Like a stagehand suddenly caught in the spotlight, Medicaid unexpectedly took center stage in the health care reform debate this summer when the Supreme Court disallowed a forced expansion of the program under President Barack Obama's health insurance overhaul.

The star of that historic court showdown was expected to be the Affordable Care Act's "individual mandate" portion that requires most Americans to acquire insurance or pay a penalty beginning in 2014, not the 47-year-old federal-state health care safety net for the poor that already insures 60 million people.

But the justices upheld the individual mandate along with the bulk of the law, then surprised almost everyone by ruling that the Medicaid expansion, designed to help provide health coverage to more than 30 million low-income Americans, should be optional for each state.

"People assumed that the individual mandate was much more at risk than the Medicaid expansion," says John McDonough, director of Harvard University's Center for Public Health Leadership and an architect of the Massachusetts health reform, which inspired the federal law. "Nobody foresaw them making the Medicaid expansion voluntary as an option."

Republican Govs. Rick Scott of Florida and Rick Perry of Texas, whose states are among those with the largest populations of uninsured low-income residents, immediately vowed not to expand their Medicaid programs. Other governors blindsided by the court's decision unleashed their insurance commissioners to explore the choices for states under a ruling that generated more questions than answers.

"There are at least 300 questions that have legitimately been raised in the wake of the decision, and there is nothing in the actual language that can help you understand it one way or another," says McDonough.

What is certain is that there's a strong incentive in the law for states to extend Medicaid to everyone with incomes of up to 133 percent of the federal poverty level (approximately $15,000 for an individual or $30,000 for a family of four) and cover eligible childless adults for the first time.

States that do so will have their expansion completely funded by the federal government for three years, with the federal share later declining to 90 percent. But wait, there's more: The feds' offer of three "free" years only applies to the years 2014 through 2016, further prompting states to act now.

Regardless of how a state proceeds on Medicaid expansion, individuals and families earning between 133 percent and 400 percent of the poverty level will be eligible for insurance premium subsidies beginning in 2014 under the federal health care law.

McDonough says the Medicaid expansion was designed to standardize Medicaid eligibility levels, thereby eliminating the current state-by-state patchwork, cutting the cost of uncompensated care at hospitals and emergency rooms and leaving less room for lawmakers to manipulate Medicaid programs for their own purposes.

Read the rest here:

Will the Medicaid safety net be stretched?