July | August 2017

Medicaid Expansion: Take It or Leave It

By Debra Miller
When it comes to expanding Medicaid, states can take it or leave it.
That was part of the Supreme Court ruling on President Barack Obama’s signature initiative, the Patient Protection and Affordable Care Act. The decision prohibited the federal government from withdrawing all federal Medicaid funding if a state does not expand eligibility as set out under the law.
“The bottom line (for states) is pretty simple,” said Lisa Soronen, executive director of the State and Local Legal Center. “If you want to participate in Medicaid, it is all yours, but you have to follow the rules. If you don’t want it, you can walk away from it. Do what you were doing before. You don’t have to do anything more, you don’t have to do anything less.”
Soronen spoke to a Council of State Governments’ Medicaid Policy Academy the day after the historic Supreme Court decision on health care reform.
Soronen said the Medicaid ruling was probably the best of both worlds for states, leaving the decision to expand Medicaid eligibility to 133 percent of poverty up to individual states.
Tennessee Rep. Joe Armstrong called the decision tremendous for his state.
“It has put the decision of expansion in the lap of the governor and the legislature. They can’t blame the press, can’t hide behind a federal mandate,” he said. “If Tennessee does not expand Medicaid, it’s because of Tennesseans.”
Armstrong said Gov. Bill Haslam and the majority leadership of both legislative chambers came out against the Affordable Care Act during the 2012 legislative session. While the governor opposed expanded eligibility, he left $200 million on the budget table, unappropriated, just in case the law was upheld. Armstrong said this amount would be Tennessee’s share of expanded Medicaid.
Connecticut Rep. Betsy Ritter welcomed the decision that allows her state to move forward toward full implementation of the law “with the certainty that we have a strong federal partner.”
Connecticut already has taken advantage of Medicaid eligibility expansion. Ritter estimated that the state’s uninsured population—which now stands at 380,000 individuals—will drop by about 170,000 once the law is fully implemented in 2014. She said only about 3 percent of the state’s population will remain uninsured.

To Expand or Not

Although expanding Medicaid would help achieve the goal of having more people covered, some state officials are balking at growing the joint state-federal program.
“Every governor’s got two critical decisions to make,” Louisiana Gov. Bobby Jindal said in an interview on NBC. “One is do we set up these exchanges. And, secondly, do we expand Medicaid. And, no, in Louisiana, we’re not doing either one of those things.”
Jindal was referring to the health insurance exchanges states are required to have in place by Jan. 1, 2014.
He’s not alone in opposition to expanding Medicaid. Govs. Rick Scott of Florida, Phil Bryant of Mississippi, Nikki Haley of South Carolina and Scott Walker of Wisconsin all have said they won’t expand the program. Governors in Iowa, Missouri, Nebraska, Nevada, New Jersey and Texas also have indicated they are leaning against expansion, but are studying the issue.
On the flipside, Arkansas, Oregon and Rhode Island are leaning toward expansion, while California, Connecticut, Delaware, Hawaii, Illinois, Maryland, Massachusetts, Minnesota, Vermont and Washington have plans to expand the program, despite the additional costs for states down the road. The federal government will pay 100 percent of costs for the expansion through 2020, then down to 90 percent thereafter.
“California will comply with the Medicaid expansion in the law, even though it will increase the state’s costs in future years,” California Gov. Jerry Brown said in a statement.

Health Insurance Exchanges

States also are required to set up health insurance exchanges, or markets for individuals and businesses to buy health insurance.
Some states are moving ahead on setting up those exchanges, while others have rejected federal grants to establish them.
Oregon Sen. Richard Devlin, co-chair of the Joint Ways and Means Committee, told CSG his state is in a somewhat unique situation and had planned to go ahead with an exchange regardless of how the Supreme Court ruled.
“The federal government invested a small fortune in our exchange and we should be up and running on time,” Devlin said. He said other states might want to look to Oregon’s health insurance exchange plans and duplicate them.
The exchanges also will offer federal subsidies to make health insurance more affordable to individuals and families between 100 and 400 percent of poverty. But that won’t help some people, according to Soronen and Stacey Mazer from the National Association of State Budget Officers, who also spoke at the CSG meeting. Individuals between today’s eligibility and 100 percent of poverty will be ineligible for both Medicaid and federal subsidies for health care insurance unless states expand Medicaid, Soronen and Mazer said.
That could be as many as 11.5 million Americans, according to a July 5 Urban Institute report. Approximately 1.4 million of those people in this newly created donut hole live in California, 1 million live in Florida and 1.3 million live in Texas, according to the report. Georgia, Illinois, Michigan, North Carolina and Ohio each have 400,000 to 500,000 residents in this income category.

Beyond Health Care

While states will be dealing with immediate effects, the Supreme Court ruling could impact other state-federal partnerships down the road.
Soronen called the Court’s finding of unconstitutional federal coercion of states a “huge legal development.” Since the 1930s, lower courts have taken up the coercion doctrine, but this was the first time the Supreme Court had limited federal strong-arming of states.
Rep. Bob Godfrey, majority leader of the Connecticut House and former chair of CSG, said the implications of the court ruling go beyond health care. Now, he said, “there are limits on the coercive power of the federal government vis-a-vis the states. In the long run, this will help with unfunded mandates handed down to the states.”

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