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The Six States That Can't Decide on Medicaid Expansion The Six States That Can't Decide on Medicaid Expansion

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Health Care

The Six States That Can't Decide on Medicaid Expansion

A small handful of states remain in negotiations with themselves and the federal government over if and how to expand Medicaid under the Affordable Care Act.

For a number of states, the decision of whether to expand Medicaid is not a straight path.(Shutterstock/Sergiu Ungureanu)

For the final six holdouts, the decision of whether to expand Medicaid under the Affordable Care Act has become a delicate tug-of-war between state officials and the federal government.

The Affordable Care Act expands Medicaid coverage to all adults below 138 percent of the federal poverty level. Under the law, the federal government will cover 100 percent of the cost for the first three years—from 2014 to 2016. The federal contribution then gradually declines to 90 percent, where it will remain.

However, the Supreme Court ruled in 2012 that the decision to expand must be left up to the states. While the Obama administration assumed that states would still jump at the federal funding, this turned out not to be the case.

 

The "road to yes," as Matt Salo—executive director of the National Association of Medicaid Directors—calls the decision, is complex and unique to each state. In those still deciding, there are a number of factors—political, financial, ideological—to consider, and various ways the program can be implemented.

"This is not just a question of what does the state want," Salo says. "In this case it's a combination of the governor and legislature, which can be of the same party or different parties, and can have subtly or radically different ideas of what they want done."

"I do think that the vast majority of states would like to get to 'yes'; it's just yes for them may look different from what the administration is currently willing to do," he continued. "A lot of states are sitting on the sidelines at the moment and trying see if they can get a better sense of how far the administration is willing to come."

The White House did not set any deadline for a final decision on Medicaid expansion, and states may change at any time.

Currently, 25 states and the District of Columbia have opted into Medicaid expansion, while 19 have opted out. That leaves six that have not yet decided.

Here is what's going on in those limbo states:

New Hampshire

New Hampshire is on the brink of expanding Medicaid to approximately 50,000 low-income residents. The Republican-controlled Senate voted 18-5 earlier this month to pass the state's version of expansion under the ACA. The Democratic-controlled House is expected to pass the bill in the next couple of weeks, and Democratic Gov. Maggie Hassan has said she supports it.

The bipartisan New Hampshire plan calls for putting all newly eligible adults into a premium assistance model similar to the approach in Arkansas, which will use federal funds to buy private insurance plans on the exchanges.

However, because the process for implementing the "private option" can be lengthy—with drafting the waiver and putting it up for public comment—the state will move forward with expanded coverage in the meantime, according to Deborah Bachrach, partner at Manatt Health Solutions, which is assisting with Medicaid expansion in New Hampshire. Beginning July 1, newly eligible adults will begin receiving coverage through the existing Medicaid managed care plan, and will later be transitioned onto the private market.

"This drives home that this is time sensitive; that state leadership wants to start coverage, bring in federal dollars, and have the federal matching rate," Bachrach says.

The state anticipates that some, if not all, of the Medicaid managed care plans will become plans on the private market, which could have a significant impact on competition in the New Hampshire exchange, as there is currently only one insurer participating.

Virginia

Virginia is at an impasse on Medicaid expansion, with the governor strongly in favor and the Republican-led House fervently opposed.

Democratic Gov. Terry McAuliffe, elected in November, campaigned on the issue of Medicaid expansion and has made it his mission to pass it in Virginia. Yet while the state Senate supports the expansion bill, the House is not budging. The political standoff continues, as McAuliffe travels the state to rally support for the legislation ahead of the special session.

"The governor is relatively new, and this debate has existed in the Virginia Legislature for years," says Salo. "The governor said it's his No. 1 priority—the GOP probably doesn't want to hand him a victory on his No. 1 priority right away."

The state's General Assembly adjourned nearly two weeks ago without passing a budget or Medicaid expansion. The Legislature will return for a special session at the end of this month, but neither side is showing signs of caving. McAuliffe has rejected calls from Republican lawmakers to separate Medicaid expansion from the two-year, $96 billion state budget, and if the two sides cannot agree and pass a budget by the end of June, the state government will shut down.

Expansion would extend coverage to about 400,000 Virginia residents.

Pennsylvania

If Republican Gov. Tom Corbett's proposal for Medicaid expansion is approved, Pennsylvania will be the first state to tie work-related criteria to its Medicaid program.

