State lawmakers gird for battle over Medicaid expansion

By N.C. Aizenman, December 3, 2012 - The Washington Post

As state legislatures prepare to meet in January, lawmakers across the country are girding for a battle over whether to sign on to the health-care law’s expansion of Medicaid.

“This is the number one issue,” said state Sen. Michael Lamoureux (R), incoming president of the Arkansas Senate. “And in 10 years this is by far the most difficult one we’ve ever dealt with.”

The national implications loom just as large. No provision is more central to achieving the health-care law’s aim of extending coverage to the uninsured than its expansion of Medicaid. Under the new rules, beginning in 2014 eligibility for the program would be opened to people with incomes up to 133 percent of the federal poverty level, or about $30,657 for a family of four.

The law calls for the federal government to foot the the entire bill for covering the newly eligible for the first three years. After that the federal match phases down slightly, reaching 90 percent by 2020.

Arkansas state Sen. Cecile Bledsoe (R) questions whether the federal government can be counted on to maintain such a high match rate in perpetuity. With all the budget pressures facing Congress members, said Bledsoe, how can she be sure they won’t shift more of the burden to states down the road?

Last August Obama officials sought to allay such concerns by clarifying that states are free to drop out of the Medicaid expansion at any time. But Bledsoe, a key leader in the Arkansas Senate on health issues, said that’s not a realistic option.

“We’re not going to put more than 250,000 people on our Medicaid rolls, then pull them off,” she said.

Bledsoe said she will not feel confident about the federal commitment at least until after Obama concludes negotiations with congressional Republicans over avoiding the “fiscal cliff.”

“At this point I don’t see anyone willing to take a chance on what the federal government might or might not do,” she said.

With barely a year before the expansion is scheduled to begin, only 14 states seem certain to join in. About 13 states seem likely to opt out because the GOP has a lock on both the governors’s office and the legislature and many of these Republicans are dubious of expansion. But even here the outcome is often in doubt. For instance, Florida’s Gov. Rick Scott (R) has been one of the most scathing critics of expanding Medicaid. But in an interview shortly after the election, Scott suggested he was open to trying to “get to yes” on the issue.

Meanwhile, in more than a third of states, governors and state lawmakers have been so vague about their intentions, or so at odds, that it is impossible to predict how the debate will play out.

In Colorado, where Democrats hold both the legislature and the governor’s mansion, the challenge is less ideological than practical. State revenue is not expected to rise fast enough to cover the extra cost of enlarging Medicaid in coming years. And the state constitution prohibits lawmakers from raising taxes without a voter referendum.

They could find that the only way to make up the difference is through unpopular cuts to spending on education — one reason Gov. John Hickenlooper (D) has so far been noncommittal.

“We’re in a fiscal straitjacket,” concedes Rep. Claire Levy (D), the House’s point person on budget matters.

The Supreme Court teed up these conflicts last June, when it ruled that states can’t be penalized for opting out of the Medicaid expansion.

This effectively threw the decision to each state’s general assembly: Because Medicaid is partly funded by states, one way or another lawmakers will be forced to address the issue when crafting their budgets for 2014.

Arkansas Gov. Mike Beebe (D) has pushed hard for his state to participate in the expansion. But he always faced a tough sell in his state, one of three where a super-majority is required to pass budget bills. And the hurdle has only gotten higher since last month’s elections, when Republicans won control of Arkansas’s General Assembly for the first time since Reconstruction.

Even if the federal match rate for Medicaid is left untouched during the current fiscal cliff talks, Lamoureux, the incoming Arkansas Senate president, said he worried his state will be unable to afford its share of the cost of expansion.

The nonpartisan Kaiser Family Foundation estimates the additional charge to Arkansas will be almost $1 billion from 2013 through 2022. And, although Arkansas’s Medicaid director, Andrew Allison, suggests the administrative costs of expansion will be modest, and it could actually save the state money on uncompensated care for the uninsured, Lamoureux wants more detailed numbers.

“We don’t even have an agreed upon set of facts that we can fight over yet,” he said.

Like many state lawmakers, Lamoureux also argues that his state’s governor could negotiate with Obama officials for permission to do only a partial expansion of Medicaid — getting the full federal match to insure people with incomes only up to 100 percent of poverty, for instance, with the remainder getting coverage through the law’s federal subsidies to buy private plans.

However, health-care experts question whether Obama officials have the legal authority to authorize partial expansions — let alone whether they would agree to them.

“There is almost no reason whatsoever for the administration to want to do this,” said Matt Salo, executive director of the National Association of Medicaid Directors.

“And I think the only thing that would change that calculus is if you have a significant number of states that are really dead serious that if you give them the choice between full expansion or nothing, they will choose nothing.”

That may explain why the administration has yet to declare whether partial expansion is, or is not, an option, Salo added.

Yet paradoxically, by keeping the idea on the table, Obama officials may only be prolonging the debate — particularly since there is no formal deadline by which states must opt in to the Medicaid expansion, and states would probably need only weeks rather than months to prepare.

“Right now you have the states and the federal government kind of circling each other warily,” Salo said. “No one is quite ready to tip their hand.”