More states seeing value in expansion of Medicaid

To expand or not to expand was the overwhelming Medicaid issue during the past four months as governors and state legislatures continued to fight a partisan battle over whether to extend coverage to millions more people under the healthcare reform law.

The other major Medicaid development in recent weeks has been the substantial enrollment of newly eligible people across the country since open enrollment through the insurance exchanges began on Oct. 1. As of Nov. 6, more than 214,000 people in eight states have enrolled into Medicaid, according to Modern Healthcare's count. That put Medicaid enrollment on track to reach the Obama administration's projected total of 7 million new Medicaid enrollees by the end of 2014.

Since June, Ohio and Michigan joined 23 other states plus the District of Columbia in deciding to expand their Medicaid programs to provide coverage in 2014 for all adults earning up to 138% of the federal poverty level. That means most Americans live in states that have opted in to the Medicaid expansion, which is projected to cover more than 5 million previously uninsured individuals residing in those states. Meanwhile, nearly 5 million people who live in the nonexpansion states will not receive coverage because their states, so far, are not participating.

Republican-led states largely have rejected the Medicaid expansion until now, despite intense pressure from hospital industry leaders eager to see their uninsured patients gain coverage.

Still, two conservative Republican governors succeeded in pushing through expansion, while others continued to battle.

In Republican-led Arizona, a ballot initiative led by conservative groups seeking to repeal the Medicaid expansion law fell short in September of the 86,000 signatures needed to put the issue on the ballot. That was a big victory for Gov. Jan Brewer.

The lure of tens of billions in additional federal funding over 10 years proved too much for some governors and legislators to ignore. If all states approved the expansion, the Congressional Budget Office has estimated the federal government would pay $931 billion between 2014 and 2022, while the state share would be $73 billion.

Some of the recent momentum in GOP-led states is due to the CMS decision in September to approve Arkansas' alternative expansion plan proposed by Gov. Mike Beebe, a Democrat. It will let the state use federal Medicaid dollars to buy private coverage for the newly eligible population in the state's federally run insurance exchange. Republican legislators had opposed expansion of the public Medicaid program.

A number of other states are following Arkansas' lead. Some proposals include provisions such as cost-sharing and work requirements to make the idea of expanding the safety net program more palatable to conservatives.

In August, the Michigan Legislature narrowly passed a bill backed by Gov. Rick Snyder to expand Medicaid to cover about 470,000 additional residents, making it the third state with both a Republican governor and GOP-led Legislature to pass expansion. Newly eligible Medicaid recipients would be required to pay up to 5% of their income in cost sharing after the first six months; that goes up to 7% if they remain in the program after four years. The plan will need a waiver from the CMS, but it's uncertain whether the Obama administration will grant it given concerns about the financial impact of cost-sharing on Medicaid beneficiaries.

In Pennsylvania, Gov. Tom Corbett, formerly a staunch opponent of Medicaid expansion, proposed a plan in September similar to the Arkansas plan. But it would require unemployed adult recipients to enter into a job-training program.

In Ohio, Gov. John Kasich, who had unsuccessfully lobbied GOP lawmakers for months to expand Medicaid, sidestepped the Legislature and took the issue to a special legislative panel called the Controlling Board. On Oct. 21, the panel voted to accept $2.5 billion in federal Medicaid funding in 2014 to expand coverage for about 275,000 residents.

Kasich challenged opponents of the expansion. “Why is it that some people don't get it?” he said prior to the board's vote. “Is it they're hard-hearted or cold-hearted? It's probably because they don't understand the problem because they have never walked in somebody's shoes.”

Experts say other states that may expand Medicaid in the coming months include Utah and New Hampshire.

In Virginia, newly elected Democratic Gov. Terry McAuliffe has vowed to make Medicaid expansion his top priority.

The October launch of the insurance exchanges added thousands of newly eligible Medicaid beneficiaries across the country. Some states signed up people through the exchanges while others implemented separate initiatives that included pre-qualifying people who were already receiving benefits through other programs such as food stamps.

In many states, Medicaid enrollment outpaced sign-ups in private health plans. Experts said it was easier to sign up people for Medicaid than for private insurance because enrollees don't have to pay premiums and they don't have to make any complicated insurance choices.

Follow Steven Ross Johnson on Twitter: @MHSjohnson