Health Reform 2.0: Governors Pushing Back on Medicaid Expansion

Opt-out in Affordable Care Act could leave millions of low-income Americans still uninsured

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States are also balking over the anticipated cost of the expansion. While the federal government would pick up 100 percent of the cost of covering new Medicaid recipients in the first three years, its share gradually declines in the following years, tapering off to 90 percent in 2020 and beyond.

Virginia Gov. Bob McDonnell, chairman of the Republican Governors Association, has held off on making a firm decision for his state. But in a letter to President Barack Obama on behalf of the RGA's Public Policy Committee, he pointed out that increased Medicaid spending would "crowd out" resources for other priorities, including education, the environment, public education and infrastructure. Without Medicaid reform, he argued, it's hard to see how expanding the program "would do anything other than put more strain on state budgets and the taxpayers."

Some states also worry that, over time, the federal government will shift a greater share of the program's costs to the states.

"What we really believe will happen is that the states will be put more and more . . . on the hook for all these people that they have added to the Medicaid rolls," said Twila Brase, president and co-founder of the Citizens' Council for Health Freedom, a nonprofit advocate of health freedom and privacy and an Affordable Care Act opponent.

Another concern is that publicity over the expansion will prompt some people who are currently eligible but not enrolled in Medicaid to come into the program, and "they're not free," George Washington's Ku observed.

Under traditional Medicaid matching rules, the federal government pays, on average, 57 percent of program costs, while states pick up the remaining share, although the state match can vary widely.

Some Say States Can't Afford Expansion, Others Disagree

Will the new expansion bust state coffers or fuel economic growth? Policy experts disagree.

"If they're very conservative, they'll say, 'Gee, when we do our estimates, we see this is going to cost us more state money.' What they fail to see is that it actually is a substantial economic boon to their states and it is perfectly conceivable that the additional revenue will actually create new taxes," Ku said.

The National Association of Medicaid Directors' Salo, however, dismissed the argument that more Medicaid spending translates into greater economic benefit because such calculations get into politics and ideology.

Florida Gov. Rick Scott, a former health-care executive, stands firm against expanding Medicaid, saying it would cost his state an additional $1.9 billion a year.

A recent analysis by the Florida Center for Fiscal and Economic Policy, a think tank and advocacy group for lower-income Floridians, concluded that the net cost of expanding Medicaid to the state's lowest-income uninsured "would be little to nothing, particularly after factoring in reductions in the cost of the delivery of 'uncompensated care' in settings such as hospital emergency rooms."

With most states operating on a July 1 to June 30 fiscal year, "any governor of either party would be smart not to go ahead" until after the election, added Edmund Haislmaier, senior research fellow for health policy studies at the Heritage Foundation, a conservative health policy think tank.

One often-neglected aspect of the Medicaid expansion is the impact on patient care.

In a recent analysis published in the New England Journal of Medicine, researchers from the Harvard School of Public Health compared health outcomes of patients in three states that substantially expanded adult Medicaid eligibility since 2000 with patients in three neighboring states that did not expand coverage. In addition to better rates of coverage and access to care, the expansions were associated with a 6.1 percent reduction in deaths from all causes, or 19.6 fewer deaths per 100,000 people.

The American College of Physicians intends to ask its state chapters to persuade state policymakers that it is in their best interest to expand Medicaid. "We think there's a health argument there and a moral argument," Doherty said.