Federal health care reform may offer another option for GAMC

Recently, the Governor signed the bill that preserves General Assistance Medical Care (GAMC) for very low-income adults without children in Minnesota. Although the GAMC agreement meets the most important need of offering health care for this very vulnerable population, no one is quite satisfied with the solution. (For more information on the history of the GAMC compromise and the impact of federal health care reform, check out the updated GAMC issue brief we just released.)

The passage of the federal health care reform legislation, however, offers a new possibility for providing health care for this population. The federal bill expands Medicaid (known as Medical Assistance in Minnesota) to cover all individuals under age 65 with incomes up to 133 percent of the federal poverty guidelines (FPG) starting January 1, 2014. The federal government would pick up 100 percent of the cost for the first three years.

The bill, however, also includes a provision that allows several states – including Minnesota – to expand coverage to childless adults up to 133 of FPG starting April 1, 2010.

There are some positive aspects to taking advantage of this “early expansion option,” particularly when we compare it to the recently approved GAMC compromise:

• The federal parameters cover the entire GAMC population, which is childless adults with income up to 75 percent of FPG ($677 a month for a single adult). In fact, the state could opt to cover adults without children with income up to 133 of FPG ($1,200 a month for a single adult).
• The benefit set under Medical Assistance (MA) would be clearly defined and would likely be better than benefits under the GAMC compromise.
• Health care providers would get higher reimbursements than they get under the GAMC compromise.
• The federal government would pay for 50 percent of the costs of the expanded MA program from FY 2010 to FY 2013, with the federal share increasing starting in FY 2014.

However, there are some important issues that are giving policymakers pause:

• The details about the federal health care bill are still emerging, so administrators are trying to assess how quickly the state could design and implement an MA program for this population that would meet federal requirements.
• Although the federal government would pay for half the costs if we choose the early expansion option, the federal government would pay 100 percent of the costs for three years to cover this population if we wait until 2014. If Minnesota chooses early expansion, the federal share would gradually increase starting in 2014 until the state would eventually receive the same matching rate as all other states in 2019.
• Even though the federal government would cover half the costs to expand MA, taking advantage of the early expansion option would still cost the state more than the GAMC compromise in the next biennium. That’s because the GAMC compromise is significantly underfunded in the FY 2012-13 biennium, drastically reduces payments to providers and leaves the patient benefit set uncertain. Adopting the early expansion option would require the state to meet federal standards for provider payments and patient benefits.

For now, the Governor and legislature have agreed to proceed with implementing the GAMC compromise. However, there are likely to be many more discussions as to if and how the state could take advantage of this federal option for covering Minnesota’s childless adults.

-Christina Wessel & Scott Russell