Connecticut is first to launch Medicaid expansion under health reform law

By Mike Lillis - 06/22/10 08:30 AM ET

Connecticut on Monday became the first state to win approval for its plan to expand Medicaid to tens of thousands of low-income adults — a provision central to the Democrats' new healthcare reform law, the Health and Human Services Department announced Monday.

Enacted in March, the Affordable Care Act requires states to expand Medicaid by 2014 to include all legal residents earning less than 133 percent of the federal poverty level (FPL), or $14,400 for an individual. But the law also grants states the option to enroll those low-income folks earlier. Previous law required a waiver for such an expansion.

Under Connecticut's newly approved plan, adults earning up to 56 percent of the FPL will become Medicaid eligible this year — folks typically targeted by a state-funded program called State-Administered General Assistance. Connecticut officials estimate that 45,000 adults will become eligible for Medicaid coverage under their plan. Because the federal government will pick up much of the cost of the expansion, the state estimates savings of $53 million by next July.

"We hope other states will follow Connecticut’s example and not wait four years to provide health benefits to those who desperately need them," Marilyn Tavenner, acting administrator of the Centers for Medicare and Medicaid Services, said in a statement.

While the Democrats' health reform bill relies heavily on Medicaid to expand coverage, that doesn't necessarily guarantee care for the new enrollees. The reason is simple: Medicaid rates are so low that many doctors simply won't see Medicaid patients.

Indeed, despite a 15 percent increase between 2003 and 2008, Medicaid rates are just 72 percent of what Medicare pays for the same services, researchers at the Urban Institute found last year.

As a result, only about 40 percent of physicians accept all new Medicaid patients, versus 58 percent for Medicare patients, according to a September study from the Center for Studying Health System Change, which randomly surveyed more than 4,700 physicians.

Among family doctors and general practitioners, that number drops to only 31 percent. About 28 percent of all physicians don’t accept any new Medicaid patients at all, the group found.

Recognizing that problem, the health reform law hikes Medicaid rates to Medicare levels for primary care services. But the provision is temporary: The rate hikes are only in effect for 2013 and 2014.

This post was updated on June 30 at 4:51 p.m.