The plan is under review for approval by the federal government. Like a number of other states still in limbo, the proposal accepts federal funding to help low-income individuals purchase plans on the insurance exchange. It would expand Medicaid to about 500,000 people.

However, Corbett's proposal has attracted attention for attempting to establish a work program within the health care program. It originally included a controversial work requirement, which would mandate that those working fewer than 20 hours a week participate in a job-training program to be eligible for coverage. The governor sent a letter to HHS earlier this month, instead proposing a voluntary pilot program that would offer lower premiums and co-pays for consumers who participate.

The current holdup in Pennsylvania is more ideological than political, Salo explains. "States are thinking about things like how to create more personal responsibility in government benefits—whether that's looking to do drug testing for beneficiaries, or lifetime limits on benefits, or require beneficiaries to participate in a job search," he says.

While HHS has approved premium assistance models in other states like Arkansas and Iowa, these personal-responsibility stipulations enter new ground that federal officials may not be willing tread.

"My sense is that the administration has no interest whatsoever in entertaining any of those conditions," Salo continues. "They don't want to put that stigma on health care coverage."

Utah

Representatives from Gov. Gary Herbert's office are in D.C. discussing his Medicaid expansion plan with administration officials this week. The state is currently moving forward with the Republican governor's plan, after proposals from the state House and Senate failed to advance before the close of the legislative session last week.

After refraining from opting in for a long while, Herbert made it clear in January that he wanted to do something about Medicaid expansion, but he did not clarify what approach that might be until recently.

The governor's Healthy Utah plan would expand coverage to adults below 138 percent of the federal poverty level, and use federal funds to buy private insurance for low-income adults. The plan would seek a federal block grant to cover the approximately 111,000 Utahns under the income threshold. The three-year pilot program would accept $258 million in federal funds in 2015.

"It's more robust [than the House and Senate proposals]," says Kolbi Young, spokesperson for the Utah Department of Health. The House plan involved only state dollars with no new Medicaid funding, while the Senate plan accepted federal funding but only expanded coverage to 100 percent of the poverty level.

Because neither plan was passed, the governor is moving ahead with his own.

The Healthy Utah plan includes elements of personal responsibility as well. It involves some cost-sharing, and those making below $15,521 would pay $420 in annual premiums and medical costs. There is not an official work requirement in the proposal, but the motto associated is "those who can work, do work."

It is not yet known what the administration's response will be. "The plan has not been presented to CMS," Young says. "That's the next step."

Missouri

Missouri has thus far been at a standstill between Democratic Gov. Jay Nixon, who very much favors expansion, and a conservative Republican Legislature that is very much opposed. However, that dynamic is beginning to show signs of shifting, and there is currently legislation pending in the House to expand the program.

Republican Rep. Noel Torpey chaired an interim committee examining Medicaid expansion last fall, according to the Missouri Department of Social Services. From this came the bill before the Legislature, which involves a kind of hybrid between premium assistance and traditional Medicaid expansion.

Under the plan, individuals would be eligible for Medicaid below 100 percent of the poverty level. Those between 100 and 138 percent would use premium assistance to purchase coverage on the exchange. About 300,000 Missourians would be newly eligible for coverage.

The bill also includes a work-referral requirement, although is is not a condition of eligibility, according to Bachrach.

The next House hearing on the bill is scheduled for March 25.

Indiana

Indiana has been held up on Medicaid expansion because of a desire to continue a program currently in place in the state: the Healthy Indiana Plan.

HIP is a pilot Medicaid program started in 2008 that covers low-income individuals whose incomes are too high to qualify for Medicaid but too low to buy insurance on the private market. The program is capped at about 45,000 individuals, and is modeled on health savings accounts, requiring consumers to contribute a portion of their income so that they have a kind of buy-in for their coverage. Medicaid expansion would extend coverage to about 400,000 individuals.

Republican Gov. Mike Pence has remained committed to maintaining the HSA model in Medicaid expansion considerations. Indiana has been granted an yearlong extension of HIP while officials continue to explore options for a full expansion in the state.

"Indiana has been very very intent on using [HIP] as the basis for Medicaid expansion--they want to be able to use this HSA approach," says Salo. "Until now, the administration has not looked on this terribly favorably; the administration is not at all intent on setting a precedent of wide expansion of the health savings approach into Medicaid expansion."

"They've been at a pretty serious impasse there for quite some time," he says.

The Indiana Medicaid office did not respond to a request for comment.

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