Medicaid is nearly 50 years old.  Is it a relic of a different era that should be repealed and replaced, or does its importance endure?

Ann Yurcek’s moving “Narrative Matters” essay in the September issue of Health Affairs demonstrates Medicaid’s vital role in health care. Re-imagined a quarter century later, her story underscores just how much this vital role endures. Indeed, Becca Yurcek’s very life is emblematic of the degree to which Medicaid goes where other payers fear to tread.

Ann’s Story

The events Ann Yurcek relates began nearly 25 years ago in 1989.

For readers familiar with Medicaid’s role in American life — especially its role in that incredible space in which health and disability policy intersect — Becca’s story is hardly uncommon. It started with young parents of a healthy and growing family, who were struggling to make ends meet even as a new baby was on the way. The father had begun a new job, but as a result of the peculiarities (a polite term under the circumstances) of the pre-reform insurance system, he was forced to pay for COBRA coverage at his old job even as he paid premiums at the new job — the new employer-sponsored health plan refused to cover Ann.

When COBRA coverage was then abruptly (and illegally) cancelled midway through Ann’s pregnancy, she turned to Medicaid. By 1989, because of bipartisan reforms enacted earlier in the decade under President Ronald Reagan, Minnesota’s Medicaid program for pregnant women was sufficiently generous to come to her aid. But, because Becca Yurcek was born catastrophically ill, Medicaid’s role did not end there.

During the critical first year of Becca’s life, the Yurceks endured the extraordinary practical and emotional burdens experienced by families of children with life-threatening conditions. For reasons that are inexplicable and lost to the mists of time, the family apparently was told that Becca could not qualify for Medicaid because infant coverage was less generous than coverage in pregnancy. (Medicaid’s automatic newborn coverage rule should have protected Becca for the first months of her life, and spend-down coverage should have been available after that.)

The Yurceks battled to hold onto Medicaid for Becca. Mr. Yurcek literally impoverished the family, scaling back his work hours in order to maintain her coverage. When Becca was able finally to return home, she was discharged with seriously inadequate support.

Following months of struggles by the Yurceks to maintain their medically frail baby with frequent emergencies, the hospital helped the family apply for a “Katie Beckett” waiver for the baby. Named after a little Iowa girl who grew into a vibrant young woman, and who devoted her far-too-short life to advocacy on behalf of persons with disabilities, the Katie Beckett waiver program was the conceptual brainchild of President Reagan who, appalled that a child like Katie could qualify for Medicaid only when institutionalized, ordered HHS Secretary Richard Schweiker to fix the problem (which HHS did via a §1115 demonstration program, which ultimately became part of the Medicaid statute itself).

Today, Ann Yurcek tells us, Becca is 23, an “amazing young woman.” Living with a serious life-long disability, Becca defied the odds against her survival with the help of the abiding love and support of her remarkable family and medical care financed by Medicaid. Because of her disability, Becca presumably will continue to qualify for full Medicaid coverage.

In the context of the Affordable Care Act, Becca’s story raises two obvious questions. First, what, if anything, about the story might change under the act?  And second, what role would Medicaid play? Fully answering these questions requires deeper knowledge of the specific facts of her case and more space than provided a blog allows. But we can at least sketch the broad outlines of a post-reform landscape.

Reimagining Ann’s Story

Imagine that Becca had been born, not in 1989, but in 2014. How might things be different?

The ACA bars insurers and employee benefit plans from refusing to cover pre-existing conditions such as pregnancy. Thus, were Ann eligible for her husband’s plan, her pregnancy would be covered. But nothing in the Act compels employers to offer spousal coverage in the first place. Therefore, Ann might continue to depend on public insurance.

In that case, Ann presumably would complete a single, streamlined application to Minnesota’s Health Insurance Marketplace and would be eligible either for Medicaid’s continuing program for pregnant women or for coverage through a qualified health plan sold in the marketplace. The application process would be far simpler and more efficient than what she encountered in 1989. Depending on her income, Ann might pay a modest premium, and if her family income were under 250 percent of the federal poverty level, she would get help with cost sharing.

As for Becca, let’s assume that Mr. Yurcek in fact had purchased family coverage for his children through his new employer. Becca would have been added to the plan from the moment of birth and without the application of any pre-existing condition exclusion. Furthermore, Becca’s coverage under the plan would not have been subject to annual or lifetime financial limits. And beginning in 2015 (owing to the one-year delay recently announced by the Obama Administration), the family would also have been protected against excessive out-of-pocket expenses in connection with her covered care.

However, certain challenges would remain.

Depending on family income, the Yurceks might continue to face steep out-of-pocket costs for their catastrophically ill baby, given the limits of cost-sharing assistance. And these would be costs associated with covered services. In cases such as these, private health insurance would continue to fall far short of what a baby like Becca would need, both during childhood and into adulthood. The costs of uncovered services could be considerable, because of the inevitable limitations and exclusions that remain a fact of life under private health insurance, even after the ACA’s considerable reforms.

These uncovered and excluded costs of care could take many forms: exclusion of round-the-clock home nursing to stabilize the baby and care for her during severe periods of illness; strict limits on the types of habilitative therapies that children like Becca often require; exclusion of respite care for the family; strict limits and exclusions on the types of medical equipment and basic medical supplies that could be covered; very limited prescription drug formularies; and other costs. Even post-reform, private insurance would continue to fall short for the Yurceks, covering standard health care needs but far, far off the mark for a child with intensive health care needs.

Minnesota is one state that has chosen to expand Medicaid for low income adults. Even if it hadn’t, Becca’s disability would qualify her for ongoing Medicaid coverage into adulthood. Because Medicaid acts as a secondary payer in the case of individuals who have employer-sponsored coverage, it would “wrap around” her father’s employer plan, paying for the treatments and therapies employer coverage does not offer.  (However, had the family obtained subsidized private insurance coverage through the Markeplace, Medicaid would be barred from playing this supplementary role because of the ACA’s anti-crowd-out provisions, which prevent families from receiving help through both subsidies and Medicaid).

Becca’s case drives home Medicaid’s enduring role in the health care system. Medicaid remains the irreplaceable foundation on which a reformed private insurance market rests, one that absorbs the highest health risks within the insurance market. During Becca’s childhood, the home and community care waiver, coupled with Medicaid’s extraordinary coverage for children through its Early and Periodic Screening Diagnosis and Treatment (EPSDT) benefit, would allow her to develop and thrive. In adulthood, Becca would receive help through Medicaid’s unequaled disability coverage, with the income level for the help she receives determined by the state.

A Final Policy Question Worth Pondering

A final question is worth exploring:  What help will people like Becca receive after the Medicaid “maintenance of effort” period expires? Under the ACA, states must maintain existing coverage levels for children (including more generous disability programs) through 2019. But for adults, this period expires once the Marketplace goes live. Will states continue to provide Medicaid to nonelderly adults with disabilities whose incomes surpass 138 percent of poverty? Or will states reduce their investments in low income adults with disabilities in order to make residents eligible for subsidized Marketplace coverage?

Becca Yurcek’s story underscores the urgency of this question. Despite the remarkable advances represented by the insurance reforms and marketplace coverage under health reform, children and adults like Becca will continue to need far more. The challenge that remains, therefore, is further modification of Medicaid to avert this Hobbesian choice; that is, a new option that permits states to either maintain Medicaid as a primary insurer for persons with disabilities as they do today, or alternatively, to use Medicaid to supplement Marketplace coverage for people with disabilities. In this way, people with disabilities can take full advantage of the new insurance market while continuing to offer essential health care protections for their most vulnerable residents.