Koch brothers' group aims to stop Medicaid expansion in some states

Medicaid expansion to lower-income adults is still possible in some Republican-controlled states despite recent setbacks in Tennessee and Wyoming, policy watchers say. But elected officials and expansion advocates are closely watching the aggressive efforts of a conservative lobbying group funded by the billionaire Koch brothers that is mounting a big push to block further expansions.

The momentum created by HHS' recent approval of Indiana's conservative-oriented Medicaid expansion model and the Arkansas Legislature's extension of that state's private-option model seemed to screech to a halt last week. That's when GOP lawmakers in Tennessee and Wyoming decisively and unexpectedly nixed expansion proposals from Republican governors. But expansion is still possible in other states, including Alaska, Idaho, Montana, North Carolina and Utah, some experts say.

“I don't think it's over,” said Ed Haislmaier, a health policy expert at the Heritage Foundation, a conservative think tank. “As long as the federal government continues to dangle this extra money, stakeholders like hospitals and some governors will continue to push for expansion in order to get their hands on it.”

To date, 28 states and the District of Columbia have expanded their programs. It's estimated that roughly 4 million adults in non-expansion states who have incomes below 100% of poverty fall into a coverage gap where they qualify for neither Medicaid nor subsidized coverage in private exchange plans.

Even with expansion still on the table, it's unclear which states ultimately will move forward, given that Republican governors and lawmakers want more-conservative policy concessions than the Obama administration may be willing to grant for beneficiary cost-sharing and benefit reductions.

Patient advocates have already raised concerns about HHS' agreement to allow cost-sharing for beneficiaries below the poverty level in Indiana and Iowa. But Haislmaier and others call those cost-sharing requirements less than substantive, because HHS did not allow the states to drop coverage for beneficiaries who don't pay.

Other sticking points for conservatives are HHS' continued refusal to allow any linkage between receiving Medicaid and requiring beneficiaries to be employed or search for work, or to permit stiff financial penalties for unnecessary use of hospital emergency departments.

The Obama administration's repeated assertions that states can change their minds and later end their Medicaid expansion programs also are unlikely to get many conservative lawmakers to sign on. Yevgeniy Feyman, a fellow at the Manhattan Institute, a conservative think tank, said ending a program after extending benefits to people is not attractive politically. “If you pull back the program, you're now in a position where you have to tell hundreds of thousands of people we're taking healthcare away from you,” he said.

The anti-Medicaid expansion lobbying of Americans for Prosperity, a national conservative group whose foundation is chaired by billionaire David Koch, is another roadblock to expansion. The group, which firmly opposes the Affordable Care Act, is credited with derailing Tennessee's expansion push.

Using its considerable resources, the group conducted an aggressive six-week campaign leading up to a special legislative session to debate Gov. Bill Haslam's alternative expansion plan. The Tennessee campaign used radio and TV ads to blast GOP lawmakers who were considering supporting the proposal by Haslam, who was re-elected with a large majority in November.

“They were scared to death of Americans for Prosperity,” said Craig Becker, president of the Tennessee Hospital Association, which vigorously supported the expansion plan. “I was told no one had ever seen a grass-roots campaign stronger than ours, yet the Legislature chose not to listen to us.”

Records show three rural Tennessee hospitals closed last year, in part due to rising uncompensated-care costs. Other closures could soon be on the horizon, Becker said. “Hospitals on the brink are probably looking at what their options might be,” he said. “Some were looking at (expansion) as a lifeline and now it's no longer there.”

Americans for Prosperity is mounting similar anti-expansion drives in other states and it remains to be seen if it will wield similar influence in other states.

On Tuesday, members of the Utah Senate's Republican caucus met to discuss how they planned to move forward on Medicaid expansion. Lawmakers there are considering three options—a straightforward expansion of traditional Medicaid, an alternative approach like those proposed in other Republican-led states, and a narrow approach that would cover only the medically frail. The third model almost certainly would not qualify for expanded federal funding under the healthcare reform law.

Utah Senate Majority Leader Ralph Okerlund said doing nothing is not an option, and that the Senate ultimately will support one of the three proposals. “These people that aren't covered are going to emergency rooms and that's costing all of us money,” he said. “So the discussion is what the most appropriate coverage option is as we're paying for these people either way.”

He added that it's unlikely an Americans for Prosperity campaign against Medicaid expansion will affect the outcome of the state's debate. “I do believe legislators listen to special interest groups, but I don't believe that what they say is at all influential in their final decisions,” he said.

Utah House Majority Leader James Dunnigan said, however, that most Republican House members are leaning toward taking no action on Medicaid. The House Republican caucus is meeting next week to discuss the issue. Dunnigan said he personally hasn't made up his mind on what he would like to do, but echoed his Senate counterpart that some action is needed. “I'm open, I would like to do something, and I recognize that there are people that need help.”

In Montana, where Democratic Gov. Steve Bullock has proposed an alternative Medicaid expansion model, it will be state factors, not the actions of other states or the influence of special interest groups, that will determine what Montana lawmakers ultimately decide to do, Republican Senate President Debby Barrett said. Most of the discussion among her GOP colleagues thus far, she said, is on reforming the state Medicaid program to reduce fraud rather than expanding coverage to able-bodied adults earning up to 138% of the poverty level.

Follow Virgil Dickson on Twitter: @MHvdickson


Virgil Dickson

Virgil Dickson reports from Washington on the federal regulatory agencies. His experience before joining Modern Healthcare in 2013 includes serving as the Washington-based correspondent for PRWeek and as an editor/reporter for FDA News. Dickson earned a bachelor's degree from DePaul University in 2007.

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