Transforming Medicaid.

• Author: Hansen, Melissa
• Position: HEALTH REFORM: SPECIAL REPORT

The nation's Medicaid program, which covers about 50 million people, faces a significant overhaul under the Affordable Care Act. The $400-billion-a-year, joint state-federal program will be expanded in 2014 to cover all Americans under age 65 with family incomes at or below 133 percent of federal poverty guidelines--$14,856 for an individual and $30,657 for a family of four in 2012.

Currently, the program covers low-income children, pregnant women, the elderly, people with disabilities, and adults with dependent children, but largely excludes childless adults. They will make up a large percentage of the newly eligible population--estimated to total about 16 million--in 2014. Additionally, a change in how eligibility will be calculated, called "modified adjusted gross income," will effectively raise the eligibility level to 138 percent of the poverty level for most applicants. Another provision, the maintenance-of-effort requirement, forces each state to maintain the same Medicaid eligibility level that was in place on March 23, 2010.

These changes, however, will add strain to Medicaid budgets that, for the last several years, have been feeling the compound effect of decreases in state revenues and increases in enrollments--13.6 percent hike in enrollment between 2007 and 2009, and 7.2 percent between 2009 and 2010. These increased enrollments, coupled with the ACA-required expansions in 2014, will swell the cost of Medicaid, making it more important than ever for states to improve the program's effectiveness and efficiency.

In 2011, 47 states implemented at least one new policy to control Medicaid costs--such as...