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In Praise of the Affordable Care Act – Medicaid

There have been widely reported, continuous attacks on the Affordable Care Act (ACA), but relatively little review of its important progress. This series will summarize some of that progress here in California. This report reviews California’s progress on the Medicaid expansion, improvements and simplification authorized by the ACA. Most of these improvements are paid with 100% federal financial participation for at least three years, beginning in 2014 and thereafter phasing down to a 90/10 match over the next three years.

As background, it is important to understand that Medicaid covers children, parents, seniors and the disabled; it does not cover other indigent adults (known as medically indigent adults or MIAs in California). Each state sets its own eligibility requirements[1] and makes decisions about which of the many Medicaid optional eligibility categories it wishes to cover.

Federal §1115 waivers have allowed states to secure federal matching funds to cover indigent adults if they will make other changes in their program such as expanding managed care to save federal funds equal to the cost of the expansion. California has secured such a waiver effective 11/1/10. Due to the waiver, California is ahead of the curve in changing its delivery systems for those to be insured through Medi-Cal; however the administration has not proposed and the legislature has not adopted the legislation needed to effectuate Medicaid improvements.


  • The ACA covers low-income adults and children under 133% of FPL through Medicaid with 100% federal financial participation. California has not yet passed legislation to implement this expansion.[2]
  • The ACA simplifies Medicaid eligibility by eliminating the asset test and most income disregards for most program eligibles.[3] California has not yet implemented this simplification. The pending legislation is SB 677 (Hernandez).
  • The ACA simplifies Medicaid application process by switching to on line applications with computer cross check verifications.[4] California has not implemented this simplification, which should produce significant administrative savings at the state, federal and local levels.
  • The ACA increases reimbursement for primary care to Medicare levels with 100% federal matching, effective January 1, 2013. California has not implemented this increase.[5]
  • The ACA simplifies Medicaid by allowing states to consolidate programs and eligibility categories.[6] California has not implemented this simplification.
  • The 1115 waiver permits California to use managed care for the dual eligible Medi-Medis. California is implementing managed care for the dual eligibles in four pilot counties – Los Angeles, Orange, San Mateo and San Diego.
  • The 1115 waiver allows California to enroll seniors and persons with disabilities in managed care, which California has done.[7]
  • The ACA allows states to cover low-income adults as an optional eligibility category with the applicable federal match (in California, that is a 50/50 match). California has sought and secured an 1115 waiver to cover low-income adults through county systems, using existing county funding as the match and upgrading the delivery system so that it assures preventive, primary and integrated care.[8]

[1] For example, California’s income levels are 100% of the federal poverty level for the parents and older children, 200% for pregnant women and infants, and 133% of FPL for young children. By comparison, Massachusetts covers up to 300% of FPL and Texas to 25% of FPL.

[2] California would need to increase income limits to 133% of FPL for adults and children. This would shift some children (100-133% of FPL) from Healthy Families to Medi-Cal, increase the income limits for parents to 133% of FPL, and add the MIAs onto Medi-Cal. The Governor has proposed and the legislature appears prepared to approve the shift of the entire Healthy Families program into Medi-Cal.

[3] The asset tests governing real estate, and personal property, such as bank accounts, stocks or cars are retained for people seeking Medicaid coverage for long-term care, seniors and the disabled. Virtually all income disregards are consolidated into a 5% flat rate.

[4] Individuals may apply in a variety of ways from on line to mail, to in person. Age, income and citizenship or legal immigration status is verified by computer cross checks. This replaces the traditional in person application process through the eligibility worker and the reams of paper verifications that currently must be secured. See Summary of Federal Medicaid Eligibility Rule Changes (ITUP April, 12, 2012) at http://itup.org/legislation-policy/2012/04/12/summary-of-federal-medicaid-eligibility-rule-changes/

[5] This is a particularly important and warranted improvement in Medi-Cal reimbursements. Physician reimbursement in Medi-Cal was 56% of Medicare payments in 2009. See California Health Care Almanac: Medi-Cal Facts and Figures (September 2009) at www.chcf.org

[6] See Wulsin, Transformation of Medi-Cal (ITUP, March 2012) at http://itup.org/public-coverage/2012/03/16/medi-cal-transformation-2/

[7] See Wulsin, Cohen and Driscoll, California’s §1115 waiver implementation (ITUP January 2012) at http://itup.org/legislation-policy/2012/01/23/californias-%C2%A71115-waiver-implementation/

[8] Ibid. Over 364,000 are currently enrolled.

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