Washington Health Policy Week in Review

Washington Health Policy Week in Review is a weekly newsletter that offers selected stories from the daily newsletter CQ HealthBeat.

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On Medicaid: Expansion Decisions Nearing Conclusion

By Rebecca Adams, CQ HealthBeat Associate Editor

June 28, 2013 -- On the one-year anniversary of the Supreme Court ruling that says states would not lose their entire Medicaid funding if they decided not to expand the program, the nation is closely divided.

With the fiscal year beginning in most states on July 1, many have decided whether or not to expand eligibility for adults starting on Jan. 1, 2014, as allowed by the health care law. So far, 23 states and the District of Columbia have announced they will expand eligibility. Another 22 have either said they will not expand or appear unlikely to expand on Jan. 1, while a handful remain unsettled.

Because there is no deadline to expand, state officials could change their minds later this year or decide next year to start offering expanded coverage in 2014 or 2015. And there is nothing to prevent states from starting their Medicaid expansion programs on another date—say, a year from now—as some new fiscal years start on July 1, 2014, not Jan. 1.

But states that expand later will lose some of the benefits of federal financing. The Centers for Medicare and Medicaid Services (CMS) will cover all of the costs for newly eligible adults for the first three years, but that phases down afterwards. In 2020, the federal matching rate will decline to 90 percent, where it is supposed to remain. The health care law (PL 111-148, PL 111-152) allows states to expand Medicaid for people with annual incomes of up to 138 percent of the federal poverty level.

The year has brought surprises, such as the announcement by nine GOP governors that they would support expansion. Arizona GOP Gov. Jan Brewer, who had been considered a favorite by conservatives until she backed expansion, went so far as to veto unrelated bills and call a special session until she got her way.

Expansion Advocates Still Pushing

Advocates for the expansion are still hoping the issue can succeed, one way or another.

In Montana, a state where the level of support for expansion was very close in the state Legislature and Democratic Gov. Steve Bullock backed it, a coalition of advocates is trying to get the issue on the 2014 ballot.

In Maine, the Legislature has passed an expansion, but Republican Gov. Paul R. LePage vetoed the legislation, and the Legislature does not have the votes to override it.

Among the states that are left, Ohio seems to have the strongest chances for passing an expansion. State officials have warned that implementation could take up to six months there, but supporters say they believe the state potentially could still be ready on Jan. 1.

"I'm feeling pretty good about Ohio, that it'll get done in time for a Jan. 1 implementation," said Georgetown University Center for Children and Families Senior Fellow Tricia Brooks, who visited the state last week. "Is it ideal to have six months to plan?," she added. "Once the legislature has signed on, you can do expedited administrative rules," she said, noting that IT systems for Medicaid are already being updated nationwide. "Would it be challenging? Yeah. ... I think you could do it in three to four months, if you really wanted to make it happen."

One thing that could make expansion more complex in Ohio is that Gov. John R. Kasich is interested in using Medicaid dollars to buy coverage in the exchange for at least some beneficiaries. Arkansas also has pursued a similar approach and released a copy of its proposal recently. CMS officials are reviewing it and previously indicated that they did not have major problems with the concept. Other states, such as Michigan, could end up looking to that type of plan as a way to expand eligibility.

Here is a state-by-state guide of some states to watch.

    • Florida: The state's hospitals are planning a major lobbying push to try to persuade Republican Gov. Rick Scott, who announced in February that he supports the expansion, to call a special legislative session this fall and to persuade lawmakers to accept expansion.

Florida's regular session ended in May without an authorization for expansion. The state Senate had supported legislation that would allow the more than 1 million Floridians who would qualify for coverage to use Medicaid dollars for private coverage through a program called "Healthy Florida." But the House did not approve it. Advocates for expansion see a chance that Scott could call a special session in September, when lawmakers will be back in Tallahassee for committee meetings. So far, Scott has not indicated that he will schedule a special session. The governor told reporters in Florida last month that "unless the House is going to make a change in their decisions, it wouldn't make sense to have a special session."

