WASHINGTON — President Barack Obama thinks his health care law makes states an offer they can’t refuse.
Whether to expand Medicaid, the federal-state program for the poor and disabled, could be the most important decision facing governors and legislatures this year. The repercussions go beyond their budgets, directly affecting the well-being of residents and the finances of critical hospitals.
Here’s the offer:
If states expand their Medicaid programs to cover millions of low-income people now left out, the federal government will pick up the full cost for the first three years and 90 percent over the long haul.
About 21 million uninsured people, most of them adults, eventually would gain health coverage if all the states agree.
Adding up the Medicaid costs under the law, less than $100 billion in state spending could leverage nearly $1 trillion in federal dollars over a decade, according to the nonpartisan Urban Institute.
“It’s the biggest expansion of Medicaid in a long time, and the biggest ever in terms of adults covered,” said Mark McClellan, who ran Medicare and Medicaid when George W. Bush was president.
“Although the federal government is on the hook for most of the cost, Medicaid on the whole is one of the biggest items in state budgets and the fastest growing,” McClellan said.
A major worry for states is that deficit-burdened Washington sooner or later will renege on the 90-percent deal. The regular Medicaid match rate averages closer to 50 percent. That would represent a significant cost shift to the states.
Many Republicans also are unwilling to keep expanding government programs, particularly one as complicated as Medicaid, which has a reputation for being inefficient and unwieldy. Awaiting decisions are people such as Debra Walker of Houston, a part-time home health care provider. She had a good job with health insurance until she got laid off in 2007.
Walker was recently diagnosed with diabetes, and she’s trying to manage by getting discounted medications through a county program for low-income uninsured people.
Walker estimates she earned about $10,000 last year, which means she would qualify under the income cutoff for the Medicaid expansion. But that could happen only if Gov. Rick Perry, R-Texas, reconsiders his opposition.
“I think that would be awesome if the governor would allow that program to come into the state,” Walker said. “That would be a help for me, robbing Paul to pay Peter for my medicines.”
She seems determined to deal with her diabetes problem. “I don’t want to lose a limb later on in life,” said Walker, 58. “I want to beat this. I don’t want to carry this around forever.”
As Obama’s law was originally written, low-income people such as Walker would not have had to worry or wait. Roughly half the uninsured people gaining coverage under the law were expected to go into Medicaid. The middle-class uninsured would get taxpayer-subsidized private coverage in new insurance markets called exchanges.
But last year the Supreme Court gave states the right to opt out of the Medicaid expansion. The court upheld the rest of the law, including insurance exchanges and a mandate that virtually everyone in the United States have health coverage, or face a fine.
The health care law will go into full effect next Jan. 1, and states are scrambling to crunch the numbers and understand the Medicaid trade-offs.
States can refuse the expansion outright or indefinitely postpone a decision. But if states think they’ll ultimately end up taking the deal, there’s a big incentive to act now: The three years of full federal funding for newly eligible enrollees are only available from 2014 through 2016.
So far, 17 states and the District of Columbia have said they’ll take it. That group includes three Republican-led states, Arizona, Nevada and New Mexico. Arizona Gov. Jan Brewer was prominent among GOP leaders who had tried get the law overturned.
An additional 11 states, all led by Republicans, say they want no part of it. Perry says it tramples states’ rights.
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