Medicaid Expansion Will Hasten Obamacare Repeal, GOP Says (Corrected)

Stay ahead of developments in federal and state health care law, regulation and transactions with timely, expert news and analysis.

By Alex Ruoff

Republicans seeking to overhaul Obamacare are pushing back on the idea that their mission is being undermined by new states expanding their Medicaid programs under the health law.

Those pushing repeal told Bloomberg Law Republican-controlled states that expand Medicaid will soon have buyer’s remorse because they’ll run into budget problems as they take on a larger share of the costs for expanding their Medicaid programs in coming years. This budget pressure will hasten efforts to pass an Obamacare overhaul.

Virginia’s Legislature recently joined 32 other states and Washington, D.C., in expanding its Medicaid program. And Maine’s government June 4 was ordered by a state Superior Court judge to move forward with its ballot-approved Medicaid expansion.

Two other states, Utah and Idaho, both with Republican-controlled Legislatures, are slated to hold referendums on Medicaid expansion in November.

The decision to extend the public health insurance program for the poor to more adults has been seen as a major blow to Obamacare opponents as more people gain insurance under the health law.

“When states choose to expand Medicaid under the Affordable Care Act there are many more people eligible for subsidized health care, so [by repealing the ACA] you’re taking away coverage from more people,” Sen. Susan Collins (R-Maine), one of three Republican senators who brought down repeal efforts in 2017, told reporters June 4.

Virginia’s Medicaid expansion is slated to extend health insurance coverage to an estimated 400,000 people in the Commonwealth. Maine is expected to cover an additional 64,000 with its expansion.

A 2012 Supreme Court ruling made expanding Medicaid to adults who earn as much as 138 percent of the federal poverty level, roughly $16,000 per year for an individual, a choice for states. Most states controlled by Democrats expanded, and ACA supporters have pushed more states to follow suit.

Hesitation in expanding Medicaid has been a largely political decision in states like Virginia, where Republicans were wary of buying into Democrats’ signature health policy.

Expansion Helps Repeal

Opponents of the ACA expect calls for repeal to increase when states start paying more for their Medicaid programs. However, research shows states that have expanded their public health insurance programs have largely offset those costs.

Former Sen. Rick Santorum (R-Pa.), now working with a slate of conservative think tanks on a new ACA overhaul plan, told Republican state lawmakers in Virginia ahead of their vote to approve Medicaid expansion they were only hastening repeal efforts.

“Passage in Virginia actually creates more fire under the Congress to act because of further expansion that’s going to take place,” he told Bloomberg Law. “These were lawmakers who were looking for an argument on why they shouldn’t vote for it and I was speaking against that interest. If you vote for it you may be hastening a broader effort.”

This opinion is shared by some other Republican lawmakers as well.

Sen. Bill Cassidy (R-La.), who spearheaded Republicans’ last repeal effort, told Bloomberg Law he thinks it could “paradoxically drive us to a solution” as states find their budgets squeezed by Medicaid costs.

“States think they’re getting free money, but turns out free money actually costs,” he said.

It can be hard to pin down how Medicaid expansion has impacted state budgets because the federal government paid for costs associated with growing the program until 2017, when that share was reduced to 95 percent. States will eventually take on 10 percent of expansion costs.

State-federal Medicaid spending nationally rose by more than 11 percent in the first years of the ACA to $549.8 billion per year in 2017, according to a study by the Medicaid and CHIP Payment and Access Commission, a congressional advisory body.

Many states offset their Medicaid costs with new health-care provider taxes or fees. A Kaiser Family Foundation analysis found some expansion states saw decreases in costs associated with behavioral health services, crime and the criminal justice system, and Supplemental Security Income programs.

Democrats widely see Medicaid expansion as central to the health law and an attractive option for states looking to reduce the number of uninsured people living within their borders.

“I think Medicaid expansion will be here for a long time to come,” Sen. Mark Warner (D-Va.) told Bloomberg Law.

Request Health Care on Bloomberg Law