Currently the Medicaid component of PPACA calls for the federal government to pay 100% of the Medicaid expansion for the first three years. The proposed federal match levels are 100% in 2014, 2015, and 2016; 95% in 2017; 94% in 2018; 93% in 2019; and 90% in 2020 and thereafter. Then the funding begins to drop to 90%, forcing states to pick up the tab for the difference for a program having more members than ever before. No one knows for sure how many people will qualify for enrollment, so quantifying the ultimate cost to each state is challenging.
Once federal funding levels decline, states must figure out how to pay for all those newly enrolled individuals, which could be costly. But if states wait to participate in the expansion, they could also miss out on the three years of full federal funding—also a significant amount of money. To help get states off the fence on participation, only last week the feds announced that states could expand their Medicaid programs to 138% of the federal poverty level for some period of time, and then drop out.
Whether this approach will work is unclear. However, with an estimated 30 states, including Texas and Florida, already declining to participate in Medicaid expansion, and other states reportedly awaiting clarifications before making a decision, the federal government had to do something to garner greater interest and participation.