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GOP Governors Seek to Cut Deals on Medicaid Expansion

By Rebecca Adams, CQ Roll Call

January 13, 2015 --Republican governors in states such as Utah and Tennessee are trying to convince GOP-controlled legislatures to expand eligibility for Medicaid, arguing it makes financial and administrative sense to grow a program that is a linchpin of the health care law's coverage expansion.

North Carolina Gov. Pat McCrory, in a meeting last week with National Governors Association colleagues such as Utah's Gary R. Herbert, told President Barack Obama he is also open to expanding Medicaid, the federal-state health program for the poor. Some Idaho Republicans also support opening up eligibility and Wyoming GOP Gov. Matt Mead is pushing an expansion plan, although some state legislators prefer a different approach.

Change could come soonest in Indiana, where Republican Gov. Mike Pence could receive word in the next week or two about whether the Centers for Medicare and Medicaid Services will approve a plan that uses accounts similar to health savings accounts that some other states view as a template.

"The Mountain West area is really popping," said Joan Alker, executive director of the Georgetown Center for Children and Families, which tracks Medicaid policy.

To be sure, not all of the governors promoting expansion are Republicans. Independent Alaska Gov. Bill Walker wants to fulfill a campaign promise to open up the program to more adults. But he'll face a Republican-controlled legislature that has resisted the idea so far. Virginia Democratic Gov. Terry McAuliffe also is facing challenges pressuring reluctant legislators to expand.

But for a variety of reasons, it's in the interest of both the Obama administration and Republican governors to cut deals on expansion plans as soon as possible. 

The health care law (PL 111-148, PL 111-152) allows states to expand Medicaid for people with income of up to 138 percent of the federal poverty line. The federal government picks up the cost of covering all newly-eligible people through 2017, after which its share phases down. By 2020, states will have to pay 10 percent of the costs of the people who qualify under the expanded guidelines.

Delaying Medicaid expansion could lead to administrative hassles for states. Uninsured individuals living in those states that haven't expanded Medicaid can buy health coverage through new marketplaces created by the law, and people with incomes between the federal poverty line and 400 percent of the poverty line can get federal subsidies to offset the costs.

But states that opt to expand Medicaid later will have to transfer those individuals with exchange coverage who qualify for Medicaid under the new eligibility guidelines. That entails disenrolling individuals with marketplace plans and moving them into Medicaid without allowing any gaps in coverage.

In Indiana, “the governor has communicated ... that time is of the essence here,” said Brian Neale, Pence's healthcare policy director, in an interview. “Hoosiers need certainty. It’d mitigate any potential problems for individuals who might be unsure about what options they have available for this year as we look at the end of open enrollment for the marketplace, if we were to get a swift answer.”

Pence spoke with Obama on Oct. 3 during the president's visit to the state and has an ongoing conversation with Health and Human Services Secretary Sylvia Mathews Burwell.

Many state legislatures that would have to sign off on any expansion convene early in the year and adjourn in the spring, adding to the urgency. And states that expand typically will need to convince the Department of Health and Human Services to grant a waiver from existing Medicaid law, a process that takes time, before a state can implement the changes.

Twenty-eight jurisdictions including the District of Columbia have already expanded Medicaid. Of those, nine were led by GOP governors.

Obama and Burwell have been personally talking with Republican governors who could be persuaded to take the federal money and widen eligibility.

In Utah, Herbert spokesman Marty Carpenter said that the governor took along a new state House GOP leader to speak with Burwell about Medicaid. Advocates for expansion say they are more optimistic about expansion than in the previous legislative session, when then-House Speaker Becky Lockhart stood against it. She did not run for re-election.

"The governor is very adamant that he wants to get something done in this session," said his spokesman.

The administration is getting some lobbying help from hospital officials, Medicaid managed care company executives and employers whose workers may be able to gain coverage through expansion.

Hospital officials in Florida, for instance, are pressuring Republican Gov. Rick Scott and state legislative leaders to expand Medicaid, over the objections of many Republicans.

Some Democrats oppose job training components that many Republican governors have rolled into their expansion proposals, but governors may find a middle ground on the issue. Last year, then-Pennsylvania GOP Gov. Tom Corbett tried to require beneficiaries to participate in job search or training activities as part of his Medicaid waiver proposal. In the end, he and CMS officials agreed to make job training and referral programs optional for enrollees and to offer the potential of lower costs to those who agree to be connected to the state programs.

Alker said that some of the recent burst of activity, including Tennessee Gov. Bill Haslam's announcement last week that he would devote a special legislative session in February to debating Medicaid expansion, was unexpected because it signaled more seriousness than in the past. Governors are making decisions based on financial considerations, she said.

"The more pragmatic among the Republicans recognized that from a budget perspective, this is a very attractive offer," said Alker. 

Rebecca Adams can be reached at [email protected].

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