Why Republican state leaders are resisting Medicaid expansion

The expansion of Medicaid called for in President Obama’s health-care law would seem an irresistible deal for states: Starting in 2014, in exchange for spending a percent or two more of their own funds, states will get nearly a trillion additional federal dollars during the next 10 years to extend health insurance to 17 million of their neediest residents.

So why are so many Republican state leaders balking?

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Increasingly they speak of two experiences that, they charge, raise questions about whether the federal government can be counted on to hold up its end of the bargain: Congress’s decision not to fund a mandated increase in Medicaid pay rates for doctors beyond two years and Obama’s recent willingness to consider cutting the federal contribution to Medicaid.

The latter idea came up during Obama’s unsuccessful negotiations with House Speaker John A. Boehner (R-Ohio) toward a “grand bargain” to slash the deficit.

Obama suggested scrapping the system of varying rates at which the federal government reimburses states for insuring people through Medicaid — which is jointly financed with state and federal funds. Instead, Obama proposed using a single “blended rate” for each state that would have effectively reduced the total federal contribution to Medicaid by tens of billions of dollars in a 10-year period.

After an outcry from liberal groups, Obama scaled back the idea, including a version in his proposed 2013 budget that would reduce federal spending on Medicaid by less than 1 percent.

Still, Republicans now point to the episode as proof that, down the line, even Democrats could be open to making the terms of the health-care law’s Medicaid expansion less generous to states.

Under the law, if states adopt the new eligibility rules for Medicaid — opening the program to people with incomes of up to 133 percent of the federal poverty level — the federal government will initially pay almost the full cost of insuring those who are newly qualified.

“Today Washington may pay. But what’s going to happen when reality sets in and they realize they can’t continue to run up the nation’s credit card?” asked Joe Negron (R), a Florida state senator and chairman of the state’s budget subcommittee responsible for Medicaid. “I think ultimately there’s a very high likelihood that an additional burden will be placed on states.”

Edwin Park, an analyst with the liberal-leaning Center on Budget and Policy Priorities, noted that the 2013 budget adopted by the GOP-led U.S. House would not only repeal the Medicaid expansion but also reduce the current federal contribution to states by 22 percent in the next 10 years.

“They are the ones pushing the biggest cuts to Medicaid,” Park said. “They have been supporting huge cost shifts to states.”

Another point of contention is a provision in the health-care law intended to raise the historically low Medicaid compensation for primary-care doctors. Many doctors say they simply cannot afford to accept Medicaid patients, and beneficiaries must often travel long distances or endure substantial waits to get care.