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Two New Governors Wrestle with Medicaid Expansion

By Marissa Evans, CQ Roll Call

December 4, 2015 -- Newly elected governors in Kentucky and Louisiana are moving in opposite directions on the same big problem: how to expand health coverage for low-income residents in states with some of the nation's highest rates of obesity, high blood pressure, and tobacco use.

As a gubernatorial candidate in Kentucky, Republican Matt Bevin decried the long-term affordability of the state's Medicaid expansion and pledged to roll back or eliminate the program.

But as he prepares to take office Dec. 8, Bevin is walking back a bit from that stance, saying he may seek federal waivers to allow the state to redo the expansion its own way while potentially avoiding the political repercussions of taking health insurance away from 400,000 people.

Meanwhile, Democrat John Bel Edwards in Louisiana says expanding Medicaid to more than 200,000 residents is a top priority.

"We're going to do it as soon as we possibly can and as responsibly as we possibly can," Edwards was quoted as saying in the New Orleans Times-Picayune. He will be sworn in Jan. 11.

The Louisiana legislature voted in June to give the newly elected governor authority to expand Medicaid through executive action. The bill also requires hospitals to pay the state's expansion costs starting in 2017. Edwards has until April 1 to make a decision.

The 2010 health care law allowed states to expand Medicaid eligibility to individuals with incomes up to 138 percent of the poverty level starting in 2014. The cost is fully covered by the federal government until 2017, when states that expanded will have to start chipping in. By 2020, states will have to cover 10 percent of the cost. So far, 30 states and the District of Columbia have broadened their programs.

Kentucky, which expanded its Medicaid program under the outgoing Democratic governor, Steve Beshear, saw its uninsured rate drop 8.4 percentage points between 2013 and 2014, according to a Kaiser Family Foundation report.

Louisiana, which has not expanded under Republican Gov. Bobby Jindal, had its uninsured rate fall only 1.8 percentage points over the same period, the report said.

Another Kaiser report found that enrollment in Medicaid and in the Children's Health Insurance Program grew by 87 percent in Kentucky after the federal health law was implemented and just 5 percent in Louisiana.

Despite the health care law's pledge that the U.S. would cover most of the cost of Medicaid expansions, many Republican governors and state lawmakers have resisted the move.

"It's one thing to sign everybody up but it's another thing to service their care needs," says Douglas Holtz-Eakin, former director of the Congressional Budget Office and president of the American Action Forum, which describes itself as a center-right think tank. "I think [governors] are worried about that, and I think that's a genuine concern."

A problem for the states, he says, could come from underestimating how many people will sign up for the program.

Among expansion states, enrollment is projected to increase an average of 4.5 percent in fiscal 2016, according to a Kaiser Family Foundation report released in October.

During fiscal 2015, beneficiary enrollment rose by 18 percent on average and Medicaid spending increased on average by 17.7 percent in the states that had expanded.

Louisiana's Medicaid expansion is unlikely to occur in time to get the 100 percent federal cost coverage, according to Robin Rudowitz, associate director for the Kaiser Commission on Medicaid and the Uninsured. Starting in 2017, expansion states will have to pick up 5 percent of the cost. However, Rudowitz says Louisiana could still see some budget savings for uncompensated care, behavioral and mental health services and in correctional facility health care.

How Kentucky and Louisiana decide to move forward with expansion will be important to watch, says Trish Riley, executive director of the National Academy for State Health Policy.

Edwards has said he'd likely do a traditional expansion in Louisiana while Bevin has said Kentucky will look into so-called 1115 waivers, which allow states more flexibility for their Medicaid programs.

Bevin has lots of models he can follow from other states, Riley says. Arkansas, Indiana, Iowa, Michigan, Montana and New Hampshire all have used 1115 waivers for their Medicaid expansions. Common elements of a waiver include subsidies to help beneficiaries pay for insurance, requiring beneficiaries to pay premiums and reducing premiums and co-pays for healthy habits such as exercising and getting health screenings.

Even if Kentucky decides to retool its expansion program, implementing the changes could take a long time, especially if the federal Centers for Medicare and Medicaid Services won't help, according to Matt Salo, executive director for the National Association of Medicaid Directors.

"The signal we've gotten is they're willing to bend over backwards to move states from the 'no' column to the 'yes' column," Salo says.

"I don't know if they're very willing to bend over at all to keep states in the 'yes' column...They don't think the threat of pulling out is real."

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