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‘The outlook for Medicaid expansion looks bleak’

"As state legislative sessions are wrapping up," Avalere Health's Caroline Pearson tweets, "The outlook for Medicaid expansion looks bleak." She posts this map of where states are at in their thinking about the health law provision.

Twenty states and the District of Columbia have agreed to expand their Medicaid programs, to cover everyone under 133 percent of the federal poverty line. That leaves 30 states that haven't, although Avalere categorizes four states as leaning in that direction (Tennessee, Kentucky, Florida and New York).

Some of these states have especially large uninsured populations. Texas, for example,  has an estimated 1.8 million people who would be expected to enroll in Medicaid under the expansion. Florida has the same number—and, while Gov. Rick Scott (R) has endorsed the expansion, the Florida House and Senate are now feuding over whether they will move forward.

There's not a whole lot that the White House can do to cajole these states into participating. The administration has shied away from Medicaid cuts, which might make governors weary of expanding the Medicaid program. It also has shown an openness to different proposals, like Arkansas' plan to expand Medicaid by using the federal dollars to buy private coverage.

Aside from these gestures, there's not much else for the federal government to do. With the health insurance exchanges, the Obama administration always had the ability to jump in and build a marketplace for any state that decided not to. With Medicaid, there's no back-up plan. A state opts out, and that's pretty much it.

This all mostly means that the health law's insurance expansion may start off significantly smaller than initially envisioned. It also creates a messaging challenge in states that do not expand: How do you explain to Texas residents, for example, that someone who earns $10,000 (just below the 2013 federal poverty line) does not qualify for new coverage, while someone who earns $12,000 does?

The decisions that states make this year aren't binding; a state can decide to participate in the Medicaid expansion at anytime. When Medicaid first launched, it took over two decades to convince all 50 states to participate. Eventually, federal dollars lured reluctant states like Arizona into the fold. We're about to see whether Obamacare dollars can do the same.



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Ezra Klein · April 25, 2013

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