Medicaid Expansion in Red States
March 16, 2015, 1:00am

A number of states that had previously refused to expand their Medicaid programs for the poor are reconsidering that policy. They would be smart to embrace expansion as soon as possible to cover millions of people who would be left uninsured if the Supreme Court wipes out federal subsidies for low-income people buying insurance on the federal health exchanges.

The Affordable Care Act originally required all states to expand Medicaid to cover people with an income up to 138 percent of the federal poverty level, or $32,913 for a family of four, but in 2012 the Supreme Court made expansion optional. Twenty-eight states and the District of Columbia have expanded their programs, but 22 have not.

The federal government pays 100 percent of the costs of covering newly eligible people through 2016, shifting down to 90 percent in 2020 and future years. This is a huge benefit to the states, since more health coverage means a healthier population, fewer people losing jobs because of health crises, greater productivity at work, fewer people getting charity care at costly hospital emergency rooms, and less strain on hospital and clinic budgets.

States that have not expanded Medicaid say it will strain them to pay even 10 percent of the costs. They insist that if the federal government pulls back from paying 90 percent, they will have to pick up more of the tab — but there is no reason to believe that will happen, and if it does, it can be resolved when it arises.

Fortunately, more and more Republican governors support expansion. Michigan, Ohio and Indiana are among 10 states with Republican governors that have already expanded Medicaid in recent years. Indiana and Iowa used Medicaid dollars to pay premiums for private health plans for poor people, an approach that requires federal approval and under federal rules must be budget neutral and offer comprehensive coverage.

Other pragmatic Republican governors, however, have been wrestling with Republican-controlled legislatures that cannot see the folly of refusing to take the federal money.

Gov. Sam Brownback of Kansas

Chris Neal / Topeka Capital-Journal, via Associated Press

In Kansas, Gov. Sam Brownback, a Republican who was previously a staunch opponent of expansion, recently said he was not opposed to an expansion that was “100 percent paid for” but wanted the Legislature to approve it. There are good reasons to do so. Kansas has a stingy Medicaid program that covers adults with children only if they earn no more than 38 percent of the federal poverty level, or $9,215 for a family of four, according to the Kaiser Family Foundation. A study sponsored by the Kansas Hospital Association estimated that the state’s failure to expand Medicaid in 2014 and 2015 is costing it $714 million in federal funding and 3,400 jobs in 2015.

In Florida, Gov. Rick Scott, a Republican, initially opposed expansion, then came out in favor of a three-year expansion to judge how well it works. After facing bitter criticism from Tea Party activists, he did not make it a priority. The Legislature ultimately rejected expansion but is now reconsidering. The more moderate Senate is considering a bill to use federal dollars to buy private insurance, but the more conservative House seems unlikely to endorse any expansion.

Alaska’s governor, a former Republican turned Independent, has proposed expansion, but Republican legislative leaders are balking. In Tennessee, a Republican governor worked hard on an expansion plan only to have it killed in February by the Legislature, which had been lobbied heavily by conservative groups.

In Utah, where the Republican governor has proposed an expansion plan, the Republican-dominated Legislature adjourned Thursday night without taking action, though the governor and legislative leaders agreed to negotiate a plan that could be approved later. In Wyoming, the Republican governor originally opposed expansion but changed his mind only to have expansion bills die in the Republican-controlled Legislature.

Not surprisingly, Democratic governors who favor expansion, like those in Missouri and Montana, have also been stymied by Republican-controlled legislatures.

The ideological gridlock in so many state capitals is inflicting serious harm on state budgets. But the greatest losers are poor people who cannot afford health coverage and the hospitals and providers who will have to take them on as charity care.