After ACA Subsidy Ruling, Focus Shifts to States' Expansion Decisions

Health Care Policy Report™ offers the inside story on health care regulation and policy, with behind-the-scenes news and analysis of developments in Congress, the federal agencies, and the...

By Nathaniel Weixel

June 26 — In the wake of the U.S. Supreme Court's ruling in support of Affordable Care Act subsidies in King v. Burwell, the focus for states and the CMS is once again the decision whether to expand Medicaid.

Some states had been waiting until after the decision to determine if they want to expand Medicaid. Edwin Park, vice president of health policy at the left-leaning Center on Budget and Policy Priorities, told Bloomberg BNA June 26 states can't use the ruling as a reason to wait.

“You can't use it as an excuse anymore,” Park said, and the Centers for Medicare & Medicaid Services will be ready to work with any states that decide to expand.

Deborah Bachrach, a partner with Manatt, Phelps & Phillips, told Bloomberg BNA June 26 states have more Medicaid expansion options available to them now than if the decision had gone for the plaintiffs.

The decision further ingrained the ACA into the health-care landscape, Bachrach said, so states can expand without worrying about the federal funding disappearing.

Under the ACA, states have the option to expand Medicaid coverage to people up to 138 percent of the federal poverty level (FPL). The government will completely cover the costs of expansion through 2016, and will never pay less than 90 percent after 2020. The law originally required states to expand, but a 2012 Supreme Court ruling made it optional.

States that are contemplating using the so-called private option—using Medicaid dollars to purchase plans on the exchanges—now can count on a stable insurance market. If the Supreme Court had invalidated the subsidies in the majority of states using a federal exchange, many analysts predicted the insurance markets would have fallen apart.

The ruling provides a “stable foundation to build a coverage strategy,” Bachrach said. States also may be more inclined to expand Medicaid coverage because residents would be able to count on continuous coverage. Now that subsidies are guaranteed, residents in expansion states will be covered if they fall into the eligibility gap between qualifying for Medicaid and exchange subsidies. In non-expansion states, adults making under 100 percent of FPL won't qualify for either Medicaid or subsidies.

State Reactions

But many governors and state lawmakers who were opposed to Medicaid expansion before the decision have since said their positions haven't changed.

Virginia Gov. Terry McAuliffe (D), who lost a battle last September with the House of Delegates to expand Medicaid, tried to take up the cause again.

“With this issue decided, I hope we can now put partisan politics aside and help 400,000 Virginians get access to health care by bringing our taxpayer dollars home to close the coverage gap,” McAuliffe said in a June 25 statement.

But House of Delegates Speaker William J. Howell (R) said the position of the solidly Republican House hasn't changed. In a June 25 statement, Howell said Republicans “remain committed to strengthening our health care safety net without expanding our broken Medicaid system.”

North Carolina was a state that had been waiting for the King decision before deciding whether to expand. Both the House and Senate recently passed legislation to overhaul the state's Medicaid program, but while they were vastly different, neither version called for the expansion of the program. Gov. Pat McCrory (R) and legislative leaders have pledged not to support expansion without first making significant changes to Medicaid.

After the decision, House Speaker Tim Moore (R) June 25 reiterated that “Medicaid reform, not expansion, will remain the priority, and today’s court ruling will not directly impact North Carolina’s final decision.”

North Carolina state Sen. Phil Berger (R), Senate president pro tem, also shut the door on possible expansion. “Nothing has changed to address the multitude of concerns with Medicaid expansion. We cannot afford our current Medicaid system, much less an expanded one,” Berger said in a statement.

CMS Role

The CMS will continue its role as a facilitator, Bachrach said.

“CMS will continue doing what they have always been doing—working with governors who want to expand Medicaid,” Bachrach said.

Health and Human Services Secretary Sylvia Mathews Burwell told reporters on a conference call June 25 Medicaid expansion “is an important part of increasing access” to care. “We know different states have different needs” and the agency is ready to work with states to fulfill them, she said.

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