Feds Say 'No' To Partial Medicaid Expansion

By Julie Rovner

Published December 11, 2012 at 3:18 AM EST

Arkansas Gov. Mike Beebe speaks about expanding Medicaid during a speech to the Arkansas State Chamber of Commerce in Little Rock, Ark., on Nov. 14. The federal government hasn't set a deadline for states to decide on their Medicaid expansion plans.

The Affordable Care Act, as passed by Congress in 2010, assumed that every low-income person would have access to health insurance starting in 2014.

That's when about 17 million Americans — mostly unmarried healthy adults with incomes up to 133 percent of poverty, or about $15,000 a year — would gain access to Medicaid.

The program currently covers parents, children, the elderly and those with disabilities. Because adding more people to the program could overburden state budgets, the federal government would pay 100 percent of the additional cost for the first three years, phasing down to 90 percent.

But the Supreme Court upset this plan last summer when it decided the Medicaid expansion should be optional. Republican governors started to ask if they could expand Medicaid just somewhat, but still collect the additional federal funding for it.

After several months of consideration, the Obama administration delivered its decision Monday, as part of a series of questions and answers for states about Medicaid expansions and setting up health care exchanges.

"Congress directed that the enhanced matching rate be used to expand coverage to 133 percent" of the federal poverty level, says the document. "The law does not provide for a phased-in or partial expansion."

But that decision could lead to many fewer people getting coverage, predicts Matt Salo, executive director of the National Association of Medicaid Directors.

"I think there are a number of states — not just governors, but state legislators as well — for whom an all-or-nothing proposition, you may see some saying no," Salo said. Those are mostly Republican, at least so far.

Conservatives who intensely dislike the health law want those GOP governors and lawmakers to stick to their guns. That includes people like Merrill Matthews of the Texas-based Institute for Policy Innovation. In a piece for Forbes.com, Matthews said Medicaid is a flawed and fraud-ridden program not worth expanding.

But those same elected officials are also being strongly lobbied to go forward with the expansion — mostly by hospitals and other health care providers who would benefit from the additional federal funds.

Federal officials say there is no set deadline for states to choose whether or not to expand Medicaid.