The federal health law's controversial Medicaid expansion is expected to add billions to states' already overburdened Medicaid budgets. It also offers a rarely discussed cost-cutting opportunity for state corrections agencies. Starting in 2014, virtually all state prison inmates could be eligible for Medicaid coverage of hospital stays—at the expense of the federal government, reports Stateline.org. In most states, Medicaid is not an option for prison inmates. A federal rule allows coverage for Medicaid-eligible inmates who leave a prison and check into a private or community hospital. Technically, those who stay in the hospital for 24 hours or more are no longer considered prison inmates for the duration of their stay.
Under the 1965 law that created Medicaid, anyone entering a state prison lost Medicaid eligibility. The same went for people who entered local jails, juvenile lock-ups, and state mental institutions. The reasoning was that states and local governments had historically taken responsibility for inmate health care so the federal-state Medicaid plan was not needed. An exception to that general rule opened up in 1997 when the U.S. Department of Health and Human Services wrote to state Medicaid directors saying inmates who leave state or local facilities for treatment in local hospitals can get their bills paid by Medicaid, if they are otherwise eligible. In addition to the incarcerated, those on probation or parole or under house arrest were among those who could participate. As a bonus to state corrections agencies, most inmates would be considered new to Medicaid, making them eligible for 100 percent coverage by the federal government between 2014 and 2019.