Among other things, the governors want the option of expanding Medicaid — the state-federal program for the poor and disabled — in a much more modest way than envisioned in the law.
“To make any health care reform truly successful, [the administration] should let states do what they do best — innovate and tailor solutions to the needs of their citizens,” the governors wrote. The letter was signed by Jan Brewer of Arizona, Bobby Jindal of Louisiana, Rick Scott of Florida, Robert F. McDonnell of Virginia and the governors of Iowa, Maine, Mississippi, Ohio, South Dakota, Utah and Wyoming.
The law calls for opening the program to people with incomes up to 138 percent of the federal poverty level, or about $31,810 for a family of four. That’s more generous than what many states offer. It would result in about 18 million Americans being newly enrolled, according to recent estimates by the Kaiser Family Foundation and the Urban Institute.
In June, the Supreme Court ruled that the federal government cannot penalize states for refusing to go along with the full Medicaid expansion called for in the law as of 2014.
Since then, state officials have floated the idea of partly expanding Medicaid. But legal scholars sharply disagree over whether Obama administration officials have the legal power to authorize partial expansions.
Obama officials have declined to say whether partial expansions could be an option or when they will make that determination.
Charles Miller, a senior attorney at the law firm Covington & Burling, is advising more than 25 state governments on the issue. He said states are stuck in limbo.
“I don’t see how governors can plan and get legislative authority to do what they want to do without knowing what these ground rules are,” Miller said. “You’re talking about a major program here. Medicaid accounts for 20 to 25 percent of a lot of state budgets.”
Under the law, the federal government would pay the full amount of covering the newly eligible recipients for three years. The federal match would phase down to 90 percent by 2020. But that’s still much higher than the regular federal match rate for Medicaid, which varies from 50 percent to 78 percent.
The governors pushing for a more modest approach want to get the enhanced federal match for a partial expansion — covering people with incomes of up to, say, only 100 percent of the poverty line.
Many of those people without Medicaid coverage could still get insurance by using federal subsidies to buy insurance from private plans. But those plans would probably be less generous than Medicaid and could cost the federal government more.
Miller said there’s a strong case to be made that the Supreme Court at least opened the door to partial expansion.
“The court said . . . we’re not allowing you to enforce this so-called mandate,” Miller said. “So what is a mandate when you can’t enforce it? I think it’s not un-sensible to say that a mandate then becomes an option. . . . And in that context does it have to be all-or-nothing? Neither the Supreme Court nor the original statute addressed that point.”
Sara Rosenbaum, a professor of health law and policy at George Washington University, disagreed.
She argued that in approving the expansion, Congress made clear that it was designating a new mandatory-coverage group under Medicaid. And just as with the program’s other mandatory coverage groups — poor children, for instance — Congress intended for this one to be covered in its entirety, not in part.
The Supreme Court decision does not change that, Rosenbaum said, because in his majority opinion, Chief Justice John G. Roberts Jr. specified that the rest of the law was “unaffected” by the court’s decision.
Roberts also wrote that “nothing in our opinion precludes Congress from offering funds under the [law] to expand the availability of health care, and requiring that States accepting such funds comply with the conditions on their use.”
“The court did not say its decision was adding new state flexibility,” Rosenbaum said.
However, she and others contend that Kathleen Sebelius, the secretary of health and human services, might still be able to permit partial expansion through a different avenue: the secretary’s long-standing power to waive certain Medicaid rules for states seeking to run demonstration projects.
Here again, though, there is controversy. For technical reasons, legal scholars differ over whether such waivers could be applied to all relevant parts of the law.
Could the secretary somehow fudge that issue?
“I think it’s a very dicey proposition,” said Judith Solomon, a health policy analyst at the liberal-leaning Center on Budget and Policy Priorities.
Then there’s the larger question of whether partial expansion would meet the criteria for granting a waiver, namely that the state is testing a new way of advancing Medicaid’s goals.
“It’s a close call,” Rosenbaum said. “You could argue that in a state that is not otherwise going to do the expansion . . . it’s consistent with the objectives of Medicaid to try to get as many poor people as possible covered. But you could also argue that it’s not consistent with the goals to take people with incomes between 100 percent and 138 percent of poverty and subject them to [private plans that are less generous]. What are you trying to prove here?”
David Merritt, a managing director at Leavitt Partners, a health consulting firm that is advising many states, said that for all the legal obstacles and ambiguities, Obama officials will easily surmount them if they decide that the best strategy is to allow partial expansions.
“At the end of the day, they’ll find whatever means they can to make this happen,” he said.