Medicaid Expansion Hits Resistance from States

Two dozen holdout states are still balking at expanding a federal program that would extend access to healthcare to more poor adults and ease the cost burden on providers who treat them.

The low-hanging fruit of Medicaid expansion has been harvested.

There are 27 states that have accepted the federal government's offer to help pay for Medicaid expansion. The other 23 states, mostly politically "red" states across the South, Plains, and Rocky Mountains, are locked in partisan struggles over expanding the program.

The expansion of Medicaid to more poor adult Americans is a key component of the federal Patient Protection and Affordable Care Act. Medicaid expansion and the new federally spawned individual health insurance exchanges are designed to provide healthcare access to poor and low-income Americans, respectively.

Under the PPACA, most individual adults with incomes under 100 to 138 percent of the federal poverty level are eligible for health insurance coverage through Medicaid. The federal healthcare law allows most individuals with incomes from 138 to 400 percent of federal poverty level to purchase subsidized insurance policies on the new exchanges.

"It's a crime. These are the most vulnerable people in our society. They have no other access to healthcare," says Lisa Dubay, PhD, a researcher at The Urban Institute and co-author of a recent report on Medicaid expansion. "We have no way to take care of them and that just seems wrong."

Prior to this year's launch of Medicaid expansion in half of the states, about 10.2 million people nationwide were potentially eligible to gain health insurance coverage through expanding the program, Dubay said. More than half of those people—5.8 million—live in states that have not expanded Medicaid.

"The states that have expanded Medicaid—they're getting a lot of people enrolled," she says. "It really speaks to the need for coverage. People are enrolling because they need it."

Resistance to Medicaid expansion in nearly half the country has created a poverty gap in the federal drive to reform the nation's healthcare system, Dubay says. "We're giving something to everybody except the poorest people in these states."

Court Fight Looms in Virginia
One of the most dramatic Medicaid expansion struggles is playing out in Virginia, where about 400,000 adults are potentially eligible to receive health insurance coverage through the program.

Last week, Governor Terry McAuliffe tried to break the Medicaid expansion impasse with Republican lawmakers by attempting to expand the program through procedural means. On Monday night, legislators in the GOP-led General Assembly blocked McAuliffe's executive power gambit, and the governor's authority to expand Medicaid appears destined for litigation.

"The ability of the governor to move forward will now be settled in court. It's not a favorable outcome," said Katharine Webb, Senior VP at the Virginia Hospital and Healthcare Association. "Somebody was going to go to court no matter what."

The political firestorm raging over Medicaid expansion in Richmond is so intense that Webb avoids using the M-word, preferring the phrase, "closing the coverage gap."

"Fundamentally, you have to get the commonwealth of Virginia to accept the federal dollars," she says, adding that Medicaid expansion advocates such as the VHHA are open to a range of mechanisms to expand the program. "We could design any kind of private option they want. But if we can't get the legislature to accept the federal dollars, we can't move forward."

Hospitals in Virginia are experiencing "real pain" financially from cuts to Medicare payments that began in 2010 to help pay for PPACA implementation as well as Medicare payment cuts linked to federal sequestration, Webb says.

The inability to expand Medicaid in the commonwealth has placed an additional financial burden on hospitals. "[The poor] go to an emergency department and get very expensive care," Webb says. "We can't keep them healthy. It's expensive and episodic."

Reports From the States
Officials from several hospital associations in states where Medicaid expansion is being debated share Webb's hopes and fears about "closing the coverage gap."

Florida

"Since our state has chosen not to accept available federal funds, our patients are not receiving health care coverage and hospitals are forced to make up these unmet costs, which leads to a 'hidden tax' that is shifted to those patients that pay out of pocket or those with private health insurance in the form of higher premiums... Florida has already left $5 billion dollars on the table by not accepting the available federal funds. We continue to lose $15 million each day, and nearly 1 million low-income Floridians remain without affordable health insurance." –Florida Hospital Association, via email.

Maine

"Our preferred answer [to the Medicaid expansion question] is, 'Yes, please,'" said "But, we are open to alternatives. … It's fair to say that while we support expansion we would also be supportive of any reasonable alternative to straight expansion." – Jeffrey Austin, VP of government affairs and communications at the Maine Hospital Association.

Missouri

Hospitals are experiencing the double whammy in Missouri. We're paying for the expansion in other states through cuts that are occurring in the Medicare program, without seeing a corresponding increase in the insured population.

In 2012, the last year we have full data, Missouri hospitals provided $1.1 billion in uncompensated care (charity care and bad debt costs combined). It is reasonable to expect that without new enrollment in a reformed Medicaid system – and only 1 in 8 of the state's uninsured enrolled in the exchange this year – that hospitals' uncompensated care costs will continue to grow." – Missouri Hospital Association spokesperson

North Carolina

"In 2012, our hospitals spent more than $1 billion on charity care to low-income and uninsured patients. Continued cuts to Medicaid reimbursement, especially in light of the state's decision not to expand Medicaid, jeopardize North Carolina hospital services and jobs… North Carolina hospitals understand that Medicaid reform must occur before Medicaid is expanded.

We join providers across the state in supporting the governor's recommendation for a patient-centered, provider-led, risk-bearing model for Medicaid. North Carolina hospitals believe health insurance coverage for everyone in our state will improve access to care, improve overall health and ultimately reduce costs." – Julie Henry, VP of the North Carolina Hospital Association

Utah

"Utah has a fairly robust economy and low unemployment rate compared to other states, which might be mitigating any impact. However, there have been reports by some hospitals of higher uncompensated care levels this year as compared to the past."

The UHA supports Gov. Gary Herbert's alternative to a straightforward expansion of Medicaid – the Healthy Utah Plan would use federal block grants to finance a state-administered Medicaid expansion. We welcome any efforts to provide coverage to those who are in need of assistance, especially those with income at or below 100 percent of federal poverty level." – Utah Hospital Association spokesperson