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State Races Will Affect Medicaid, Exchanges

By Rebecca Adams, CQ HealthBeat Associate Editor

October 19, 2012 -- Beyond the impact next month's presidential elections will have on the nation's health care policy, the winners of gubernatorial contests will have an important role in implementing the federal overhaul. The outcomes of three tight state races in particular will determine the future of Medicaid and health insurance marketplaces in those states.

If President Obama is re-elected, governors will have considerable sway over whether to expand Medicaid or operate their own state-run health insurance exchanges in 2014, among other policy choices. If former Massachusetts Gov. Mitt Romney becomes president, he is likely to try to stall or derail the 2010 health care law (PL 111-148, PL 111-152). However, unless the GOP wins a majority in the Senate, Romney would likely not be able to get an outright repeal of the law and governors would still face significant choices about health care in their states.

In the November elections, Republicans are favored to expand their gubernatorial advantage over Democrats—which could mean fewer states might accept the Medicaid expansion the health care law calls for than under the current lineup of governors.

The National Governors Association says that Republicans could have the greatest number of governors since 1922 if current polling holds. Of the 11 governorships up for grabs this year, Democrats are defending eight, while Republicans only have to maintain three.

Most polls indicate that the GOP is poised to have as many as 34 governorships after the election, up from the 29 they have now.

Republicans haven't had more than 32 governors at one time since the Great Depression, according to Republican Governors Association spokesman Mike Schrimpf.

Three of the gubernatorial races are toss-ups: Montana, New Hampshire and Washington. Although health care is not the top issue for voters in any of those contests, residents of those states ignore their candidates' stances on the subject at their peril.

University of Washington political science professor Mark Smith said that health care is something of a sleeper issue in that state's race. "It's a minor theme in the campaign overall," he said.

But that doesn't mean voters should be ignoring it.

"It's huge," said Fred Lynch, an associate professor of political science at Claremont McKenna College in southern California. "The problem with health issues is people don't think about them. The last thing people see coming is a health care crisis."

New Hampshire

In a state that is attuned to politics through its role as arbiter of presidential primary opponents, the Republican and Democratic candidates have clearly defined positions on Medicaid that line up with the national parties. Democratic former state Senate Majority Leader Maggie Hassan would expand Medicaid, while her opponent Ovide Lamontagne, a business attorney and former chairman of the State Board of Education, would not, according to their campaign staffs.

Current Democratic governor John Lynch, who has served for eight years and is not running again, has not said he would have committed the state to expanding Medicaid.

Lynch also signed a state law blocking New Hampshire from creating a state-run health insurance exchange without the consent of the legislature. The law does not prohibit the state from sharing data and cooperating with the federal government on an exchange.

The race to succeed Lynch is extremely tight. Two polls released this week showed Hassan two or three percentage points ahead of Lamontagne, while another showed the GOP candidate two points ahead.

"Maggie believes we should accept the $1.1 billion available for Medicaid expansion so we can expand access to more families," said Hassan spokesman Marc Goldberg.

Lamontagne spokesman Tom Cronin said that the Republican "opposes the expansion of Medicaid under Obamacare, as the Medicaid program is not designed to support able-bodied individuals who can access the private marketplace."

"Simply expanding the program beyond individuals with disabilities, poor women and children, and senior citizens for whom it was designed would not be the most efficient use of state nor federal dollars," Cronin said. Instead, Lamontagne would prefer a block grant approach that would provide the state more options. "By using these dollars to create a high-risk pool, for example, lower-income men and women in New Hampshire will be able to access the pool for assistance with purchasing care through the private market. The plans that can be designed in the private market have significantly more flexibility."

When it comes to the exchange marketplaces that are supposed to start in 2014, however, both candidates said they would be open to operating a state-run exchange if it feasibly can be done but are not sure that a state-only exchange is possible given the time constraints.

Hassan's staff said that she is interested in whatever approach is best for New Hampshire residents. Lamontagne's staff said that he is opposed to the health care law, but if it is clear that the federal government is prepared to implement an exchange in the state, he would work to try to create a state-run market instead.


The health care law is unpopular in Montana, and ads supporting former GOP Congressman Rick Hill have sought to tie Democratic Attorney General Steve Bullock to the overhaul. Bullock did not join the 26 state attorneys general who challenged the constitutionality of the law, a suit the Supreme Court decided in late June.

Montana—under Democratic Gov. Brian Schweitzer, who took office in 2005 and could not seek re-election because of term limits—is undecided on whether to expand Medicaid.

The race is neck and neck. A public poll released Sept. 21 showed Bullock one point ahead, while an Oct. 11 Democratic poll had Hill up by one point.

