At the moment, the rules for determining who qualifies for Medicaid are set by states. Each state runs its own Medicaid program and, as long as it hews to certain federal guidelines, each state gets to set its own rules for determining eligibility.
But the health reform law changes that. First, it expands eligibility so that everyone earning less than 133 percent of the poverty line, or about $14,000 per year, must qualify. Second, the law tells states to determine how much an individual makes using the MAGI formula. And, as written in the Affordable Care Act, the MAGI formula says states cannot count any income from Social Security in determining who earns less than the 133-percent threshold.
And that turned out to be problematic: the MAGI formula could allow an early retiree earning a hefty Social Security income to qualify for Medicaid. The Associated Press broke the news in June that 3 million early retirees, earning as much as $64,000, could enroll in a program that is meant to serve low-income Americans.
All of that has created a weird, almost magical concordance here in Washington: just about everybody is okay with reforming the MAGI formula to include Social Security earnings.
The House is likely to vote tomorrow on a bill that would take Social Security payments out of MAGI as to finance a tweak to a minor tax provision (more details on that tax provision, and the vote schedule, from my colleague Rosalind Helderman). The bill has 207 Republican and 62 Democratic sponsors. The White House endorsed the proposal in its deficit reduction proposal last month, estimating that it would save the federal government approximately $13 billion.
States are generally supportive, too, since it will mean slightly fewer Medicaid patients on rolls that have ballooned during the recession. “It was interesting and could actually be potentially good thing from the state perspective,” Matt Salo, director of the National Association of Medicaid Director, told me when we discussed the issue last month.
The proposal has seen some pushback from liberal Democrats, who don’t like the idea of pulling money away from Medicaid and the health reform law. “I don’t think it’s as bipartisan as the Republicans would like to couch it, by any stretch of the imagination,” House Democratic Caucus Chairman John B. Larson (Conn.) told my colleague Rosalind.
But among the advocacy community, it’s actually not generating much, if any, outrage. “In the scheme of things, this is a minor change, a technical fix to align the law with what Congress intended,” says Kathleen Stoll, deputy executive director of Families USA, which advocates for Medicaid patients. “This is not even a tiny baby step towards undermining the health reform law.”
Stoll does have some misgivings about the change: it will mean some who are young and disabled, for example, will not gain Medicaid eligibility because of their Social Security income. But she also notes that, under the health reform law, those individuals would have access to hefty tax subsidies in purchasing a private insurance plan.
On the balance, MAGI may be a rare moment of bipartisan agreement in what’s generally an incredibly polarized health care debate.