How Far is Obama Willing to Go to Expand Medicaid?

The president has 18 months to further secure the Affordable Care Act’s legacy.

US President Barack Obama speaks about the Supreme Court's ruling to uphold the subsidies that comprise the Affordable Care Act, known as Obamacare, in the Rose Garden of the White House in Washington, DC, June 25, 2015.
National Journal
June 29, 2015, 4 p.m.

Pres­id­ent Obama is tak­ing his Medi­caid ex­pan­sion pitch to Ten­ness­ee this week to urge Re­pub­lic­an of­fi­cials to ex­pand the low-in­come in­sur­ance pro­gram through the Af­ford­able Care Act.

Ex­pect more of that. After the law sur­vived its latest po­ten­tially dev­ast­at­ing leg­al chal­lenge, Medi­caid ex­pan­sion will be a leg­acy-de­fin­ing is­sue for the pres­id­ent dur­ing his last 18 months, one that will de­term­ine wheth­er Obama­care achieves its full, de­sired im­pact.

“If we can get some gov­ernors that have been hold­ing out and res­ist­ing ex­pand­ing Medi­caid, primar­ily for polit­ic­al reas­ons, to think about what they can do for their cit­izens to have health in­sur­ance”¦then we could see even more im­prove­ment over time,” Obama said at a press con­fer­ence on Tues­day.

“We are go­ing to squeeze every last ounce of pro­gress that we can make as long as I have the priv­ilege of hold­ing this of­fice,” he ad­ded, speak­ing in gen­er­al terms, not just about Medi­caid.

But how far can—and will—his ad­min­is­tra­tion go to achieve that goal?

Fed­er­al of­fi­cials already have stretched farther than some thought they would after the Su­preme Court sty­mied the ACA’s cov­er­age ex­pan­sion in 2012 by rul­ing that states could opt out of the Medi­caid ex­pan­sion. More than 20 states still have not ex­pan­ded, leav­ing mil­lions more people un­in­sured than the law’s au­thors in­ten­ded.

So for the ACA to get closer to its goal of uni­ver­sal cov­er­age, the ad­min­is­tra­tion has as­sen­ted to a lot of con­ser­vat­ive de­mands in ex­change for Re­pub­lic­an-con­trolled states ac­cept­ing the ex­pan­sion. Ad­min­is­tra­tion of­fi­cials hope that ex­ample means more will fol­low.

“I’m an op­tim­ist about the Medi­caid is­sue,” Health and Hu­man Ser­vices Sec­ret­ary Sylvia Math­ews Bur­well said at a brief­ing with re­port­ers after last week’s Court rul­ing.

“We wel­come the con­ver­sa­tion, wel­come the op­por­tun­ity to talk about how a par­tic­u­lar state needs to do this,” she said. “At the same time, we have stat­ute in terms of what the pro­gram’s about, but we think there’s a lot of space to get to an agree­ment.”

The ad­min­is­tra­tion has made ample use of that car­rot as it has ne­go­ti­ated with GOP-led states to ex­pand Medi­caid. But it also is try­ing the stick, fight­ing with Flor­ida this year over Medi­caid ex­pan­sion and fed­er­al fund­ing for the un­in­sured while warn­ing Texas that it could do the same there next year.

The White House seems ready to pull out every tool avail­able to get states to “yes.”

It has turned at times to the bully pul­pit. For years, the ad­min­is­tra­tion has held reg­u­lar con­fer­ence calls with loc­al of­fi­cials to draw at­ten­tion to the Medi­caid ex­pan­sion is­sue. Now Obama is head­ing to Nashville to ramp up the pres­sure on Ten­ness­ee law­makers to act.

But one of his ad­min­is­tra­tion’s best tools so far has been a will­ing­ness to ac­cept al­tern­at­ive Medi­caid ex­pan­sion plans that con­ser­vat­ive of­fi­cials pro­pose. The ques­tion now: How far is the White House is will­ing to bend?

To con­vince re­luct­ant states to par­ti­cip­ate, HHS already has al­lowed them to use Medi­caid dol­lars to pay for private in­sur­ance, re­quire some en­rollees to make small premi­um pay­ments, cre­ate in­cent­ives for health­i­er be­ha­vi­or, and set up vol­un­tary work-re­fer­ral pro­grams for their be­ne­fi­ciar­ies. That has per­suaded states such as Arkan­sas, Iowa, and In­di­ana—with a Re­pub­lic­an gov­ernor, le­gis­lature, or both—to ex­pand Medi­caid cov­er­age to hun­dreds of thou­sands of low-in­come res­id­ents, des­pite their am­bi­val­ence to­ward or out­right op­pos­i­tion to Obama­care.

But the agency has its lim­its. It has denied state re­quests to re­quire people be­low the poverty line to pay premi­ums, as well as to lim­it be­ne­fits pack­ages. One red­line for the ad­min­is­tra­tion is re­quir­ing Medi­caid en­rollees to work or look for work. Some GOP of­fi­cials floated the so-called work re­quire­ment while their states were de­vel­op­ing their plans, but it nev­er made it in­to a fi­nal pro­pos­al.

“A year or two ago, there was a lot of de­bate about this ques­tion. How flex­ible was the ad­min­is­tra­tion go­ing to be, how far were they will­ing to go?” said Joan Al­k­er, ex­ec­ut­ive dir­ect­or of Geor­getown Uni­versity’s Cen­ter for Chil­dren and Fam­il­ies. “That’s really not what’s happened. There’s no waiver that they haven’t been able to ne­go­ti­ate to ‘yes.’”

“I don’t think we’ll ever get to the end of flex­ib­il­ity, per se,” she ad­ded. “I do think we have seen [the Cen­ters for Medi­care and Medi­caid Ser­vices] draw some lines in cer­tain places.”

