White House Proposes New Medicaid Expansion Incentives

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By Nathaniel Weixel

Jan. 14 — States that have yet to expand Medicaid under the Affordable Care Act would receive three years of federal matching funds under a plan that the White House will propose in its fiscal year 2017 budget, according to a Jan. 14 White House blog post.

Under current law, the federal government pays 100 percent of the cost of Medicaid expansion until 2017. The amount will decrease to 95 percent in 2017 and drop to 90 percent in 2020. The cost for states to cover that remaining 10 percent has been a primary argument from Republican governors and state lawmakers against expanding Medicaid coverage.

Offering to completely cover three years of expansion even for latecomers is part of a concerted push by the administration to convince the remaining holdout states to expand Medicaid coverage in President Barack Obama's last year in office. Obama's budget proposal will be released Feb. 9.

The administration's proposal would provide any state that takes up the Medicaid expansion the same three years of full federal support and the gradual decrease that the 2014 expansion states received, “no matter when the state takes up the option,” the posting by Office of Management and Budget Director Shaun Donovan and Cecilia Munoz, director of president's Domestic Policy Council, said.

Congressional Approval

The proposal would need to be approved by the Republican-controlled Congress, which is unlikely, especially since lawmakers just voted to completely repeal the expansion as part of the reconciliation bill (04 HCDR, 1/7/16).

“We hope Congress will act to provide this extra incentive to states that haven't yet expanded, encouraging them not to miss out on the benefits other states are already enjoying,” the White House said in the blog.

The announcement comes just days after Louisiana's newly elected governor John Bel Edwards (D) signed an executive order expanding Medicaid effective July 1 (08 HCDR, 1/13/16), and coincides with Obama's visit to the state. The ACA lets states make their own decision about expanding coverage to all non-elderly adults with income below 133 percent of the federal poverty level, and Edwards's order will make Louisiana the 31st state, plus the District of Columbia, to do so.

“This common-sense proposal makes the expansion as good a deal for states that expand now as it is for the states that have already done so,” the announcement said. “It is further evidence of the administration's willingness to work with states to build on recent progress in improving health coverage and making Medicaid affordable to states and taxpayers alike.”

Stakeholder Praise

America's Essential Hospitals, which represents mostly community safety-net systems, praised the decision in a Jan. 14 statement.

“Our hospitals look to Medicaid expansion as a necessity. Unsustainable costs from uncompensated care—especially where expansion has not occurred—threaten their ability to deliver vital care to their communities,” Bruce Siegel, the group's president and chief executive officer, said. “States that so far have refused to expand Medicaid undermine progress toward a country where no one goes without basic health care. We call on those states to reconsider their decisions and work with the president to bring a full, national expansion of Medicaid across the finish line.”

Patient advocacy group Families USA also praised the proposal and urged Congress to pass it.

“State legislatures are convening to draw up their budgets, and this could be crucial to their deliberations. Governors and legislatures can now be reassured that, as they extend coverage, their states’ budgets and economies will also be strengthened,” Ron Pollack, Families USA executive director, said in a statement. “The reluctant states have nothing to lose. History shows the federal government honored its commitments for full federal funding. Given this offer, it would be unconscionable for state legislatures not to accept the President's offer. In fact, they should lobby for it on behalf of their constituents.”

To contact the reporter on this story: Nathaniel Weixel in Washington at nweixel@bna.com

To contact the editor responsible for this story: Janey Cohen at jcohen@bna.com