Affordable Care Act Implementation Among the States, Part 2: Medicaid Expansion

The Supreme Court upheld the Patient Protection and Affordable Care Act on June 28 of last year, but it also sent the Obama Administration a serious curve ball: In a 7-2 decision, the Court held that Medicaid expansion would have to occur by agreement between the Federal Government and each of the States.  Medicaid was created in 1965 by President Lyndon Johnson and a Democratic Congress as Title XIX of the Social Security Act.  Essentially, it was created to assist States in providing health care to poor families and individuals who could not obtain health insurance.  Along with Medicare, the Federally-managed health care program for senior citizens also created in 1965, Medicaid was the Johnson Administration’s consolation prize for its failure to implement single-payer health insurance in the face of determined opposition from the American Medical Association and health insurance companies.  Because Medicaid was created as an entitlement for those unable to afford to buy private health insurance in a series of State health insurance markets, its exact spending and benefit levels are set by agreement between the Federal Government and each of the States.

1 State’s Medicaid program (New York’s, for instance) may be fairly progressive; another State’s Medicaid program (take Missouri’s) may be risible, leaving hundreds of thousands of the poor without any health care at all.  Not only does the list of those entitled to Medicaid depend on the State, but the percentage of Medicaid costs covered by the Federal Government (as opposed to the State) varies from State to State.  Only the character of benefits provided through what is still effectively a Federal entitlement program is the same from State to State, as a condition for the Federal Government to provide matching funds to each State’s Medicaid program.

The Patient Protection and Affordable Care Act mandated that Medicaid eligibility be expanded to all State resident citizens earning up to 138% of the State’s poverty level, starting in 2014.  The Federal Government would pay 100% of the cost of the expansion of Medicaid from 2014 to 2016, then its contribution would slowly reduce to 90% of the cost of the expansion from 2017 to 2019, remaining at a mandatory 90% thereafter.  Originally, under the Affordable Care Act States had to accept this expansion of Medicaid or they would lose their existing Federal matching funds for the program; in its 7-2 decision on that provision of the law, the Supreme Court ruled that it violated Federalism and States’ rightful prerogative to force them to accept the Medicaid expansion.  The expansion became a standing invitation rather than an imposition.  This was consistent with the Court’s more-controversial decision on the Affordable Care Act, that the individual mandate requiring citizens to buy health insurance could not be justified under the Commerce Clause’s provision for the Federal Government to regulate interstate commerce, but could be justified in its financial penalty to those who fail to buy health insurance, through the Federal Government’s power to tax.  It also meant that State governments had the power to extend or deny health care to a combined millions of poor and working-class Americans.

Some Republican Governors, particularly in the South, said they would refuse to expand Medicaid almost immediately.  In particular, Nikki Haley of South Carolina, Rick Scott of Florida, Phil Bryant of Mississippi, Bobby Jindal of Louisiana, and Rick Perry of Texas came out against the Medicaid expansion within 2 weeks of the National Federation of Independent Business v. Sebelius decision.  This list of those formally declared for or against the Medicaid expansion changed little in the 4 months leading up to the 2012 Presidential Election; Medicaid would be expanded through State budgets, and since the expansion would start in 2014 it wouldn’t be necessary for State governments to declare for or against the expansion until the following spring, as they discussed and passed their new budgets.  This meant that only Governors studiously shoring-up their Conservative bona fides and failing to perceive other political pressures would have an incentive to “stand firm” against the Federal Government’s program to help the poor with their medical expenses.  President Obama’s re-election meant that, not only would the law stand, but it would not be repealed.  Free Federal money was sitting on the table.  (“The money isn’t free,” Conservatives rejoined.  “We’re paying for the Medicaid expansion and the rest of the Affordable Care Act through taxes.”  Actually, the rich payed for much of the expansion through higher capital gains taxes and fees on luxury medical procedures, but the point is a valid one.  Still, this arguably makes the argument for States expanding Medicaid stronger; a State that declined to expand its Medicaid program would effectively see its Federal tax dollars going to States that did decide to expand the program.)

