Partial Medicaid expansions won’t get full federal funding, administration tells states

There is no deadline by which states must declare their intentions regarding the Medicaid expansion. The decision will rest largely with state legislatures as they wrestle with 2014 budgets in the coming months.

So far, just more than a dozen states appear certain to take part in the expansion. In about 13 states, officials have been leaning heavily against it. In the remaining states, the decisions are still very much in doubt.

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Matthew Salo, executive director of the National Association of Medicaid Directors, said it is hard to predict how many states will go along with the expansion now that the choice is all or nothing.

“It pushes some of those states that were pushing for partial expansion to yes and some to no. . . . It will be a mixed bag,” he said.

Douglas J. Holtz-Eakin, a former director of the Congressional Budget Office and a critic of the health-care law, predicted that many state leaders will shy away from expansion because they don’t trust Congress to leave the higher matching rate untouched.

“The fundamental question state leaders have to ask is, ‘Do I believe that I will continue to get 90 percent of the cost of the expansion [covered by the federal government] forever, given that the federal government has no money?’ ” Holtz-Eakin said.

Such concerns were fueled by Obama’s willingness to consider reducing the total federal contribution to Medicaid during his unsuccessful deficit negotiations with House Speaker John A. Boehner (R-Ohio) last year. His proposal would have reduced the federal contribution to Medicaid by tens of billions of dollars over a 10-year period.

Obama scaled back the idea in his proposed 2013 budget, offering to reduce federal spending on Medicaid by less than 1 percent.

In Monday’s memo, the administration said it no longer supports even that more modest idea. “The Supreme Court decision has made the higher matching rates available in the [health-care law] even more important to incentivize states to expand Medicaid coverage,” the memo said.

In a blog post Monday, Sebelius also announced that the administration had approved the plans of six states — Colorado, Connecticut, Maryland, Massachusetts, Oregon and Washington — to run the health insurance marketplaces, or “exchanges,” called for under the law. States wishing to run their exchanges have until Friday to submit their blueprints. The administration will sign off on those plans on a rolling basis.

If a state is deemed unable to operate an exchange, or simply chooses not to, the law empowers the federal government to step in and run it.