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Republican governors vow to fight Medicaid expansion, but will they?

July 03, 2012|By David Lauter
  • Gov. Rick Scott speaks about the Supreme Court's decision concerning the federal healthcare law at a news conference in Tallahassee, Fla.
Gov. Rick Scott speaks about the Supreme Court's decision concerning… (Steve Cannon / Associated…)

Will Republican-led states "opt out" of the expansion of Medicaid that is one of the chief pillars of the Obama administration’s healthcare law?

Political figures in both parties have increasingly focused on that question since Thursday’s Supreme Court decision upholding most parts of the law. Several Republican governors, most prominently Florida's Rick Scott, already have said they will refuse to cooperate.  

As we reported the day of the decision, Chief Justice John G. Roberts Jr.’s insistence that states have an option on whether to cooperate with parts of the new law could open the way to a significant red state/blue state divide over healthcare coverage.

But although Scott left little wiggle room on his stand -- "Florida will opt out," he said in a statement -- other Republican governors have given themselves more leeway. Wisconsin's Scott Walker, for example, said only that his state would take no action to implement the law for now. There are good reasons to think that if President Obama wins reelection, some may see things differently.

What's at stake are the main ways the new law aims to provide health insurance coverage for the approximately one-in-six Americans who lack it. The law provides two main mechanisms: People who have jobs that don't provide insurance would get subsidies to help them buy it, and people who are too poor to buy insurance would be covered by expanding Medicaid, the federal-state program that currently insures at least some of the poor.

Both of those mechanisms are supposed to involve the states. For those who can afford insurance, each state government is supposed to set up an exchange -- an online marketplace in which people can buy it. For Medicaid, the federal government would pick up the entire tab for expanding the program for the first several years, then 90% of the cost starting in 2020, so states eventually would share the cost.

The law as written required all states to participate in the Medicaid expansion, but Roberts said that the Constitution requires that they be given a right to opt out. The law doesn't require states to set up exchanges, but says that Washington will do that for them if they decline.

If Washington is going to pick up the entire cost of expanding Medicaid for the first several years, why would states want to turn down the money? First, of course, there's ideological opposition to anything related to "Obamacare." Second, state officials quite rationally fear that the federal government, facing its own budget problems might change the rules down the road and cut back its payments, leaving them with a big bill.

So what might change their views? After the election, the ideological passion over the healthcare law could subside. Right now, public opinion on the law divides almost entirely along partisan lines. That won't change before the election. But political parties seize on different issues at different times, and if Obama wins reelection, the political focus could move to other issues.

Moreover, refusing to expand Medicaid could be politically difficult for Republican governors and lawmakers. Hospitals, for example, can be expected to lobby hard for states to participate. Currently, hospitals pay out billions of dollars to provide care to people who have no way to pay. In states that take the federal money and expand Medicaid, hospitals will suddenly start getting paid for that care, while in states that don’t, the hospitals will continue to foot much of the bills.

The more people who lack insurance a state has, the worse that uncompensated-care problem is for the hospitals. Many of the worst states in that regard are conservative ones that traditionally have covered very few of their residents under Medicaid. Those states would see the biggest increase in coverage, and because the federal government will pay the lion's share of the cost, they would also reap the most federal money by participating. The Kaiser Foundation has studied how states would fare under expanded Medicaid. Of the states that would get the most money, almost all are Republican-leaning.

Finally, the structure of the law would lead to an unusual situation in states that refuse to expand Medicaid: Middle-income residents would be eligible for federal subsidies to buy insurance, but low-income residents would not get help. That could trouble some lawmakers.

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