Partial Medicaid expansions wonft get full federal
funding, administration tells states
By N.C. Aizenman, December 11
The Obama administration told states Monday that they couldnft do a partial
expansion of Medicaid under the health-care law and still receive full federal
funding, disappointing many Republican governors on one of the most important
questions surrounding the health-care law.
In recent weeks, these governors, along with other state officials, had shown
increasing interest in the idea of a partial expansion of the state-federal
program for the poor and disabled. In ruling that option out, the administration
has raised the stakes for states debating whether to participate in a part of
the law that is crucial to its success.
The 2010 law called for states, starting in 2014, to open their Medicaid
programs to people with incomes up to 138 percent of the federal poverty level.
Under the law, the federal government will pay the entire cost of covering newly
eligible individuals for the first three years. After that, the federal
governmentfs share declines, reaching 90 percent by 2020. If all states were to
take part in the full expansion, an additional 18 million Americans would be
covered by Medicaid.
But many state leaders, especially Republicans, have been leery of sharply
expanding their Medicaid programs; many worry that the federal government might
reduce funding. As an alternative, they have floated the idea of partial
expansions — extending coverage, for instance, to all adults with incomes up to
100 percent of the poverty level — while still having the federal
government foot the entire bill.
On Monday, Secretary of Health and Human Services Kathleen Sebelius said no.
In a memo to all 50 governors, she said that gthe law does not provide for a
phased-in or partial expansion.h
States might still be able to get federal dollars to do a partial expansion,
the memo said. But at least from 2014 through 2016, those states would receive
their regular federal match rate — which varies from 50 percent to 78 percent,
depending on the state. States would also have to apply for federal permission
for such a partial expansion.
After 2017, the memo said, states might be able to get the higher federal
match for a partial expansion as part of a broad ginnovation waiver.h States can
apply for such waivers starting that year.
These waivers exempt states from many of the lawfs specific mandates as long
as they can prove that there will be no increase in the numbers of uninsured
residents and that insurance plans will be no less affordable or
comprehensive.
Interest in the partial expansion idea has been growing since June, when the Supreme Court found that states canft be penalized for
opting out of the lawfs full expansion.
In a statement Monday, Louisiana Gov. Bobby Jindal, chairman of the
Republican Governors Association, said that by removing the possibility of
partial expansion, the administration had made the decision facing states gmore
difficult.h
gThe Obama Administrationfs refusal to grant states more flexibility on
Medicaid is as disheartening as it is short-sighted,h Jindal said.
There is no deadline by which states must declare their intentions regarding
the Medicaid expansion. The decision will rest largely with state legislatures
as they wrestle with 2014 budgets in the coming months.
So far, just more than a dozen states appear certain to take part in the
expansion. In about 13 states, officials have been leaning heavily against it.
In the remaining states, the decisions are still very much in doubt.
Matthew Salo, executive director of the National Association of Medicaid
Directors, said it is hard to predict how many states will go along with the
expansion now that the choice is all or nothing.
gIt pushes some of those states that were pushing for partial expansion to
yes and some to no. . . . It will be a mixed bag,h he said.
Douglas J. Holtz-Eakin, a former director of the Congressional Budget Office
and a critic of the health-care law, predicted that many state leaders will shy
away from expansion because they donft trust Congress to leave the higher
matching rate untouched.
gThe fundamental question state leaders have to ask is, eDo I believe that I
will continue to get 90 percent of the cost of the expansion [covered by the
federal government] forever, given that the federal government has no money?f h
Holtz-Eakin said.
Such concerns were fueled by Obamafs willingness to
consider reducing the total federal contribution to Medicaid during his
unsuccessful deficit negotiations with House Speaker John A. Boehner (R-Ohio)
last year. His proposal would have reduced the federal contribution to Medicaid
by tens of billions of dollars over a 10-year period.
Obama scaled back the idea in his proposed 2013 budget, offering to reduce
federal spending on Medicaid by less than 1 percent.
In Mondayfs memo, the administration said it no longer supports even that
more modest idea. gThe Supreme Court decision has made the higher matching rates
available in the [health-care law] even more important to incentivize states to
expand Medicaid coverage,h the memo said.
In a blog post Monday, Sebelius also announced that the administration had
approved the plans of six states — Colorado, Connecticut, Maryland,
Massachusetts, Oregon and Washington — to run the health insurance marketplaces,
or gexchanges,h called for under the law. States wishing to run their exchanges
have until Friday to submit their blueprints. The administration will sign off
on those plans on a rolling basis.
If a state is deemed unable to operate an exchange, or simply chooses not to,
the law empowers the federal government to step in and run it.
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