The mandatory expansion of Medicaid was an important element of the Affordable Care Act as providing health care benefits to uninsured was intended to achieve equity.  The expansion of Medicaid rolls was also intended to reduce the cost of providing care for the uninsured and the need for disproportionate share hospital funding, which is an adjustment to account for the needs of hospitals serving a large number of low-income patients.  With the ability to opt out of the Affordable Care Act’s expansion of Medicaid eligibility (read more: The Federal Medicaid Apple:  Poison or the Cure?), the opt-out states may create financial problems for hospitals that depend on disproportionate share payments to cover part of their costs for providing non-reimbursed services to the indigent and uninsured.  The Affordable Care Act’s decrease in disproportionate share payments to hospitals is not changed by the Supreme Court’s ruling.

As the uncertainty about healthcare reform was extinguished by the Supreme Court in its 5-4 decision upholding the Affordable Care Act, with the provision that the Department of Health and Human Services may not withhold Medicaid funding from states that refuse to adopt the Medicaid expansion, all states, including Kentucky, now have important decisions to make about expansion of Medicaid to a projected 22.3 million uninsured eligible individuals.  Under the Affordable Care Act, the federal government will pay the full cost of covering the newly eligible Medicaid participants for three years from 2014 to 2016.  Thereafter the federal share will gradually decline until it reaches 90% in 2020.  For traditional Medicaid, the federal government now pays, on average, about 57% of a state’s total Medicaid costs.  With 826,941 Kentucky Medicaid beneficiaries in January 2012, and an additional 290,000 individuals that would be covered under the expansion, Governor Steve Beshear has announced that he is studying the issues and the costs.