Obama speech kicks off new drive to expand Medicaid

With the Affordable Care Act's premium subsidies protected for now, the Obama administration and the hospital industry are stepping up their efforts to persuade the 21 holdout states to expand Medicaid to low-income adults.

President Barack Obama spoke last week in the capital of Tennessee, a state where Republican Gov. Bill Haslam recently was blocked by the GOP-controlled Legislature in his effort to establish a conservative-friendly version of Medicaid expansion. Last month's U.S. Supreme Court decision in King v. Burwell preserved subsidies for 156,000 Tennesseans.

An obviously upbeat Obama talked about pushing ahead with healthcare reform. “One thing I'm hoping is that with the Supreme Court case now behind us, we can focus on how to make it better,” Obama said during his speech at Nashville's Taylor Stratton Elementary School, which was attended by a who's who of healthcare leaders. “There are still areas of improvement and there are still people who are uninsured.”

Since the ruling, Democratic governors in Alaska, Missouri and Virginia have indicated they want to reopen discussions about expanding Medicaid, as has Haslam. Meanwhile, Republican-led Utah is in talks with the administration about an expansion model. Supporters hope the King ruling will give their cause momentum. But opposition to the ACA and Medicaid expansion remains powerful among Republicans, fueled by fiery anti-Obamacare campaign statements from presidential hopefuls, including the governors of Louisiana and Wisconsin.

Obama mentioned Medicaid expansion only obliquely in his prepared remarks. But pressed by an audience member, the president said states that have expanded Medicaid have reduced their uninsured rate more quickly than other states. “Here in Tennessee, that's probably a couple hundred thousand people who could benefit,” he said. “Given the strong history of innovation of healthcare in Tennessee ... you all should be able to find a solution. The federal government is … ready to work with the states that want to get going.”

Conversations are starting among GOP state policymakers about whether to now expand Medicaid, said Trish Riley, executive director of the National Academy for State Health Policy, which will host a summit July 9 on the issue. “The question is whether the politics change,” she said.

States may be more comfortable expanding Medicaid with stronger budgets and an improved economy, said Joseph Antos, who focuses on healthcare at the conservative American Enterprise Institute. Still, he argued that HHS needs to be more flexible in working with GOP-led states, some of which are seeking to impose work requirements, premium contributions and other personal-responsibility rules for new beneficiaries. “Until HHS gives a signal to the states that they're actually open to new ideas, I don't think we'll see more states jump on this,” Antos said.

But Brietta Clark, a professor at Loyola Law School in Los Angeles, said HHS is limited in what it can approve. “The administration has been really open and flexible with working with the states,” she said. “It's the Affordable Care Act that put clear constraints on what the states can do.” For example, some Republicans have proposed expanding eligibility only to people up to 100% of the federal poverty level, but the ACA sets the threshold at 138%.In Tennessee, the political winds may be shifting since the Legislature shot down Haslam's Insure Tennessee proposal this year. That plan would provide vouchers for Medicaid eligible people in the Medicaid coverage gap to purchase private coverage. It would require hospitals to pick up an increasing share of expansion costs when federal match dollars drop from 100% to 90% after 2016.

In Nashville—the center of the country's for-profit healthcare industry—the fight for Medicaid expansion has been particularly contentious. That's because hospital and healthcare companies such as HCA have supported the ACA's Medicaid and private-insurance expansions, given that they offer millions of Americans a way to pay their medical bills.

During his remarks, Obama thanked former Senate Majority Leader Bill Frist, a Tennessee Republican who has been supportive of the ACA. The King ruling “allows an opportunity for Tennesseans to be further educated about the benefits of Medicaid expansion,” Frist said in an interview after the president's remarks. “Momentum is moving in that direction, but it will require bipartisan and nonpartisan support to get there.”

“I hope this ruling will encourage state governments that the intent of Congress has to be validated and they'll expand their Medicaid programs,” said Bill Carpenter, CEO of Brentwood, Tenn.-based LifePoint Health, who also attended the speech.

At the presidential speech, the Tennessee Justice Center rallied a group of supporters wearing purple “Insure Tennessee Now!” T-shirts. “People finally understand who it will help,” said Michele Johnson, the center's executive director. “We are absolutely overwhelmed with hope that this thing is going to pass.”