Medicaid Expansion Prospects Warming Up

Although the federal program that provides healthcare for millions of poor people faces some legal hurdles, governors in some states that have refused Medicaid expansion are starting to reconsider.

On the national scene and in the media, Medicaid often takes a back seat to Medicare.
That's understandable. Medicaid is a smaller program; the poor people it serves don't have the political clout of Medicare recipients; and Medicaid is much harder to track on a national level because each state administers its own program.

The day-to-day operations of Green Mountain Care in Vermont, for example, may not much affect what happens to Missouri's MO HealthNet. It's hard to build a national consensus or a political movement around so many fiefdoms.

Nonetheless, Medicaid is a vitally important and expensive program that affects the lives of millions of poor and vulnerable people who would otherwise go without health insurance coverage.

The program will be in the news this year on several fronts, so I've rounded up a sampling of some of the issues that likely will be taken up in 2015.

Medicaid Parity Funding Expires
The New Year started off on a dour note for Medicaid with the expiration on Dec. 31 of Section 1202 of the Patient Protection and Affordable Care Act. The Medicaid-Medicare Parity provision had earmarked $12 billion in 2013 and 2014 to raise to Medicare levels the Medicaid fee-for-service payments for primary care physicians. Without action from Congress, however, the provision expired at the end of the year.

The American Academy of Family Physicians and other provider associations want the Republican-controlled Congress to reinstate the money this year, but that is laughably unlikely because the Republican-controlled Congress hates anything to do with Obamacare and has spent much of its time trying to eviscerate it.

SCOTUS Hears Idaho Medicaid Suit
The U.S. Supreme Court next Tuesday will hear oral arguments in Armstrong vs. Exceptional Child Care Center, Inc. I wrote about this case back in October. In a nutshell, providers in Idaho complain that the state's Medicaid reimbursements are insufficient to cover costs, and are thus a violation of Medicaid's equal-access mandate because they create a barrier to care access for the state's poor.

The chief question before the court is whether or not the Supremacy Clause in the U.S. Constitution grants providers the "private right" to sue the state to increase its Medicaid reimbursement rates.

The American Medical Association is one of a number of parties with vested interests that have filed a friend-of-the-court brief. AMA President Robert M. Wah, MD, said in prepared remarks this week that "the sad fact is that Medicaid's guarantee of equal access has become an illusion in many states that have cut Medicaid funding and driven physicians and other health professionals from the program."

The AMA cited a report by the Government Accountability Office which showed that 38 states were unable to attract enough physicians and dentists to serve new Medicaid patients and that low Medicaid payment rates were a leading cause.

Matt Salo, executive director of the National Association of State Medicaid Directors, says allowing private parties to sue Medicaid for perceived inadequate rates would create chaos.

"There is a process to determine what constitutes appropriate rates and how to define access. Medicaid is administered by the states and overseen by the federal government. Health and Human Services has very effective guidelines and processes for determining these issues," Salo wrote in an email exchange.

"We think it is unnecessary and counterproductive to open up that process to other parties who feel aggrieved by the results. Private right of action on this issue (can you name a provider or group of providers who think they're paid too much?) would unnecessarily clog up the courts and prohibit the effective and efficient operation of the Medicaid program."

Medicaid Expansion in Red States
Throughout this year we can expect to read about Red State governors reconsidering their ill-advised and politically motivated decisions to reject billions of federal dollars in the form of Medicaid expansion money.

The Obama administration earlier this month pledged to work with the states that were considering non-traditional alternatives to expanding Medicaid and governors are grasping that olive branch, perhaps to use it as a fig leaf.

Tennessee last month was the latest state to bow to reality when Gov. Bill Haslam (R) pitched a plan that would allow Medicaid-eligible adults to use the expansion money to buy private coverage. The proposal will be debated by a special session of the Republican-controlled Tennessee General Assembly next month. The Centers for Medicare & Medicaid Services also would have to approve the deal.

Political leaders in Kansas, North Carolina, Utah, Colorado, Wyoming, Montana and other non-expansion states have also expressed an interest in creating their own version of Medicaid expansion. There were even reports that Texas' new Gov. Greg Abbott (R) during a closed-door staff meeting last month expressed some interest in expanding Medicaid. That idea was buggy whipped when it became public, however, forcing the governor's spokesperson to claim that Abbott's remarks had been "misinterpreted."

At the point where it becomes politically expedient, Texas will adopt Medicaid expansion. I cannot imagine that Texas's healthcare sector, which includes huge and wealthy for-profit and not-for-profit health systems, is not aggressively pushing for some form of expansion. They understand that the state is missing out on billions of dollars of federal subsidies, even as hospitals are required to provide care for people who can't otherwise pay.

In 2015, the question for Texas—and all non-expansion states—will be not "if" but "when."