Bullock appears to be ducking the question of whether he supports broadening Medicaid; when asked by Montana media, he didn't say whether he would expand the program. There's no indication from his campaign materials whether or not he would support a state-run exchange.

He said at a health care forum in Helena in September that he needs to study the issue and its consequences more closely, according to the Associated Press. Bullock's staff did not return messages seeking comment on his position.

Hill, however, is clearly against the overhaul. Spokesman Brock Lowrance said Hill would not expand Medicaid.

"Medicaid expansion could put Montana taxpayers at risk, and Rick is not going to take actions that would threaten the solvency of our state or cause tax increases for Montanans," Lowrance said. "Rick will not support the Medicaid expansion if it puts Montana taxpayers at risk and increases the cost of health care in Montana. He believes we need to look at other mechanisms to solve the problem."

Hill, who once served on the board of directors for the state Blue Cross and Blue Shield Association affiliate, said at the September forum that he is open to operating a state-based insurance exchange. However, Republican legislators have voted to prevent the state from creating its own exchange, and Lowrance said Hill is not inclined to pursue a state-run exchange.

"If someone can come up with a valid reason on why Montana should have its own exchange, Rick is happy to listen to the argument," Lowrance said. "At present he doesn't see how a state-run exchange would be beneficial to Montanans."


The Democratic candidate is Rep. Jay Inslee, who voted for and is an outspoken supporter of the health care overhaul. He has said that the Medicaid expansion, especially with the federal government initially paying all or most of the costs, would benefit not only those who gain coverage, but also insured people whose costs sometimes are increased when providers shift the costs of covering patients without insurance to them.

Inslee's position is in sync with current Gov. Christine Gregoire's. Gregoire, who was first elected in 2005 and is not running again, has supported the Medicaid expansion in her state.

At an Oct. 2 debate, Inslee called the expansion a "no-brainer," according to local news reports, and said that insured people pay about $1,000 a year to subsidize the costs of uninsured people who are unable to pay their emergency room bills.

Inslee also has backed his state's existing plans to create a state-based insurance exchange.

The race in Washington remains within the margin of error. In three polls released this week, Inslee was one point to three points ahead of McKenna.

Of the Republican gubernatorial hopefuls in these races, Rob McKenna has the most detailed plan for how he would handle health care in his state.

An opponent of the central tenets of the health care law, McKenna joined the challenge by the GOP attorneys general. He notes that states eventually would have to pay some of the costs of expanding Medicaid. He cites an Urban Institute study showing that almost one-third of state residents would be eligible for Medicaid in 2014 if the state expanded its program, a statistic he calls "rather shocking."

Instead, McKenna wants to ensure that as many people as possible get private insurance, according to a policy plan on his website that shows an affinity for consumer-directed health plans, such as health savings accounts.

As part of McKenna's interest in private insurance, he is willing to operate the exchange as a state-run market. Washington has moved in that direction, and McKenna said that "if done right, the exchange can be a crucial element of extending coverage."

But he warns that the exchange must have "a broad range of choices for consumers."

"Our state must avoid the temptation to increase mandates, regulations and red tape that would drive new insurance carriers away from our market while increasing the cost of coverage," McKenna wrote.

Instead of expanding Medicaid, he would rather get grants from the federal government to replace the Medicaid entitlement.

Further, he suggests that states are in a good position to strike a hard bargain with the Obama administration if the president is re-elected.

The Supreme Court ruling "provides significant leverage for states to negotiate with the federal government for Medicaid reforms that allow us to provide better care and lower costs for the current population, before we consider the prospect of adding 328,000 new lives to the case load," he said on his website.

McKenna said that a per capita spending allotment "would realign incentives" and be "free of unnecessary and cumbersome federal constraints."

One thing McKenna would like to do is increase and give some teeth to the co-pays and other cost-sharing that Medicaid recipients pay.

"Washington is one of few states without meaningful cost-sharing for the bulk of its Medicaid enrollees," McKenna wrote. "Enforceable cost-sharing for current and new eligible populations must be allowed by the federal government as a means of curbing unnecessary utilization."

But Smith, the University of Washington professor, said he doubts that McKenna would really push hard for a block grant if he was elected or turn away federal funding, even if strings are attached.

"That's easy to say when the money is not sitting on the table," Smith said. "Most people think this is pure blustering because it's nine federal dollars for your one state dollar. At end of the day, that deal is too good for anyone to pass up."

Republican gains this year, regardless of whether they include Washington, will continue to erode Democratic control. Just five years ago, Democrats held the keys to the governors' mansions in 28 states, while Republicans did in 22. That represented the highest mark in 14 years for Democrats. But in elections since then, Republicans have moved ahead, with major consequences for Medicaid and the health care industry.

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