State Politics, Medicaid Expansion, and Public Health

Since the Supreme Court ruled against the Affordable Care Act’s mandatory Medicaid expansion in 2012, twenty-nine states and the District of Columbia have expanded the program to individuals at or below 138% of the Federal Poverty Index (FPI), or approximately $16,000 for an individual per year. Resistance to the expansion has largely come from states with Republican governors and/or legislatures. However, in December, three GOP governors moved to expand Medicaid in their states – Utah, Tennessee, and Texas. Indiana received Federal approval for its Medicaid plan the last week in January. While a big move in support of the President’s signature health care law, the proposals come with drawbacks that may negatively affect the effectiveness of the expansion.

The Utah expansion does not rely on Federal programs to insure its citizens. Adapting the Arkansas expansion plan, the Utah plan allows the State’s citizens to purchase private insurance with Federal funds rather than enrolling in the Federal Medicaid program. Utah’s program will cover nearly 100,000 residents over the next four years. Residents under 100% FPI continue their enrollment in traditional Medicaid while the “expanded” individuals (between 100-138% FPI) receive assistance to purchase private insurance or enroll in an employer-offered plan. The Utah plan touts $15 monthly premiums. However, the plan also poses a $50 penalty for every Emergency Room visit for a non-emergency situation in an effort to bring down health care costs. Notably, this adapted Medicaid expansion had to be approved by the Centers for Medicaid and Medicare Services (CMS).

Tennessee liked the plan behind Utah’s expansion. Medicaid expansion under these terms has been deemed a compromise between Republican and Democratic ideals. Gov. Bill Haslam has specifically stated that his 2015 proposal is not an expansion of the Medicaid program, but the “unveil[ing] of Insure Tennessee.” Early estimates predict that nearly 200,000 Tennesseans will be eligible for State assistance under the proposed expansion. Notably, Tennessean hospitals are largely in favor of the Expansion. The Tennessee Expansion does more than focus solely on making available funds to purchase private insurance, but also shifts bill-payment to an outcome-based method rather than fee-for-service. Representatives in Tennessee on all sides of the Expansion debate support the Governor’s decision to make insurance available through the proposed means. The proposals must still be approved by the Tennessee legislature and CMS.

The biggest potential win for the President’s health law is the state of Texas. Former Governor Rick Perry has been one of the most vociferous opponents of the Medicaid expansion. However, Governor-Elect Greg Abbott addressed the extremely controversial topic with state lawmakers in Houston. Working with CMS to expand Medicare could mean nearly $10 billion in Federal funds for Texas over the coming years. Texas has the most of any state to gain from the Medicaid Expansion. Nearly 950,000 Texans live between 100-138% FPI. The Kaiser Foundation believes these Texans represent approximately twenty-five percent of all Americans living in the “gap.” The Texas legislature has rejected the “traditional” Expansion, but the Governor-Elect’s meetings may indicate an alternative similar to those in Utah and Tennessee, though his office has yet to comment.

The approval of Indiana’s plan may encourage even more states to expand their Medicaid services. The Indiana plans extends coverage to nearly 350,000 low-income individuals and families. The plan requires enrollees to contribute to a health savings account, an effort to keep “personal responsibility” as part of the expansion. However, the plan comes with high penalties for missed payments, including up to six-month exclusions from the program. The plan also increases reimbursement rates, which were cut across the board by the Affordable Care Act. Indiana’s plan has already caught the attention of the Wyoming legislature.

The twenty-two states that are yet to expand the Federal program need to act quickly. The Affordable Care Act only covers 100% of any state’s expansion through 2016, covering only 90% of associated costs thereafter. Understandably, political and ideological differences will hamper Medicaid expansion in many states. However, Utah’s adaptation to the Medicaid expansion may allow well-meaning legislatures to not only follow their ideals but also act in the best interest of their citizens. In Tennessee, for example, the proposal allows the State legislature to provide expanded coverage while encouraging Tennesseans to take an active role and have more personal responsibility for their own health care.

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