President Obama was right last week to pivot to two things in the wake of the Supreme Court’s Affordable Care Act (ACA) decision: (a) a plea to Republicans (yet again) to please, pretty please drop their opposition to the law and join him in tweaking it and fixing what remains broken in healthcare, and (b) Medicaid expansion.
It’s probably too much to hope Republicans will drop their fierce attempts to trash, dismember or repeal the law—as the political season leading to the Nov. 2016 elections gets underway in earnest. But Medicaid expansion could prove a fruitful path to concrete results.
As a reminder, the 2012 Supreme Court decision on the ACA nullified the law’s provision compelling states to expand Medicaid. Instead, it made such expansion voluntary.
To date, 29 states plus the District of Columbia have chosen to expand Medicaid; 21 states have chosen not to. In 2 of those states (Alaska and Utah, both of which have Republican governors), Medicaid expansion is actively under discussion. The Kaiser Family Foundation (KFF) has a state-by-state rundown here.
Of the 10 million or so previously uninsured adults who have gained coverage under the ACA since Jan. 2014, 35% are enrolled in Medicaid. In addition, 3 million uninsured children have become newly enrolled in Medicaid. Thus, about 6.5 million people who were previously uninsured are now covered under Medicaid, about half the 12 million new Medicaid enrollees since the ACA became law. (On any given day in the U.S, Medicaid covers between 60 and 70 million people, including 33 million children.)
Another reminder: Under the ACA, the federal government will pay the full cost of Medicaid expansion through 2016. That share phases down to 90% by 2020 and sticks at that level. Republican governors worry that after 2020 (or even before) Congress, facing rising costs, will increase the state share. In short, they don’t trust the feds.
For now, though, what would happen if the 21 hold-out states expanded Medicaid? The Urban Institute made some projections on that back in April. They estimated a Medicaid enrollment jump of 7 million people, of which 4.3 million will have been previously uninsured. The cost: $472 billion in federal and $38 billion in state spending from 2015 to 2024. Savings on reduced uncompensated care would offset between 13% and 25% of the additional state spending.
One way forward is more flexibility for states to design their Medicaid expansions. So-called Medicaid “waivers” have a long history. Simply explained, a provision of the Social Security Act (Section 1115) permits HHS to “approve experimental, pilot, or demonstration projects that promote the objectives of Medicaid and CHIP [Children’s Health Insurance Program]” outside the parameters of existing law. Pre-ACA, states sought and received dozens of Section 1115 waivers, many of which have led to expansions in coverage, better functioning Medicaid programs, and even some cost savings. Notably, waiver initiatives are supposed to be budget neutral for the feds.
Five states (Arkansas, Iowa, Michigan, Pennsylvania and Indiana) that have expanded Medicaid under the ACA have done so using a Section 1115 waiver. And Tennessee and Utah are currently negotiating Medicaid expansion waivers with HHS.
The Indiana waiver is the most unique. It has features that have not been approved in other states and is being looked at as a possible model for Republican governors whose resolve not to expand Medicaid may be waning (as Obama hopes). For example, Indiana was exempted from providing retroactive eligibility and allowed to make coverage effective beginning on the date of the first premium payment, rather than on the date of application. Indiana can also bar adults from re-enrolling in coverage for six months if they are dis-enrolled for unpaid premiums.
Obama and HHS Secretary Sylvia Burwell implied heavily in the past week that they’d be willing to provide this kind of flexibility to other states that have not yet expanded Medicaid. And conservative health policy wonks such as Tom Miller at the American Enterprise Institute predict that the administration will get desperate enough to bring in the rest of the states that it’ll cave to a lot of state demands for Medicaid flexibility.
I doubt Obama or HHS will compromise too much but I agree the pressure will mount as the days of the Obama administration begin to dwindle down.
I may be naïve and the politics of this are still tough, I know, but it would be really nice to see a robust and orderly process—focused on the benefits to low income Americans—that ends in Medicaid expansion in almost all the states over the next 18 months.
An update: In May I wrote a blog on Florida Governor Rick Scott’s refusal to expand Medicaid in his state, and the intense spat he was having with HHS and the White House over an existing program (called the Low Income Pool, scheduled to sunset this year) in Florida that provides federal and state funding to hospitals that provide care to uninsured people. Scott wanted more money for that program in lieu of expanding Medicaid, as HHS had suggested. Claiming HHS was trying to force him to expand Medicaid in defiance of the Supreme Court 2012 ruling, Scott, in an unprecedented move, sued HHS in April. The dispute stalled passage of a FY2016 budget in Florida’s legislature for months, resulting in the need for a special session in June.
In late June, Scott and HHS reached a compromise agreement that extends the Low Income Pool for two years but with significantly lower federal funding. Scott dropped the lawsuit. The upshot: the can is kicked down the road. Scott, vigorously anti-ACA to date, now has the opportunity to engage in a more constructive dialogue with HHS. And what should he do? Expand Medicaid, of course.
Steven Findlay is an independent journalist who covers medicine and healthcare policy and technology.