    • Indiana: Republican Gov. Mike Pence is open to expansion if it can be operated much like the current Medicaid program, Healthy Indiana. That program, which was approved through a waiver and is expiring at the end of the year, offers beneficiaries a set amount of coverage, like a health savings account.  Policy experts doubt CMS officials would allow the newly eligible group to be covered in that way. "The administration is not real keen on that," said Matt Salo, executive director of the National Association of Medicaid Directors. "They certainly have not signaled any interest in doing the Indiana version. If that's what Indiana is going to hang its hat on, they may be waiting a long time."
    • Michigan: Republican Gov. Rick Snyder, who supports expansion, has been touring the state to put pressure on the Senate to approve authorization of the Medicaid expansion, which the House passed earlier this month. Snyder called on the state Senate to "take a vote, not a vacation." The legislature meets year-round and will come back after a break. Meanwhile, a half-dozen GOP senators said they will meet over the summer to try to work out a solution.
    • New Hampshire: Democratic Gov. Maggie Hassan still hopes the legislature will pass an expansion this fall. The House supported it. But the legislature recently approved a state budget, which Hassan supported, that puts off the Medicaid decision by creating a commission that is supposed to study the issue, with a report due by Oct. 15.

"I am confident that once the study is complete the legislature will seek to move quickly to implement expansion through a special session in order to improve the health and financial wellbeing of our citizens," Hassan said in a June 26 statement about the budget and the Medicaid legislation. Spokesman Marc Goldberg said the governor believes that the expansion could be implemented within a few months.

The vote in the legislature is "really close, and it's a little hard to judge exactly who they might be able to move," said Georgetown's Brooks, who is a New Hampshire resident. "I still think there's hope in New Hampshire, and in time for Jan. 1. But I'm not sure I'd put as much money on it as I would in Ohio."

    • Ohio: Republican Gov. John Kasich is pushing hard for an expansion. He is backed by a large coalition of health industry officials, employers, and religious groups. Republican legislators have been reluctant so far, and stripped Kasich's plan to expand Medicaid from the two-year state budget. But the legislature meets throughout the year.

In recent weeks, Kasich has been making a moral argument, according to The Columbus Dispatch, which recounted a conversation that Kasich said he had with a legislator. Kasich is quoted as telling the lawmaker, "I respect the fact that you believe in small government. I do, too. I also know that you're a person of faith. Now, when you die and get to the meeting with St. Peter, he's probably not going to ask you much about what you did about keeping government small. But he is going to ask you what you did for the poor."

    • Pennsylvania: The Pennsylvania legislature, which is controlled by Republicans but closely divided, meets throughout the year, and backers of expansion hope that Republican Gov. Tom Corbett will come around to the idea of supporting an expansion.
      Corbett initially resisted expansion in Pennsylvania. But after Secretary of Public Welfare Gary Alexander, a critic of expansion, left his post several months ago, Corbett's administration has been holding talks with CMS officials. Advocates, including hospital groups and the seniors group AARP, are pushing state officials to support expansion.
    • Tennessee: Some policy experts are watching to see if action emerges in Tennessee, but the state looks like a long shot to expand Medicaid by Jan. 1.

The legislature is out of session. Republican Gov. Bill Haslam has expressed some support for the idea of using Medicaid dollars for private health insurance. Salo said that what Tennessee officials really want is permission to expand Medicaid for part of the newly eligible population—an idea that CMS officials have clearly rejected. "What Tennessee is saying ... is, are we going to do an expansion this way, with partial expansion, or nothing? Wouldn't you rather have people covered?" said Salo, outlining the state's position to CMS officials. "Tennessee is holding out hope that this argument is strong enough to give them what they want. Will it be? If I'm a betting man, I'd say no, but that's way above my pay grade."

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