Health-care law’s Medicaid provision too good to pass up

July 2, 2012

Over the coming weeks and months, you’re going to hear a lot of Republican governors fulminate against the Affordable Care Act and swear to do everything possible to stand in its way — including refusing to participate in the Medicaid expansion. In fact, the governors of Florida, South Carolina and Louisiana have already promised to do exactly that.

Ignore them. The deal the federal government is offering states on Medicaid is too good to refuse. And that’s particularly true for the red states. If Mitt Romney loses the election and Republicans lose their chance to repeal the Affordable Care Act, they’re going to end up participating in the law. They can’t afford not to.

Medicaid is jointly administered between states and the federal government, and the states are given considerable leeway to set eligibility rules. Texas covers only working adults up to 26 percent of the poverty line. The poverty line for an individual is $11,170. So, you could be a single person making $4,000 a year and you can’t qualify for Medicaid. That’s part of the reason Texas has the highest uninsured rate in the nation.

Massachusetts, by contrast, covers working adults up to 133 percent of the poverty line — partly due to a former governor whose name rhymes with Schmit Schmomney. It’s a big reason it has the lowest uninsured rate in the nation.

The Affordable Care Act wants to make the whole country like Massachusetts. Everyone earning up to 133 percent of the poverty line, which is less than $15,000 for an individual, gets Medicaid. And the way it does that is by telling states the feds will cover 100 percent of the difference between wherever the state is now and where the law wants them to go for the first three years, and 90 percent after 2020.

To get a sense of what an incredibly, astonishingly, unbelievably good deal that is, consider this: The federal government currently pays 57 percent of Medicaid’s costs. States pay the rest. And every state participates.

But, somewhat perversely, the states that get the best deal under the law are states like Texas, which have stingy Medicaid programs right now, and where the federal government is thus going to pick up the bill for insuring millions and millions of people. In states like Massachusetts, where the Medicaid program is already generous and the state is shouldering much of the cost, there’s no difference for the federal government to pay.

That is to say, the less you’ve been doing on Medicaid so far, the more the federal government will pay on your behalf going forward. And that gets to an irony of the health- care law: Red states have, in general, done less than blue states to cover their residents, so they’re going to get a sweeter deal under the terms of the Affordable Care Act.

In May 2010, the Kaiser Family Foundation ran the numbers for all 50 states. Of the top 10 beneficiaries — which I’m defining as the states that get the highest percentage of eligible adults moved to insurance by the Medicaid expansion — nine of them are states that went for John McCain in 2008. Of the 10 states that get the least help from the Medicaid expansion, eight of them went for Barack Obama. As Alec MacGillis wrote in The Post back in May 2009, “The Democrats’ No. 1 domestic policy initiative, universal health care, is likely to help red America at the expense of blue.”

Take South Carolina. “We’re not going to shove more South Carolinians into a broken system that further ties our hands when we know the best way to find South Carolina solutions for South Carolina health problems is through the flexibility that block grants provide,” said Rob Godfrey, spokesman for Gov. Nikki Haley.

So how are those South Carolina solutions working out? Nineteen percent of the state’s residents are uninsured, which is well above the national average. When the Kaiser Family Foundation ran the numbers, they found the Medicaid expansion in the new law would cut South Carolina’s uninsurance rate among eligible adults by 56.4 percent. That’s the fourth-largest drop in the nation. The cost of that for the federal government between 2014 and 2019? Almost $11 billion. For South Carolina? Less than $500 million.

In the short term, a rising Republican star like Haley might have reason to reject that deal. The Republican base hates the law, and so one way to build a national profile right now is to win the GOP’s ongoing “no, I’m the most anti-Obamacare!” contest.

But that won’t last forever. And governors also have to answer to non-Republican voters who don’t want their state missing out on billions in federal dollars, and to the hospitals in their state who have to treat uninsured patients that end up in their emergency rooms, and the insured voters who end up paying for their uninsured brethren.

Plus, when they want to flip-flop on the issue, they’ll have an easy argument with which to do it: It’s a way to stick it to those blue states that put Obama back in office.

For previous columns, go to washingtonpost.com/business.

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