WASHINGTON — It’s health care brinksmanship, with hundreds of billions of dollars and the well-being of millions of people at stake.
President Barack Obama’s health care law expands Medicaid, the federal-state health program for low-income people, but cost-wary states must decide whether to take the deal.
Turn it down, and governors risk coming off as callous toward their neediest residents. Not to mention the likely second-guessing for walking away from a pot of federal dollars estimated at nearly $1 trillion nationally over a decade.
If the Obama administration were to compromise, say by sweetening the offer to woo a reluctant state, it would face immediate demands from 49 others for similar deals that could run up the tab by tens of billions of dollars.
As state legislatures look ahead to their 2013 sessions, the calculating and the lobbying have already begun.
Conservative opponents of the health care law are leaning on lawmakers to turn down the Medicaid money. Hospitals, doctors’ groups, advocates for the poor and some business associations are pressing them to accept it.
“Here’s the big thing: The state does not want to expand Medicaid and get stuck with the bill,” said Dr. Bill Hazel, Virginia’s health secretary. “Our legislators do not like to raise taxes to pay for a benefit someone else has promised. The concerns we have ... are around federal solvency and the ability of the federal government to meet its commitment.”
Medicaid covers nearly 60 million low-income and disabled people but differs significantly from state to state. Under the health care law, Medicaid would be expanded on Jan. 1, 2014, to cover people making up to 138 percent of the federal poverty line, or about $15,400 a year for an individual.
About half the 30 million people gaining coverage under the law would do so through Medicaid. Most of the new beneficiaries would be childless adults, but about 2.7 million would be parents with children at home. The federal government would pay the full cost of the first three years of the expansion, gradually phasing down to a 90 percent share.
The Supreme Court said states can turn down the Medicaid expansion. But if a state does so, many of its poorest residents would have no other way to get health insurance. The subsidized private coverage also available under Obama’s law is only for people making more than the poverty level, $11,170 for an individual. For the poor, Medicaid is the only option.
Although the health care law fully funded the Medicaid expansion and Obama has protected the program from cuts, the federal government’s unresolved budget struggles don’t give states much confidence.
Most states, including Republican-led Virginia, are considering their options.
A recent economic analysis by the nonpartisan Kaiser Family Foundation and the Urban Institute found that states will receive more than $9 from Washington for every $1 they spend to expand Medicaid, and a few will actually come out ahead, partly by spending less on charity care. States are commissioning their own studies.
So far, eight states have said they will turn down the expansion, while 13 states plus the District of Columbia have indicated they will accept it. The eight declining are Alabama, Georgia, Louisiana, Maine, Mississippi, Oklahoma, South Carolina, and Texas. Nearly 2.8 million people would remain uninsured in those states, according to Urban Institute estimates, with Texas alone accounting for close to half the total.
Hospitals aren’t taking “no” for an answer in the states that have turned down the expansion.
Although South Carolina’s Republican Gov. Nikki Haley has had her say, the Legislature has yet to be heard from, said Thornton Kirby, president of the South Carolina Hospital Association.
Hospitals agreed to Medicare cuts in the health care law, banking on the Medicaid expansion to compensate them.
“We’ve got a significant debate coming in January,” said Kirby. “There are a lot of people tuning in to this issue.”