A number of states could reject Medicaid expansion
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Even as the Republican-led House of Representatives voted again to repeal the 2010 healthcare overhaul, providers were bracing for the possibility that a majority of states may decline to implement the law’s Medicaid expansions.
A growing number of state leaders have expressed hesitancy or outright opposition to growing Medicaid after the U.S. Supreme Court’s June 28 decision upholding much of the Patient Protection and Affordable Care Act. That decision also allowed states to forgo the law’s plan to expand Medicaid eligibility without penalty.
The House, meanwhile, voted 244-185 to repeal the law, gaining support from all Republicans and five Democrats. It remained unclear whether the Democrat-led Senate would hold a similar vote, and the White House issued a pre-emptive threat to veto the legislation.
Throughout the week, providers watched as state reactions to the Med- icaid provisions of the law continued to range from vocal support to strong opposition, leading some provider advocates and health policy experts to conclude many states ultimately may in fact refuse to grow their Medicaid program.
“We figure there are 30 at-risk states,” Bruce Siegel, CEO of the National Association of Public Hospitals and Health Systems, said in an interview. “Those states account for 60% of the expansion population.”
States were expected to add at least 16 million beneficiaries to their Medicaid rolls under the reform law, and 13.8 million would have come from the wavering states, Siegel said.
Bonnie Washington, senior vice president for consulting firm Avalere Health, told attendees at a July 9 Washington health policy meeting that the governors’ responses to date left her “less and less comfortable” with the earlier assumption that the states would expand their Medicaid programs because the federal government was funding much of its cost.
The healthcare overhaul authorized the federal government to fund the total cost for the first three years of expanding it to every resident with incomes of up to 138% of the federal poverty level. That federal share would taper to 90% by 2020 and thereafter.
The National Governors Association and National Association of Medicaid Directors wrote letters last week to HHS seeking “formal guidance” about possible tangential effects of the court’s decision. Chief among the outstanding questions is whether the decision effectively eliminated the law’s maintenance of effort provision, which required states to retain at least the Medicaid enrollment levels they had when it was enacted.
“There is still debate about the
question and certainly the federal government is encouraging states to continue their maintenance of effort,” said Sandi Hunt, a principal specializing in government health policy for PricewaterhouseCoopers.
Maine Gov. Paul LePage, for one, interpreted the ruling to mean that requirement is void and is planning to implement the Legislature’s cut of at least 21,000 beneficiaries from the program.
Meanwhile, congressional Republicans said Congress should remove any doubt about the enrollment requirement. “I think it’s certainly possible that there would be—I would like to see—a vote on the House floor repealing the maintenance of effort provision of the law, which, as you all know, puts handcuffs on the governors and prevents them from doing the things they need to do in regard to the Medicaid program,” Rep. Phil Gingrey (R-Ga.), a physician and co-chairman of the GOP Doctors Caucus, told Modern Healthcare.
So far, HHS Secretary Kathleen Sebelius has written governors only to confirm the removal of state penalties for not expanding eligibility and to clarify that low-income residents of states that don’t would not face tax penalties for lacking insurance. “The court’s decision did not affect other provisions of the law,” Sebelius wrote.
Similarly, Marilyn Tavenner, acting CMS administrator, wrote in a July 13 letter to Virginia Republican Gov. Bob McDonnell, chairman of the Republican Governors Association, that states have no deadline to decide on their Medicaid expansion and can keep recent federal funding for Medicaid-related IT upgrades either way.
Federal officials may take a while to answer the many more questions that remain for states and providers, including whether Medicaid will still cut funding for Disproportionate Share Hospitals on the schedule laid out by the healthcare law. “More guidance will be issued in the year and half before Medicaid eligibility expan- sion and the exchanges begin,” Tavenner wrote.
But states need to decide on the Medicaid expansion by early 2013 in order to have enough time to meet the January 2014 start date of the expanded enrollment, said Washington of Avalere.
One state that plans to delay that decision until after the November elections is Kansas, the state’s Republican Lt. Gov. Jeff Colyer, a physician, said at a July 10 congressional hearing on the law’s impacts on providers. “We’ve got an election coming up; the governor has said that we need to change the system and we are going to make a decision afterward,” Colyer said when asked whether the state’s efforts to improve its Medicaid program will include expanding it to conform with the Affordable Care Act.
Bruce Rueben, president of the Florida Hospital Association, said he is encouraged by more restrained reactions from the state’s legislative leaders after Republican Gov. Rick Scott firmly pledged in the wake of the court’s ruling not to enroll more people in Medicaid under the reform law. “There’s been a lot of rhetoric, but we’ve already seen some cooling down,” Rueben said.
House members ascend the Capitol steps before voting to repeal the reform law.
Source: Center for American Progress, Urban Institute, Modern Healthcare reports