Medicaid expansion a tough sell to governors of both parties

July 12, 2012

While the resistance of Republican governors has dominated the debate over the health-care law following last month’s Supreme Court decision to uphold it, a number of Democratic governors are also quietly voicing concerns about a key provision to expand coverage.

At least seven Democratic governors have been noncommittal about their willingness to go along with expanding their states’ Medicaid programs, the chief means by which the law would extend coverage to millions of Americans with incomes below or near the poverty line.

“Unlike the federal government, Montana can’t just print money,” Gov. Brian Schweitzer (D) said in a statement Wednesday. “We have a budget surplus, and we’re going to keep it that way.”

The law would add an estimated 84,000 people to Montana’s Medicaid program, doubling its size, the governor said. Although the federal government would pay the vast majority of the additional costs, Montana’s health department estimates the state’s share would reach $71 million in 2019. Outside groups say the costs would be far lower than that.

The range of state leaders expressing unease suggests that implementing the law could be rough going, with divisions not always breaking along party lines.

The topic is likely to factor prominently in this week’s meeting of the National Governors Association in Williamsburg. And it has been fueled by a long list of unanswered questions about the choice now before states.

In particular, it is unclear how the court’s pronouncement that states cannot be penalized for refusing to adopt the law’s more generous eligibility standards for Medicaid in 2014 changes the rules governing the expansion.

Will states that opt in have the option of scaling back in future years?

If a state that opts out decides it wants to participate later, will the federal government still pay nearly the full cost of covering those who become newly eligible for Medicaid?

And can a state participate only partially — for instance, by raising the income cutoff for its program to a level lower than the ceiling envisioned in the law, which is set at 133 percent of the federal poverty line?

Asked at a forum Wednesday to describe state reactions to the Supreme Court ruling, Dan Crippen, executive director of the National Governors Association, replied: “Confusion.”

The association was one of several — along with the Republican Governors Association and the National Association of Medicaid Directors (NAMD) — to send a letter to Health and Human Services Secretary Kathleen Sebelius this week with a voluminous list of queries.

“The answers to these questions are key,” said NAMD Director Matt Salo. “States need to be making these decisions now, and it’s hard to make them if you don’t have clarity.”

At least one governor, Democrat Mike Beebe of Arkansas, has also tried contacting the Obama administration directly.

According to spokesman Matt DeCample, Beebe is “leaning toward” the Medicaid expansion, which he said would add between 200,000 and 250,000 Arkansans to the Medicaid rolls in a state whose population is around 3 million. Not only would it bring a significant injection of federal funds to the state, but it would also be a boon to Arkansas hospitals, which are currently treating many poor people for free.

But DeCample said the governor has concerns that there be “state flexibility down the line.” So last week, Beebe asked officials at the federal Centers for Medicare and Medicaid Services whether, in the event of an unforeseen future fiscal calamity, Arkansas would be able to tighten its eligibility rules and still get the full federal match for those who continued to qualify for its Medicaid program.

To date, Beebe has received no answer.

In a letter to the governors Tuesday, Sebelius assured them, “I appreciate that states have questions.” She gave little in the way of specific guidance, however, promising to address concerns at meetings in cities across the country beginning July 31.

Wisconsin’s secretary of health services, Dennis G. Smith, was skeptical. “I don’t think we’ll have answers anytime soon,” said Smith, who directed federal Medicaid operations under President George W. Bush and was appointed to his current post by Republican Gov. Scott Walker, a vocal critic of the health-care law.

Obama administration officials “are putting a brave face on all of this,” he said. “But they have a mess on their hands.”

Smith predicted that many states will ultimately interpret the rules in ways that conflict with the administration’s position.

“I suspect that judges are going to be hearing a lot of new cases as a result of this ruling,” he said. “I see legal challenges in the future.”

The earliest could be brought by the state of Maine.

Last spring, Maine’s legislature voted to eliminate Medicaid coverage for about 21,000 state residents. At the time, that unquestionably required the governor to seek a federal waiver from a “maintenance-of-effort” requirement in the health-care law that bars states from tightening their eligibility rules for Medicaid before 2014.

The Obama administration has signaled that it considers the maintenance-of-effort provision separate from the law’s expansion of Medicaid and therefore untouched by the Supreme Court’s ruling.

However, Adrienne Bennett, a spokeswoman for Maine Gov. Paul LePage (R), said the state attorney general has determined that the court’s ruling means Maine is no longer bound by the maintenance-of-effort mandate.

Bennett said that within a few weeks, the governor will file what effectively amounts to a pro-forma notice informing the Obama administration of Maine’s plan to alter its Medicaid program.

And if Obama officials object?

“The governor has indicated that he is willing to proceed with legal action,” she said.

Sarah Kliff contributed to this report.

Karen Tumulty is a national political correspondent for The Washington Post, where she received the 2013 Toner Prize for Excellence in Political Reporting.
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