New Arguments, Possible Solutions in Medicaid Expansion Debate

A new argument has been raised in the debate on Medicaid expansion, and some opponents may find it persuasive. A study by Jackson Hewitt examined census data to estimate the number of employed people with incomes up to 138 percent of the federal poverty level (FPL) who would have to purchase coverage through the health insurance exchanges and would be eligible for the advance premium tax credit. It also calculated the shared responsibility payments (SRP) the employers would owe. Assuming an SRP of $2,000 per employee, the study estimated that Texas employers would owe $298.6 million each year. North Carolina employers would owe  SRPs totaling $65.6 million and  Louisiana employers would owe $51.7 million. Employers in Wisconsin would owe $24 million in SRPs.

In some states, opposition to Medicaid expansion may be softening. Legislative committees in Colorado and Idaho voted positively this week. But legislatures in three states defeated expansion proposals. In several states, no decision has been made.

  • In Florida, Republican Governor Rick Scott had come out in favor of expansion, but committees in both houses of the Republican-controlled legislature voted it down. It’s possible that the state will be able to work out a waiver agreement with federal officials, who are reported to be receptive, but there have been no official announcements. Legislators are working on a proposal, but the legislation has not been filed.
  • In Missouri, the legislature has voted several times not to expand Medicaid. On Wednesday, March 13, 2013, the Senate Appropriations Committee did so again. And the House Budget Committee voted down two proposals that would have added the expansion to the budget.
  • South Carolina also voted against Medicaid expansion on Tuesday, March 12, 2013. Among the “no” votes was state Representative Kris Crawford (R), an emergency room physician, who previously had indicated that he favored the expansion, but that it was “good politics” to vote with the party and against President Obama.

In Kansas, a coalition of 30 groups is pushing for expansion. A resolution opposing it is pending in the House. Governor Sam Brownback has not yet made a decision.

The Utah legislature backed off from a bill that would have barred Medicaid expansion. Instead, it passed a bill requiring the governor to study the issue further and to make the results of the studies public.  Governor Gary Herbert doesn’t plan to make a decision for several more weeks. He is awaiting the results of a study by a private consultant.

Because the expansion is optional, the decision in each state is probably up to the legislature. But the bills barring expansion aren’t necessary. If the statute places limits on eligibility, as they generally do, then it takes positive action to expand Medicaid. The default, if you will, is no expansion. Yet, legislators in Kansas, Michigan, New Hampshire, North Carolina, and Utah have introduced legislation to outlaw the expansion.

Montana Governor Steve Bullock (D) just sent his expansion bill to the legislature this week. Maine‘s Governor Paul LePage (R) has retreated from his earlier opposition and is now willing to consider expansion.

But the real game-changer may be the program in Arkansas. Democratic Governor Mike Beebe faces a legislature where both houses are dominated by Republicans. Recently they overrode his veto of the country’s most restrictive abortion law. There was no way that a typical expansion would have passed. But HHS Secretary Kathleen Sebelius and Governor Beebe have tentatively agreed on a plan to use the Medicaid expansion funds to fund the purchase of private insurance for the newly eligible through the health insurance exchanges. The plans will have to meet the same requirements for cost sharing and benefits as any other qualified health plan.  Actually, it will be more expensive than traditional Medicaid coverage. But for the first three years, the price won’t be Arkansas’ problem. After that, the state may make a decision based on its experience. And actually, the subsidized purchase of private insurance is at the heart of the health reform law. Louisiana Governor Bobby Jindal’s administration has expressed interest in a similar arrangement.

Indiana had requested a waiver to run its Medicaid expansion as a block grant program with emphasis on health savings accounts. However, HHS rejected the application because no public hearings had been held on the waiver. The hearings are set for March 20 and 22, 2013. The state may resubmit its application 30 days later.