And wouldn’t you know it?  After what doubtless was some serious intellectual rigors and soul-searching among them–most Republican Governors declined to expand their Medicaid programs in the end.  In the past several months, 8 out of 30 Republican Governors did decide to embrace the expansion of Medicaid; all were significant.  Brian Sandoval of Nevada (announcement made December 11), Susanna Martinez of New Mexico (January 9), Jack Dalrymple of North Dakota (January 12), Jan Brewer of Arizona (January 14), John Kasich of Ohio (February 4), Rick Snyder of Michigan (February 6), Rick Scott of Florida (February 20), and Chris Christie of New Jersey (February 26) all embraced available Federal funding to provide health care for the poor in their respective States.  Governors Sandoval, Martinez and Christie all work with Democratic State legislatures which were happy to embrace the Medicaid expansion.  North Dakota, with a small and homogeneous population and flush with cash from a growing oil and natural gas industry, saw legislative passage of the Medicaid expansion by a wide margin.  Arizona continues to debate implementation of the Medicaid expansion; the biggest sticking point there, apparently, is whether expanded Medicaid services would result in Federal funding for abortions.  (It couldn’t be used for that; an Executive Order by President Obama in March 2010 specifically prohibited the use of Federal funds under the Affordable Care Act to cover abortions.)  Still, most advocates of the Medicaid expansion in the Arizona legislature expect it to ultimately pass, if perhaps the vote will be close.  Finally, there are 3 States–Ohio, Michigan, and Florida–where a Republican Governor elected with Tea Party support made a lot of news by accepting the Medicaid expansion, only to see the proposal rejected by both chambers of a Republican State legislature.  Very few Republican State legislatures have been coaxed into accepting the expansion of Medicaid, though many organizations have endorsed it and many rallies have been held to support the expansion in State capitals.  Arizona, Montana, North Dakota, Missouri, Arkansas, Michigan, Ohio, and Florida all have Governors who declared they would support the Medicaid expansion and fully-Republican State legislatures; all but Arizona’s, North Dakota’s and Arkansas’ have blocked the expansion–though in Montana’s and Florida’s case there remains some hope that the State legislature will support a very limited expansion.  Kentucky and New Hampshire both have Governors who support the Medicaid expansion and split partisan majorities in their State legislatures; both States have Conservative-Republican Senates that seem opposed to the Medicaid expansion, though there is some possibility of at least 1 Republican State Senator in New Hampshire crossing party lines and allowing the Medicaid expansion to move forward.

With the exception of North Dakota and Arkansas, and at least prospectively of Arizona, New Hampshire, Tennessee and Kentucky, this map of the progress of State expansion of the Medicaid program under the Affordable Care Act is a pretty good indicator of Democratic control of both chambers of a State legislature.  The Republican Governors of Wisconsin, Iowa, and Indiana, however, have proposed serious non-Medicaid alternatives for establishing universal health care using other components of the Affordable Care Act.  They are currently in different stages of obtaining Federal approval for these alternatives.  Map credit: Sarah Kliff, The Washington Post.

With the exception of North Dakota and Arkansas, and at least prospectively of Arizona, New Hampshire, Tennessee and Kentucky, this map of the progress of State expansion of the Medicaid program under the Affordable Care Act is a pretty good indicator of Democratic control of both chambers of a State legislature. The Republican Governors of Wisconsin, Iowa, and Indiana, however, have proposed serious non-Medicaid alternatives for establishing universal health care using other components of the Affordable Care Act. They are currently in different stages of obtaining Federal approval for these alternatives. Map credit: Sarah Kliff, The Washington Post.

That makes just 3 1/2 Republican State legislatures working with supportive Governors to expand Medicaid thus far.  Several States are working on plans to provide full or partial health care coverage without a conventional Medicaid expansion, however.  Some of these proposals (notably Wisconsin’s) have good prospects of passing; some, like 1 coming out of the Missouri legislature, have little chance of winning either the Democratic Governor’s or the Obama Administration’s support, and may even be a gimmick.  Arkansas’s passage of Medicaid expansion was a major breakthrough–not just because its was only the 2nd Republican State legislature to vote for expansion, but because budget authorization required 3/4 of both legislative chambers to vote in favor.  Governor Mike Beebe, a very popular Democrat in his 2nd term, made passage of the Medicaid expansion a central policy priority.  (For some reason, however, Jay Nixon, the popular Governor of neighboring Missouri, was not able to cajole or pressure his State’s Republican legislature into supporting Medicaid expansion.)

NPR recently reported that States that do not expand Medicaid will create unintended and politically-awkward situations in which some groups of people are arbitrarily insured while others are not.  According to the report, businesses with 50 or more employees will have to pay a fine if even 1 of their employees obtains health insurance through a Federally-subsidized exchange rather than through their employer; if the employees make no more than 138% of the State poverty level, thus qualifying them for Medicaid, however, the employer doesn’t have to pay a fine for leaving them to Medicaid.  Thus, declining the Medicaid expansion, 100% of which is initially Federally-funded and 90% of which is permanently Federally-funded, exposes many businesses to new fines if any employees make between 100% and 138% of a poverty-level income and do not receive health insurance from their employer.  Then there is the health care coverage for immigrants, which isn’t affected by States declining the Medicaid expansion: Since non-naturalized immigrants don’t qualify for Medicaid in the 1st place, the Affordable Care Act covered them through Federal subsidies to purchase private health insurance only.  Since the Supreme Court ruled the Medicaid expansion an option for the States because it requires them to spend money, this means States can choose to leave low-income citizens without health care while legal non-naturalized immigrants will be taken care of.  Finally, Federal subsidies to buy private health insurance through your local health insurance exchange can extend down to those making just above a poverty-level income; below that income it is assumed any citizens without insurance would be covered through Medicaid.  So, if your State leaders choose not to expand Medicaid and you make, say, 102% of a poverty-level income, your health insurance will be purchased for you by the Federal Government; if you make 98% of a poverty-level income, you get no health care.  The Affordable Care Act goes into full implementation in 2014.  In that year, the elected leaders of a lot of Republican-led State governments will have to explain these rather obvious inequities in health care coverage while Democrats will be able to tell those people the incumbent simply chose not to insure them; later that year, most Governors and State legislatures will face an election.

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