The Obama administration's new approach is likely to face legal attacks. Scott has promised to sue, arguing that the linkage violates a 2012 U.S. Supreme Court decision that the federal government cannot make a state's Medicaid funding contingent on expanding the program under the ACA. Texas Republican Gov. Greg Abbott said last week that he would support Scott's lawsuit. “The Supreme Court made it very clear that the Constitution does not allow the federal government to use these coercive tactics against the states,” Abbott said in a written statement. “Medicaid expansion is wrong for Texas.”
Legal experts differed on Scott's chances of prevailing in the courts. One issue is that the Supreme Court ruled based on the threat of withholding all federal Medicaid funding from a state, not the relatively small portion from a discretionary waiver program. “There is no precedent of where to draw the line,” said Jesse Witten, a partner at Drinker Biddle & Reath. “It's less than a full-blown shutdown of the Medicaid program, but (it's) significant.”
Some provider groups say they feel caught in the middle in the current showdown. They have tried everything over the past several years to get their Republican governors and legislative leaders to expand Medicaid. But they warned that the new federal pressure could prove counterproductive.
“The reality is, we're just not going to get there for a while, (though) maybe someday,” said Craig Becker, president of the Tennessee Hospital Association. His state's Republican governor, Bill Haslam, recently tried to pass a Medicaid expansion model to extend coverage to about 200,000 Tennesseans, but it was blocked by Senate Republicans. The state receives about $500 million a year in federal uncompensated-care funding. “If (the CMS) is going to do this, it's going to be terribly disruptive,” Becker said.
The National Rural Health Association plans to reach out to state hospital associations to pressure the administration into backing down, said Maggie Elehwany, the group's vice president for government affairs. “This draconian threat leaves rural patients as the ones who are going to suffer,” she said.
In Texas, hospital leaders were split on the administration's approach, given state GOP leaders' implacable opposition to Medicaid expansion. “To tie (uncompensated-care funding) to Medicaid expansion would hurt the vulnerable population (it) was created to help,” said John McWhorter, president of Baylor University Medical Center at Dallas.
But George Masi, CEO of Harris Health System, the major safety net provider in Houston, said he supports the administration's efforts to push Texas to expand Medicaid. “Nobody wins in a scenario where we aren't providing care to those who require it,” he said.
For now, Medicaid officials in Kansas, Tennessee and Texas say they aren't too worried because their waiver expirations are a year or more away. Kansas' program expires in January 2018, Tennessee's in June 2016 and Texas' in September 2016.
In Florida, however, the threat is dire. “We must stress the importance of maintaining LIP funding for the short term,” said Jim Burkhart, CEO of Tampa General Hospital. “The loss of $86 million in LIP funding would seriously impact our ability to maintain our mission.”