States Wary of Medicaid Expansion

Five governors opposed expanding program under healthcare reform and 26 have yet to decide.

Governors in five states say they oppose expanding their Medicaid programs under President Barack Obama’s health-care overhaul, and another 26 haven’t decided, an option created by a U.S. Supreme Court ruling that may prevent millions of low-income Americans from obtaining insurance.

Governors of Florida, Louisiana, Iowa, South Carolina and Mississippi object, saying they’re concerned rising health-care costs may force tax increases or cuts to services, even as the federal government is promising to cover all the added Medicaid costs in the first three years and 90 percent after that. The federal reimbursement is about 59 percent now, on average.

Most of the governors resisting the Medicaid expansion are Republicans who objected to the health-care law as unconstitutional or too costly. If all 31 states don’t go along, as many as 11.4 million Americans who would otherwise be eligible for expanded Medicaid may be left without the coverage that Obama and Congress intended to offer, according to the Urban Institute, a Washington-based research group.

Without Medicaid, states are unlikely to have the resources to fill the gap, said Genevieve Kenney, a researcher at the institute.

“I don’t see a way for these folks to get coverage,” Kenney said.

A U.S. Supreme Court ruling on June 28 upheld the heart of Obama’s health-care law, requiring most people to obtain insurance or pay a fine, an idea originally embraced by Republicans. The justices also ruled that the federal government can’t threaten to withhold existing Medicaid money from states that don’t fully comply, as the law said, allowing states to opt out.

Obama’s health-care law, called the Patient Protection and Affordable Care Act, was designed to open the state-run program to an estimated 17 million low-income Americans by admitting people earning as much as 133 percent of the federal poverty level, or about $30,657 for a family of four this year.

The five Republican governors said they are opposed to the expansion in public statements or in interviews with their spokesmen.

Governors in at least 26 states -- 23 Republicans and three Democrats -- said they’re reviewing the decision or are waiting for the outcome of the November presidential election because Mitt Romney, the presumptive Republican nominee, has called for repealing the health law.

 

Democratic Governors

The three Democrats are Jay Nixon in Missouri, John Hickenlooper in Colorado and Earl Ray Tomblin in West Virginia. Republican governors include Rick Perry of Texas and Scott Walker of Wisconsin.

Indiana Governor Mitch Daniels, who leaves office in January, said the next governor and Legislature will need to decide how to proceed.

Florida Governor Rick Scott said July 1 that implementation of the Medicaid expansion alone would cost the state about $1.9 billion. Scott said in a statement that “the burden increasingly shifts to Florida taxpayers.”

From 2014 to 2019, Florida would have to pay $1.23 billion in state money and would receive $20.1 billion in federal funds, according to the Kaiser Family Foundation, a health-research group in Menlo Park, California.

Bobby Jindal of Louisiana said he isn’t implementing the health-care law and wants Romney to defeat Obama and help undo the measure. Mississippi Governor Phil Bryant doesn’t plan to expand Medicaid even if Obama wins, said Mick Bullock, a spokesman, in an e-mail.

While Republican Governor Terry Branstad of Iowa hasn’t made an announcement, it’s “highly unlikely” the state will expand Medicaid because the governor doesn’t trust the federal government to keep its promises, said Tim Albrecht, a spokesman.

Iowa will be able to provide coverage to “a significant number” of 150,000 uninsured residents with state health-care initiatives, Albrecht said.

Republican Governor Dave Heineman of Nebraska also said in a June 28 statement that he would oppose efforts to raise taxes or cut education funding to pay for a Medicaid expansion.

Governor Chris Christie, a New Jersey Republican, said previous Democratic governors expanded Medicaid about as far as the state can afford.

“We’re taking a hard look at it,” Christie said July 3 on Fox Business Network. “I doubt that we could expand Medicaid in New Jersey a whole lot more.”

 

Rejecting Expansion

Governors will have difficulty rejecting Medicaid expansion as they face pressure from constituents, said I. Glenn Cohen, a professor at Harvard Law School in Cambridge, Massachusetts, who specializes in health issues.

“It’s a very hard thing for a governor, as a matter of principle, to turn down funding and basically keep a number of his constituents who are poor basically without health care,” Cohen said in a telephone interview.

Even if a governor supports the expansion, legislatures could still decline to authorize the funding, said Ray Scheppach, the former executive director of the National Governors Association who is now a professor of public policy at the University of Virginia in Charlottesville.

“The state fiscal situation continues to be pretty bad, and this is going to make it worse,” Scheppach said.

States’ decisions will affect providers.

Hospitals, especially those that treat many poor people, have warned that failing to expand Medicaid could put them in financial jeopardy. Managed-care companies that focus on Medicaid, including Virginia Beach, Virginia-based Amerigroup Corp. and Saint Louis, Missouri-based Centene Corp., won’t see as many customers as they had expected if governors opt out of the expansion.

The Medicaid expansion would cost states $21 billion through 2019, according to Kaiser. The federal government would contribute $444 billion, the group said in the report.

States whose Medicaid programs now have the lowest eligibility standards stand to gain the most.

Texas, for example, where working-age adults with children are ineligible for Medicaid if they make more than a quarter of the poverty level -- and childless adults aren’t eligible at all -- would be turning down $52.5 billion from 2014 to 2019, or 20 times the amount it would spend on the expansion itself, according to Kaiser.

Perry, the Texas governor, on June 28 called the Supreme Court decision “a stomach punch to the American economy,” and said he would consult with state officials.

 

U.S. Contribution

Congress may reduce the federal government’s contribution, said Dean Clancy, legislative counsel and vice president for health policy at FreedomWorks, a Washington nonprofit that supports Tea Party groups.

“It’s a trap,” Clancy said. “It’s free money today that won’t be free tomorrow.”

States should instead lobby Congress to convert their Medicaid funding into a “block grant,” which would give greater flexibility, he said. Governors would have more freedom to run the program, and could stop covering some services or use the money to subsidize private health insurance for the poor, Clancy said.

Georgia Governor Nathan Deal said it may be in Georgians’ best interests to participate in the expansion despite his personal opposition. The Republican has said he’s concerned that Georgians, as federal taxpayers, will be paying for expansions in other states even if the state opts out.

“That’s certainly a question we would have to ask, if that’s prudent,” he said at a June 28 news conference at the state Capitol.


 

Bloomberg News

 

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