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Officials See Full, On-Time Medicaid Expansion by the States

By John Reichard, CQ HealthBeat Editor

Senior Obama administration officials say they are confident that states won't opt out of the health law's Medicaid expansion as they won the right to do under the Supreme Court's ruling on the overhaul.

At a background briefing for reporters at the White House, the officials said that the availability of full federal funding for the expansion in its first three years—and no less than 90 percent federal payment of expansion costs on a permanent basis—would lead all states to expand Medicaid coverage up to 133 percent of the poverty line.

The Medicaid expansion is scheduled to begin in 2014 but some observers wonder whether it will take a number of years for states to go ahead with it. A reporter noted, for example, that not all states entered the Medicaid program right away after its creation in 1965 and asked whether the same pattern would occur under the expansion. One of the officials responded that there were only two "outliers" when it came to entering Medicaid originally, Arizona and Alaska, and indicated such delays are unlikely to recur under the expansion.

Kaiser Health News, however quoted, officials in Missouri, Mississippi and Nebraska as casting doubt on the likelihood their states would expand Medicaid. Lobbyists in recent days have also raised the possibility that Congress might decide to delay the 2014 implementation not only of the Medicaid expansion but also the start of insurance exchanges with subsidies to buy coverage. They've suggested that savings from doing that would help cement a deficit reduction agreement next year between Democrats and Republicans.

National Association for Home Care and Hospice President Val Halamandaris recently said a delay would give states time "to prepare for implementation including the creation of exchanges. This delay will also save approximately $200 billion, which can be applied to deficit reduction, extending the SGR "doc fix" and avoiding the need for any further cuts to Medicare," he said.

But one of the officials, who spoke on the condition that they not be identified by name, downplayed the possibility that deficit reduction talks next year would center on the health law (PL 111-148, PL 111-152), saying that the overhaul measure significantly reduces deficit spending. And the officials expressed confidence that all states would either have their own exchanges or a federal insurance exchange available by 2014. So far 33 states have received federal money to create their own exchanges, one official added,—in addition to the initial planning grants. And more states have applied for such added funding.

The officials also denied that there are any funding or staffing shortfalls that would keep the federal exchange or the federally sponsored data port—to be used by state exchanges to obtain income and other information on insurance applicants—from functioning as scheduled.

If states do opt out of Medicaid, that would ostensibly leave some poor people who do not qualify for Medicaid without access to subsidies to buy insurance. That's because their incomes in many instances would be below 133 percent of the poverty line, the point at which subsidies become available. Would the Obama administration seek legislative changes to ensure such Americans would have access to subsidies? Officials brushed aside the inquiry as a hypothetical while again expressing confidence states wouldn't opt out.

Officials also suggested that public support for the law will grow over time and that people will form their own assessments and be less influenced by critics who engage in "spin."

They said they plan no special effort to explain to the public the justification for the individual mandate, which polls say is the least popular part of the law. Rather, they said they would respond to questions about it and would emphasize benefits of the overhaul such as its ban on denying coverage because of preexisting medical conditions.

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