Work re­quire­ments are the big one. Re­pub­lic­ans have de­fen­ded them as fisc­ally con­ser­vat­ive policy that will pre­vent Medi­caid eli­gib­il­ity from dis­suad­ing people to seek em­ploy­ment. When then-Pennsylvania Gov. Tom Corbett, a Re­pub­lic­an, pro­posed the policy in 2013, he said it would lead to more people get­ting in­sur­ance through an em­ploy­er—light­en­ing the fin­an­cial load for Medi­caid.

“We can­not af­ford to ex­pand the cur­rent Medi­caid pro­gram,” he said at the time. “It is an en­ti­tle­ment that is un­sus­tain­able.”

The Obama ad­min­is­tra­tion, however, re­fused to con­di­tion Medi­caid eli­gib­il­ity on be­ing em­ployed or search­ing for work, ar­guing that it vi­ol­ates the ba­sic stat­utory ten­ets of the pro­gram, and Corbett even­tu­ally backed down. Some states have since worked job-re­fer­ral ele­ments in­to their ex­pan­sion plans; New Hamp­shire plans to auto­mat­ic­ally refer un­em­ployed en­rollees to a state job-coun­sel­ing ser­vice, though par­ti­cip­a­tion wouldn’t be a re­quire­ment to re­ceive be­ne­fits.

But bey­ond that, HHS has ac­com­mod­ated a lot of con­ser­vat­ive pro­pos­als—more than some ex­pec­ted. In­di­ana’s Medi­caid ex­pan­sion plan might be the most far-reach­ing. It does not ap­ply en­rollee’s be­ne­fits ret­ro­act­ively, as the pro­gram usu­ally does, and en­rollees do not start to re­ceive cov­er­age un­til their first premi­um is paid. The state also was al­lowed to tem­por­ar­ily stop or down­grade an en­rollee’s be­ne­fits if they don’t make pay­ments.

“I didn’t think the ad­min­is­tra­tion was go­ing to ap­prove the [In­di­ana] pro­pos­al the way it did. That was more flex­ib­il­ity than I would have pre­dicted,” said Matt Salo, ex­ec­ut­ive dir­ect­or of the Na­tion­al As­so­ci­ation of Medi­caid Dir­ect­ors, in an email. ‘However, they’ve made state­ments that they ac­know­ledge they’ve gone out­side of their com­fort zone and are not go­ing to be ap­prov­ing any­thing sim­il­ar un­til there’s some eval­u­ation/ana­lys­is of In­di­ana to see how it’s im­pacted ac­cess.”

Oth­ers say it’s hard to tell if HHS is reach­ing the edges of its flex­ib­il­ity. Each state is start­ing from a dif­fer­ent status quo, and no two waiver ap­plic­a­tions are alike. What is clear, as In­di­ana showed, is the ad­min­is­tra­tion is will­ing to stretch pretty far to get Medi­caid ex­pan­ded.

“I really can’t say where the out­er lim­it is for CMS, what their feel­ing is,” said Mary­Beth Musumeci, as­so­ci­ate dir­ect­or of the Kais­er Com­mis­sion on Medi­caid and the Un­in­sured. “I will say, In­di­ana did go farther than the oth­er waivers we had seen on the Medi­caid ex­pan­sion.”

Bur­well her­self cited her agree­ment with In­di­ana Gov. Mike Pence as an ex­ample of her ca­pa­city to com­prom­ise.

“Is it ex­actly what he wanted, is it ex­actly what we wanted?” she said. “We found the space and it’s a space that we be­lieve is go­ing to make a lot of dif­fer­ence for the folks in In­di­ana.”

As Al­k­er noted, the agency is 6-for-6 so far in strik­ing Medi­caid ex­pan­sion waiver deals—even if she thought some of them, par­tic­u­larly In­di­ana’s so-called “lock­out” pro­vi­sion that tem­por­ar­ily stops be­ne­fits for non-pay­ment, were “very prob­lem­at­ic and bad health policy.” That is the bar­gain that the Obama ad­min­is­tra­tion has proven pre­pared to make in or­der to se­cure the law’s leg­acy.

Montana is next after the state le­gis­lature and gov­ernor ap­proved Medi­caid ex­pan­sion this year. Fed­er­al of­fi­cials already have stated their con­cerns about the state’s plan for premi­ums and oth­er cost shar­ing for poorer en­rollees, though both sides have said they ex­pect to find middle ground.

“We still be­lieve there is a lot of space to meet the needs of states,” Bur­well said. “That’s why these con­ver­sa­tions are so im­port­ant, and it is dif­fer­ent state by state in terms of how the gov­ernors and their state le­gis­latures ex­press what’s im­port­ant to them, and then fig­ur­ing out how you can meet those needs at the same time that what you’re do­ing is mak­ing sure that you’re cre­at­ing ac­cess­ib­il­ity and af­ford­ab­il­ity for these folks.”

“I ac­tu­ally think there’s a lot of place where you can meet both needs,” she said.

The more press­ing ques­tion, Al­k­er ar­gued, might be wheth­er the Court’s de­cision last week to pre­serve Obama­care will soften the Re­pub­lic­an in­transigence to Medi­caid ex­pan­sion. Be­cause if they do come around, evid­ence sug­gests they’ll be able to wring a lot of flex­ib­il­ity out of HHS.

“It’s been the in­tense polit­ics with­in the Re­pub­lic­an Party that has proven to be the ul­ti­mate bar­ri­er,” she said. “So where do those Re­pub­lic­ans go from here? Are they go­ing to fold their tents and ac­cept that the Af­ford­able Care Act is here to stay?”

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