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Dr. Brent Sherard, Wyoming Integrated Care Network
Dr. Brent Sherard, left, spokesman for the Wyoming Integrated Care Network, speaks Jan. 22 in favor of expanding the federal Medicaid system.
Photo credit: AP PHOTO

Rounding up support

Medicaid expansion advocates look to business

By Rich Daly
Posted: January 26, 2013 - 12:01 am ET

Expanding Medicaid remains a hard sell in most states. Hospitals and patient advocates are finding they can do it with the right friends and if they show jittery lawmakers how to do it without growing an already crushing fiscal burden.

State legislatures this month are beginning the sessions that will determine whether they go along with the historic expansion of Medicaid scheduled for 2014 under the Patient Protection and Affordable Care Act.

Raising eligibility to all legal residents with family incomes of up to 138% of the federal poverty level was a central pillar of the law and is expected to add 7 million beneficiaries next year. But the U.S. Supreme Court set off a state-by-state scrum over expansion when it eliminated penalties on states that don't expand as part of its June 2012 decision upholding the law.

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Provider and patient advocates in many states have joined with insurers and union groups to prod political leaders toward expansion. But the recruitment of business groups to the cause has proved critical in many Republican-led states.

“Having that natural ally emerge out of years of working closely with the business community has helped greatly in our efforts” to expand Medicaid, said Pete Wertheim, a spokesman for the Arizona Hospital and Healthcare Association.

Arizona is one of four states with Republican governors who have decided in recent weeks to support growing their Medicaid programs, despite their continued opposition to the underlying federal law that authorized the expansion. Arizona Gov. Jan Brewer's support coincided with the state Chamber of Commerce's move to back the expansion, Wertheim said.

Medicaid advocates in other states have taken note and are pouring energy into corralling support from business leaders.

For instance, the board of directors of the Florida Chamber of Commerce is expected to consider this week whether to back a Medicaid expansion in that state, said Bruce Rueben, president of the Florida Hospital Association.

“Certainly, we are talking to the business community about why it is in the best interests of Florida's business community to support the expansion of coverage,” Rueben said. “Obviously, the business community has strong support from Florida's Legislature.”

Similar efforts are under way in Texas and Ohio, two other large Republican-led states seen as Medicaid bellwethers. Medicaid advocates in both states have been celebrating recent public endorsements from local Chambers of Commerce, but so far have failed to garner support from their statewide business groups.

But policy experts caution that even when broad coalitions have succeeded in convincing governors to pursue an expansion, an extensive amount of advocacy work remains.

“That's just the governor—you're still going to need to get the legislature to do this,” said Matt Salo, executive director of the National Association of Medicaid Directors.

Supporters of the expansion also are making inroads by showing lawmakers where to find the money.

Medicaid advocates emphasize that the federal government would cover most of the tab—including 100% of the cost of newly eligible enrollees for the first three years—although policy experts have identified additional costs states will incur.

For example, a November 2012 analysis by the Kaiser Commission on Medicaid and the Uninsured concluded that if all states undertook the expansion, it would cost them a total of $76 billion from 2013 to 2022. It could be less, the commission noted, because of offsetting reductions in spending in other areas, increased tax revenue or other factors.

“We're not saying you won't have to put more money in your Medicaid budget,” said Kathleen Stoll, director of health at Families USA, a liberal patient advocacy group based in Washington.

State fiscal officers, who cannot include hoped-for savings in their budget blueprints, have begun searching for ways to cover the certain expenses the state will face in the next fiscal year.

Medicaid advocates have tried to help find those “payfors.” For example, they have suggested a range of new taxes to cover the state share, including cigarette, alcohol and luxury taxes. Two other expansion ideas that could impact hospitals are cuts in state subsidies for uncompensated care and increased provider taxes.

Hospitals in Arizona backed Brewer's proposal for a new provider assessment that would collect $154 million, or the entire first-year state share of the cost of expansion.

However, the long-term viability of provider taxes as a funding stream is “definitely a concern,” said Wertheim, of the state hospital group, because the Obama administration and Congress have repeatedly proposed slashing or eliminating such taxes, which draw additional federal matching funds. Many federal officials have criticized the taxes as a “scam.”

Meanwhile, the CMS recently introduced the option of offsetting Medicaid costs with higher cost-sharing for some beneficiaries. That flexibility was tucked into a series of proposed Affordable Care Act regulations issued Jan. 14.

“We've heard a lot of governors say, 'We want this to look like private coverage, we want people to contribute,'” said Judy Solomon, vice president for health policy at the liberal Center on Budget and Policy Priorities. “So the regulation basically says, 'Here it is, here's how you can do that.'”

But critics dismissed the option as unreliable. During the budget fights over the past year, President Barack Obama has proposed cutting the amount of the federal Medicaid funding match, which some see as evidence that the federal government could trim its commitment at any moment.

“These are pretty transparent and temporary efforts to induce states to bail out the federal government and do the heavy lifting that the federal government wants them to do,” said Michael Cannon, director of health policy studies at the libertarian Cato Institute. “There is nothing permanent about these offers of flexibility because (the) federal government could revoke them all tomorrow, especially when they are done administratively instead of through statute.”

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