This small quirk in the Affordable Care Act that Arizona stumbled on could significantly reshape the politics for governors weighing whether to sign up for the health law's Medicaid expansion.
The dilemma raised by Brewer's budget advisers is this: Turning down the Medicaid expansion would mean giving low income, legal immigrants access to private insurance subsidies unavailable to American citizens.
“If Arizona does not expand, for poor Arizonans below (the federal poverty line), only legal immigrants, but not citizens, would be eligible for subsidies,” budget documents turned up by the AP note.
Here's how that would work: Under the Affordable Care Act, the only American citizens eligible for government subsidies to purchase private coverage are those who live above the poverty line (earning more than $11,170).
For legal immigrants, however, things work differently. Medicaid has, for decades, now imposed a five-year waiting period before they can gain coverage. The Affordable Care Act, however, created a new option: Any legal immigrant, no matter how long they had been a resident of a given state, could purchase health coverage on the new exchanges and qualify for the subsidies.
That coverage would likely cost more than Medicaid but, if a legal immigrant were still in that five-year waiting period, it would be better than nothing.
All of that seemed like a decent setup when the law passed. Then the Supreme Court came along and told states they didn't have to expand Medicaid. If a state does not participate in the expansion, then all of its American citizens below the poverty line will not qualify for Medicaid or private insurance subsidies.
Legal immigrants would, however, qualify for the latter. And that explains where Brewer's budget advisers saw the decision to opt out of the Medicaid expansion as one that would leave only "legal immigrants but not citizens" eligible for a new, federal program.
This was, of course, not the only factor that mattered in Arizona's decision. The state noted that it could expect an additional $1.6 billion in federal funds, to finance the expansion, should it move forward.
"Given the ongoing financial struggles of Arizona and its health sector, the Executive contends that the responsible choice is to accept this offer," the memo concludes, urging Arizona to move forward with the expansion.
Now that Arizona has brought this issue into the Medicaid expansion debate, it should be interesting to see how other states navigate around it. Will Gov. Rick Perry in Texas stand for legal immigrants having better access to health insurance subsidies? What about Gov. Rick Scott in Florida? It's a new wrinkle in an old debate, that might make it a bit harder for Republican governors to turn down these Obamacare funds.