The Medicaid Mess: Where Do States Stand on ObamaCare Expansion?

The Medicaid Mess: Where Do States Stand on ObamaCare Expansion?

State leaders are wrestling with whether to take part in the Affordable Care Act's newly voluntary Medicaid expansion. Several policy and political concerns are driving their decisions.

Surprise! The road to reform is just beginning.

“Everyone thought the [Supreme Court] ruling on PPACA was the climax,” Reason‘s Peter Suderman marveled this week. Turns out it was just “the inciting incident!”

It’s been two weeks since the court upheld the Affordable Care Act and wonks continue to pick through the fallout. And what was first seen as a clear victory for the White House is starting to look a bit more shaded.

In the long term, Chief Justice John Roberts’ narrow interpretation of the Commerce Clause may present challenges for Congress’ ability to implement national policy and craft future health care reforms. As the New Yorker‘s Jeffrey Toobin notes, “This new rule may limit the ability of Congress to expand the size of the government, and … may invite challenges to some government programs that are currently on the books,” such as federal consumer safety laws.

But in the short run, the court’s decision to allow states to opt in or out of the Affordable Care Act’s Medicaid expansion without any effect on current funding has dominated the headlines. That ruling leaves each state’s decision to participate in the hands of the nation’s governors and state leaders –and as of press time on Wednesday, five governors already have announced they plan to opt out. (A map prepared by American Health Line, a sister publication of California Healthline, charts where each state stands.)

What’s striking isn’t that five governors are opposed to the ACA’s Medicaid expansion. All are Republican and many, like Texas Gov. Rick Perry, staked out their opposition to ObamaCare many months ago.

Instead, it’s fairly surprising that more than half the states suggest that they’re undecided.

Governors have had more than two years to model out the impact of the ACA; essentially everyone has issued their support for or offered critiques of the law. Sure, the game has changed — but the numbers are essentially the same, on the surface. So what’s leading to the hesitation? A combination of new policy and political concerns, according to analysts.

Financial concerns. Most media coverage has portrayed the ACA’s Medicaid expansion as essentially free funds for participating states to grow their health care services.

Under the provision, as originally written in the law, the federal government will offer a nearly 100% matching rate for states to cover Americans whose annual incomes fall between 100% and 138% of the federal poverty level, beginning in 2014. When the ACA was first drawn up, the Congressional Budget Office projected that the provision would allow Medicaid to cover about 17 million currently uninsured Americans.

But Ben Domenech argues at ReformMedicaid.org that the deal isn’t as sweet as it might first appear. Although the federal funds are “indeed generous for the newly eligible [emphasis added] population, it is less so for the rest,” he contends. Domenech says that states must rely on the standard federal Medicaid matching rate, which ranges between about 50% and 75%, to simply bring their coverage levels up to par with the national baseline.

That means states like Texas that have income eligibility limits below 100% of FPL will have to spend considerable amounts even before being able to tap the new federal funds. Domenech cites a House Energy & Commerce Committee report that includes estimates “that Texas alone will be forced to spend $27 billion — more than the program’s entire annual budget today.”

Political concerns. Some analysts also suggest that governors may simply be waiting until November’s elections to make their decisions — or rather, have their decision be made for them, if Republicans retake the Senate and the White House and overturn the entire law.

Republican governors who know they plan to opt out of the expansion might have another savvy reason to delay their announcements: Health care is typically a mobilizing issue for get-out-the-vote campaigns, and GOP politicos don’t want to give their Democratic opponents another issue to run on.

What’s Next

The state of the states on the Medicaid expansion isn’t the only issue raised by the court’s ruling. Questions continue to swirl over whether the decision invalidated another part of the ACA, which prevents states from tightening eligibility programs. As Matthew Herper points out in Forbes, some state officials believe that gives them the ability to actually shrink their Medicaid programs below current levels; the White House on Tuesday explicitly warned against that scenario.

Still, the main event remains whether the states will opt in to the ACA’s expansion, and how soon it will happen. As the Washington Post‘s Sarah Kliff writes, some states dawdled for years before deciding to join the original Medicaid program. The Golden State wasn’t one of them and has again made a firm commitment to expand Medicaid, regardless of the Supreme Court’s ruling.

“Road to Reform” will continue to track whether other states will join California this time around, too.

Here’s what else is happening around the nation.

In the States

Administration Actions

Effects of the Supreme Court Ruling

Public Opinion About the Ruling

On the Campaign Trail

On the Hill

Covering the Uninsured

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