States Balk At Expanding Medicaid
By Phil Galewitz
KHN Staff Writer
Jul 02, 2012 - Kaiser Health News
Hours after the Supreme Court upheld President Barack Obamafs health law on
Thursday, but made its Medicaid expansion optional, senior White House officials
were asked by a reporter how they would entice states to participate.
They laughed. It seemed almost inconceivable to them that states would opt
out. After all, the federal government will be paying the entire bill for
three years for the expanded health insurance program for the poor, from 2014 to
2017, and then picking up at least 90 percent of the costs after that.
But a growing number of Republican lawmakers and state Medicaid officials,
including those in Florida, Texas and at least seven other Republican-leaning
states, have said they may indeed walk away from the nearly $1 trillion federal
pot –putting at risk the administrationfs plans to cover up to 17 million
people, or more than half the total expected to gain coverage under the law.
While politics is a factor, states have legitimate budget concerns, said Matt
Salo, executive director of the National Association of Medicaid Directors. Many
state officials are already struggling to pay for the entitlement program, which
typically is the largest or second largest state expense. Their future share may
sound small, but it represents billions in new spending that could require
cutbacks of other more popular programs, such as education or transportation, or
else raising taxes. gDownstream there is exposure for uncontrollable costs,h he
said.
The Congressional Budget Office projected that states would pay approximately
$73 billion, or 7 percent of the cost of the Medicaid expansion between 2014 and
2022, while the federal government pays $931 billion, or 93 percent.
Salo and others also dispute the notion the program is gfreeh in the early
years, saying that startup costs and the likelihood that millions of people
currently eligible for Medicaid, but not enrolled, will come forward as a result
of publicity about the expansion, is sure to drive up statesf expenses.
For those people, states will receive their traditional federal funding
match, averaging 57 percent. Officials are also worried that a future,
deficit-focused Congress will scale back the federal share, leaving states on
the hook for a much greater share of the entitlement program.
States may try to negotiate smaller expansions that leave them less exposed
in the future, but itfs unclear whether the White House would go along.
Texas Would Pay $27 Billion Over Decade
Take Texas, which has the nationfs highest rate of uninsured –with more than
one in four of its residents under 65 without insurance. Under the law,
the state would be in line for $164 billion in federal dollars over a decade to
cover an additional 2 million people through Medicaid, according to state
estimates. But state officials, who this year underfunded Medicaid by billions
to balance their budget, estimate their own share at $27 billion over that time.
gAt this moment, Texas would be very hesitant to expand the Medicaid rolls,h
said state Rep. Lois Kolkhorst, R-Brenham, chair of the House Public Health
Committee, told the Houston Chronicle.
Charles Begley, professor of management, policy and community health at the
University of Texas, predicts Lone Star officials will try to negotiate a
smaller expansion, perhaps up to 90 percent of the poverty level, rather than
the 133 percent called for in the law.
gThe GOP in Texas will say we canft fund the current Medicaid program, and
they wonft want to spend more money on the program than it has to,h he said.
But hospitals, doctors and insurers are likely to bring strong pressure on
them to accept at least some of the expansion, he said. Providers want the
expansion to help pay for their treatment of the uninsured. Insurers want it
because states are increasingly shifting Medicaid enrollees into private managed
care plans which they operate.
The White House will likely try to leverage that pressure. Chief of Staff
Jack Lew said Sunday on This Week With George Stephanopolous that he expects
gthe vast majority of statesh to expand Medicaid. gFor those few that are
slow to come in, they're going to have to answer to people why they're turning
this down and why they're letting people go without coverage.h
State officials retort that the notion that expansion is free for states
until 2017 is ga big lie,h in Salofs words. While the federal government will
pay many of the administrative costs, states will share in the expense of some
information technology and personnel. And the requirement that most individuals
carry insurance is expected to spur at least some of an estimated 13 million
people who currently qualify for Medicaid, but are not enrolled to sign up, Salo
said. States will receive their traditional federal funding match for those
people.
gAs it stands now, therefs no way we can afford to do it,h said Tony Keck,
South Carolinafs Medicaid director.
Beyond that, Keck said therefs little incentive gto pour more money into a
broken system,h which he argued does little to hold down costs or improve the
health of the poor.
Keck estimated the expansion of Medicaid would add 500,000 people to the
rolls in South Carolina at a cost to the state of as much as $2.4 billion over
10 years.
He acknowledged that cost predictions are uncertain, however, since it is
unclear how many might enroll, especially since some lower-income people will be
exempt from the mandate to carry insurance.
States Also Face Costs If They Opt Out
The lawfs supporters argue that states will pay a cost for not expanding
Medicaid. They will likely have to pay more to hospitals and other providers to
compensate them for caring for patients without coverage, said Jocelyn Guyer,
co-executive director of the Center for Children and Families at Georgetown
University.
Another factor Guyer believes will drive participation is the reduction of
Medicaid funding to hospitals that care for the uninsured starting in 2014. The
assumption was they would not need the help because fewer people would be
uninsured, she said.
That will also spur providers that care for the uninsured to lobby state
lawmakers to expand Medicaid, she said
Don Berwick, who until December was the administrator of the federal Centers
for Medicare and Medicaid services, argued that states would be
shortsighted not to participate.
gIt does not make sense morally or economically to leave a person out of the
health system,h he said. gThat can lead to human suffering and increase costs
for states.h
Some state officials worry it is shortsighted to go along with the plan at a
time of looming federal deficits when a future Congress could decide to scale
back federal funding, leaving states to pay a bigger share.
State Sen. Richard Rosen, co-chairman of the Maine Senate appropriations
committee, notes that federal lawmakers channeled additional money for the
program in the 2009 stimulus package only to take it away in 2011.
gLiving with those gyrations makes me cautious about any expansion,h he
said.
Rosen said hefd be more inclined to expand Medicaid if the Obama
administration granted states more flexibility, so they had more power to
determine benefits and how they pay providers.
gThat would go a long way to addressing out concerns to take on a greater
population,h he said.
© 2012 Henry J. Kaiser Family Foundation. All rights
reserved.