Warm­ing to the ACA

Harsh crit­ics now look to ex­pand Med­i­caid rolls

Modern Healthcare - - COVER STORY - Me­lanie Evans

Whether mil­lions of Amer­i­cans get the cov­er­age en­vi­sioned in the health­care re­form law will come down to this: whether gov­er­nors can stom­ach leav­ing fed­eral money on the ta­ble. Even some of the law’s fiercest crit­ics now say they won’t.

More than half the states are op­posed to or are still wa­ver­ing on ex­pand­ing Med­i­caid rolls in or­der to meet the am­bi­tious cov­er­age goals of the Pa­tient Pro­tec­tion and Af­ford­able Care Act. Repub­li­can gov­er­nors lead all of the states say­ing no, and most of the other ones are on the fence.

But Ari­zona Gov. Jan Brewer an­nounced last week plans to broaden the state’s safety net in­surance.

“My con­cerns about the Af­ford­able Care Act are well known, but it is the law of the land,” she said. “With this ex­pan- sion, Ari­zona can lever­age nearly $8 bil­lion in fed­eral funds over four years, save or pro­tect thou­sands of qual­ity jobs and pro­tect our crit­i­cal ru­ral and safety net hos­pi­tals.”

Her de­ci­sion fol­lowed sim­i­lar de­ci­sions by Repub­li­can gov­er­nors in North Dakota, Ne­vada and New Mex­ico.

The Con­gres­sional Bud­get Of­fice es­ti­mated last March that 13 mil­lion more peo­ple would get Med­i­caid cov­er­age in 2014, the first year that the Af­ford­able Care Act re­quires that nearly ev­ery Amer­i­can be cov­ered or pay a penalty. That es­ti­mate dropped to 7 mil­lion four months later af­ter the U. S. Supreme Court— re­solv­ing a law­suit joined by Brewer and many of the state of­fi­cials still mulling how to pro­ceed—ruled that HHS couldn’t

Ar­gu­ing their case

pe­nal­ize states for de­clin­ing to ex­pand Med­i­caid el­i­gi­bil­ity to at least 135% of the fed­eral poverty level.

Last June, af­ter the Supreme Court’s de­ci­sion to up­hold it, Brewer crit­i­cized the law as a “fis­cal and reg­u­la­tory night­mare” and “an over­reach­ing and un­af­ford­able as­sault on states’ rights and in­di­vid­ual lib­erty.”

Bet­sey Bay­less, pres­i­dent and CEO of the Mari­copa In­te­grated Health Sys­tem, said ex­ec­u­tives called to ar­gue their case with Brewer, and a group of providers hired a lob­by­ing firm to press the busi­ness case for Med­i­caid ex­pan­sion. The Phoenix-based sys­tem gets nearly two-thirds of its rev­enue from Med­i­caid. It risked los­ing the in­creased rev­enue from newly in­sured Med­i­caid pa­tients and an es­ti­mated $80 mil­lion from adults who are ex­pected to lose tem­po­rary cov­er­age that was es­tab­lished in 2001, but sched­uled to sun­set Jan. 1, 2014, with the Af­ford­able Care Act’s Med­i­caid ex­pan­sion, Bay­less said.

In North Dakota, Repub­li­can Gov. Jack Dal­rym­ple, who pre­vi­ously called the Af­ford­able Care Act “wrong for North Dakota,” re­versed his po­si­tion and submitted a bill in early Jan­uary to ex­pand Med­i­caid.

Su­sana Martinez, New Mex­ico’s Repub­li­can gov­er­nor, also an­nounced plans in early Jan­uary to ex­pand Med­i­caid. But the state will cut the most re­cent en­rollees first if “the fed­eral government breaks its fund­ing prom­ises,” Martinez said in a let­ter to state res­i­dents.

And Ne­vada Gov. Brian San­doval like­wise said he would pull back if the fed­eral government doesn’t carry as much of the bur­den as promised. The Repub­li­can said in De­cem­ber that he would ex­pand Med­i­caid de­spite his dis­like for the Af­ford­able Care Act. He touted the ex­pan­sion as a source of cov­er­age for 78,000 res­i­dents who might oth­er­wise face tax penal­ties un­der the law.

North Dakota’s will­ing­ness and Ari­zona’s em­brace of the ex­pan­sion—and its strat­egy to opt out with­out promised fed­eral sup­port—could help sway de­bate in South Dakota, said David Hewett, pres­i­dent and CEO of the South Dakota As­so­ci­a­tion of Health­care Or­ga­ni­za­tions.

South Dakota Gov. Dennis Dau­gaard said in his bud­get ad­dress last month that with­out more in­for­ma­tion, he would not ex­pand the state’s Med­i­caid rolls this year, which he said would cost the state about $43 mil­lion to $44 mil­lion by 2020.

The fed­eral government will cover the cost of newly el­i­gi­ble Med­i­caid en­rollees through 2016. The fol­low­ing year, states will cover 5% of the costs, and their share rises to 10% by 2020. “We don’t know what will hap­pen af­ter 2020,” Dau­gaard said. “Will the fed­eral share re­main at 90%? Will it drop to 80% or 70%?”

Dau­gaard noted that states have the op­tion to de­lay the de­ci­sion, sug­gest­ing the de­bates in South Dakota and else­where could drag on for years. The CMS in De­cem­ber said that the state could choose to broaden Med­i­caid el­i­gi­bil­ity later than 2014 and still draw the same level of fed­eral fund­ing, and that they may drop the cov­er­age later.

11.5 mil­lion left out

Many low-in­come, unin­sured adults in states where Med­i­caid does not ex­pand will likely re­main with­out in­surance. Some low- in­come unin­sured— those with in­comes above 100% but be­low 400% of the fed­eral pol­icy guide­lines—will be el­i­gi­ble to buy sub­si­dized cov­er­age in newly cre­ated health in­surance ex­changes in states with­out Med­i­caid.

But about 11.5 mil­lion adults do not qual­ify for Med­i­caid and have in­come be­low 100% of the fed­eral poverty guide­lines and can­not qual­ify for sub­si­dized in­surance, ac­cord­ing to the Ur­ban In­sti­tute.

Matthew Buettgens, an Ur­ban In­sti­tute se­nior re­search an­a­lyst, said the penalty will largely not ap­ply to those be­low 100% of fed­eral poverty be­cause most will have in­come too low to re­quire fed­eral in­come tax fil­ing.

States where gov­er­nors have de­clared their in­ten­tions may yet see op­po­si­tion from leg­is­la­tures.

Arkansas Gov. Mike Beebe, a Demo­crat, ar­gued at length in his state-of-the-state ad­dress for the Repub­li­can- con­trolled Leg­is­la­ture to raise el­i­gi­bil­ity, say­ing it would pro­vide an im­me­di­ate boost to fed­eral funds for some ex­ist­ing Med­i­caid ex­penses, aid hos­pi­tals and bol­ster the broader econ­omy.

The state’s to­tal cost, even when Arkansas has to pay 10% of the cost, would amount to less than $5 mil­lion, Beebe said. He urged the state not to “sac­ri­fice our share of fed­eral money to other states.

“Re­fus­ing money to help our peo­ple may make a state­ment to the fed­eral government,” Beebe said, “but it will cost us more at home, will jeop­ar­dize the health of our fel­low Arkansans and won’t solve the prob­lems of our na­tional coun­ter­parts.”

AP PHOTO

Ari­zona Gov. Jan Brewer, left, in­ter­acts with Mari­copa Med­i­cal Cen­ter CEO Bet­sey Bay­less af­ter Brewer called for the ex­pan­sion of Med­i­caid last week.

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