National Health Care Reform is a Win for DC

While many of the changes coming from national health care legislation will not be implemented for several years, the District is taking advantage of an opportunity to opt-in early to one key part.  The early opt-in will improve health care for thousands of DC residents while also helping the District save tens of millions of dollars in the near future. 

Under the new law, states are required to expand coverage in their Medicaid program by 2014 to residents with incomes below133 percent of the federal poverty line and to extend coverage to childless adults. (Medicaid provides health insurance to low-income residents and is jointly paid by the federal and state governments.)  Under current law, states and DC set their own Medicaid  income eligibility rules, and eligibility is limited to certain populations — mainly families with children, people with disabilities, and elderly residents.

The District is opting in early to this Medicaid expansion because the city already is serving thousands of residents under a locally funded program — the Health Care Alliance.  Moving Alliance participants into Medicaid would allow the city to get federal Medicaid funds to help pay for the care of these residents.

The District has been very aggressive in providing health care insurance for low-income residents who do not qualify for Medicaid, through the Health Care Alliance program.  Last week, officials announced that the District has the second lowest uninsured rate in the nation — 6.2 percent — and the lowest uninsured rate for kids — 3.2 percent.     

With many Alliance participants eligible for Medicaid under health care reform, DC will save tens of millions of dollars because the federal government pays 70 percent of DC’s Medicaid expenses.  The Alliance program, by contrast, is entirely paid for with local dollars.  It is estimated that about 35,000 to 40,000 DC residents will move from the Alliance program to Medicaid in FY 2011. 

This switch also will improve health services for DC residents, because Medicaid benefits generally are broader than benefits provided under the Alliance program.  In particular, the Alliance has poor access to mental health services, while Medicaid provides much better access.

DC’s net savings from health care reform are small in FY 2011, but that is largely because DC will still be sharing a portion of the costs of covering these individuals under Medicaid with the federal government, and may not be able to move residents into Medicaid until the middle of the year.  Therefore, more savings should be seen in FY 2012.  And by 2014, the federal government will be paying for 100 percent of the cost of covering these individuals in Medicaid. 

Health care reform will mean big changes in health care going forward.  For low-income DC residents and the District’s budget, the changes should result in better benefits and bigger savings.