care Act. She said, “We largely meet the federal required Medicaid levels already. Our Medicaid eligibility levels are actually even greater for parents through our Family Help Plus program, which is a Medicaid expansion.”

One population that will see a modest expansion in Medicaid in order for the state to comply with the Affordable Care Act is childless adults. According to Holahan, they are currently covered up to 100% of the poverty level. The federal poverty line for a single adult is currently about $11,000 a year, and an individual making that amount of money is considered at 100% of poverty.

Under reform, Medicaid will expand to 133% of poverty. This means that a person could make about $15,000 a year and still qualify for the government insurance. Holahan said, “Let’s see, we cover about 800,000 childless adults in New York today, and New York pays 50% of the cost and the federal government pays the other 50%. But in 2014, when federal reform goes into place, we will receive an enhanced match for this childless adult population.”

According to Holahan, the percent the federal government will be kicking in is so much higher that New York will actually save money while adding more people onto Medicaid. Through the federal law, New York and seven other states were deemed expansion states. Holahan explained, “So we’re getting credit for the fact that we expanded early, and even though today we spend state dollars on covering childless adults, we’ll be getting 90% federal match. It actually works out to be an enormous savings for New York to the tune of $2.3 billion per year and $28 billion over 10 years. So the Medicaid expansion for New York is a very good thing and we will be proceeding with it.”

This could be good news to both state and county governments, according to Holahan. Currently, counties in New York pay a share of Medicaid costs and the savings should trickle down to that local level.

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