A new Democratic plan to expand Medicaid hits a big snag: Republican governors

The Covid-19 stimulus bill isn’t going to fix the Medicaid expansion gap.

As part of their Covid-19 stimulus bill, Democrats are trying to cut a deal with Republican-led states to plug one of the biggest holes in Obamacare: the so-called Medicaid expansion gap.

But conservative state officials don’t sound interested in taking it. Based on an informal survey of the states yet to expand Medicaid, the provision in the stimulus bill that provides increased funding for states that expand the program now may end up having no effect at all. That would mean millions of people in poverty remaining uninsured.

Medicaid expansion is the unfinished work of the Affordable Care Act. The 2010 law was written with the intention that every state would expand the program to people living in or near poverty. But then the Supreme Court ruled that the federal government couldn’t force states to expand Medicaid; they must have a choice. As a result, 12 states have for the last decade refused Medicaid expansion, and an estimated 2.2 million Americans who would have been otherwise covered by the expansion are still uninsured and have no other realistic option for affording coverage. Most of them live in the South and they are disproportionately Black.

Democrats now are offering a new enticement for the holdout states to expand Medicaid. Already, under the ACA, the federal government would cover 90 percent of the expansion’s costs. Under the stimulus bill, newly expanding states would also receive a 5 percent bump in the federal funding match for their traditional Medicaid programs for two years. Because the traditional Medicaid population is significantly larger than the expansion population, the funding bump is projected to cover a state’s 10 percent match for expansion enrollees and then some over those two years.

Texas and Florida, the two largest holdout states, could net $5.9 billion and $3.5 billion respectively if they took the deal, according to estimates from the Center for Budget and Policy Priorities. Even a smaller state like Mississippi is looking at $890 million in additional federal funding — while covering an estimated 100,000 people currently without any other option for health insurance.

But based on my reporting, the holdout states appear unmoved and are unlikely to take the deal.

Republican states say they aren’t interested in Democrats’ new Medicaid expansion deal

I hopped on a press conference this week with Mississippi Gov. Tate Reeves (R) to ask him whether the new funding incentive would prompt him to reevaluate the decision to refuse Medicaid expansion.

“No, sir, it will not,” was his answer.

I heard the same from other governors’ offices in the non-expansion states.

“The Governor remains opposed to the expansion of Medicaid in Florida,” Cody McCloud, spokesperson for Florida Gov. Ron DeSantis (R), said in an email.

Laine Arnold, a spokesperson for Tennessee Gov. Bill Lee (R), said the governor was focusing on implementing the state’s new Medicaid block grant approved in the final days of the Trump administration.

“Governor [Kristi] Noem knows that expanding Medicaid is not the answer to accessing quality healthcare in South Dakota,” Ian Fury, a spokesperson for the South Dakota Republican governor, said in an email.

In a handful of non-expansion states — Kansas, North Carolina, and Wisconsin — a Democratic governor who supports expansion is contending with a Republican legislature that does not. (Most non-expansion states require the legislature to sign off on Medicaid expansion, though the governor’s support is obviously an important signal to the legislative branch on whether to pursue it.)

Kansas in particular has come tantalizingly close to expanding, with the most recent deal between Gov. Laura Kelly and Republican legislators derailed last year by a spat over abortion. But there is not much optimism about the stimulus bill’s new funding incentive putting the expansion over the top in Kansas.

“The current makeup of the legislators and leadership have no interest in expanding Medicaid,” Jim Denning, who recently retired after serving as the Republican leader in the Kansas Senate, told me.

The most positive response I received was a noncommittal answer from Wyoming Gov. Mark Gordon’s (R) office, who said the issue was in the hands of state lawmakers.

“The Governor is aware of that provision in the federal legislation and is monitoring potential impacts for Wyoming,” Gordon’s office told me in an email. “But, the issue of Medicaid expansion lies with the Legislature, so he will wait to see if this provision is in the bill that the President signs and if the Wyoming Legislature takes action.”

I didn’t hear back from Republican officials in every non-expansion state. But reporting elsewhere doesn’t sound optimistic either.

“Despite Covid and despite all the attention on health and disparities, we see almost no movement on this issue,” Tom Banning, who leads a Texas doctors’ group, told Kaiser Health News recently.

It’ll probably take more than a new funding incentive to fill the Medicaid expansion gap

The fact is that the Republican opposition to Medicaid expansion is more ideological than practical. These states have objected to the expansion despite evidence that it is cost-effective and saves lives.

As noted above, the feds were already covering 90 percent of the expansion’s costs — and these states still refused to take the deal. As for states that did take the expansion deal, a recent analysis published in JAMA found that they had seen “no significant changes in spending.” These states were able to offset the state costs of expansion by reducing other health care spending, such as subsidies to hospitals that care for large numbers of uninsured patients, that were not as necessary after the expansion.

“Medicaid expansion appears to be a win-win from the states’ perspective,” the authors, Jonathan Gruber and Ben Sommers, wrote, “giving health insurance to millions of low-income adults and offering financial support to safety-net hospitals, without any adverse effects on state budgets.”

Medicaid expansion also reduces mortality for patients: A working paper published in January concluded that Medicaid expansion led to 19,200 fewer deaths over its first four years. Another study found that Medicaid expansion had led to greater access to medical care, better disease management, and improved financial well-being for patients. During the Covid-19 pandemic, Medicaid has done “the heavy lifting” in providing coverage for people who lost their job and employer-sponsored health insurance, according to an analysis from the Economic Policy Institute.

Moreover, Medicaid expansion is popular, even with red-state voters. Voters in Utah, Idaho, Oklahoma, Missouri, and Nebraska have approved Medicaid expansion via ballot initiative. A recent survey by Data for Progress found voters in non-expansion states expressed solid margins of support for extending the program’s eligibility under the ACA.

And yet, conservative state leaders haven’t budged. Their intransigence has created a bizarre disparity for the Democrats’ Covid-19 stimulus legislation, which will likely succeed in extending more generous premium tax subsidies to middle-class Americans but appears destined to fail in covering uninsured people in poverty.

Democrats have other ideas for covering people in the Medicaid expansion gap. President Joe Biden proposed during his campaign creating a new government insurance plan, called a public option, that would automatically enroll people in the gap.

But the public option was not included in the stimulus bill, may not meet rules for the “budget reconciliation” process that Democrats must use to advance a bill without any Republican votes, and may simply not have 50 votes in the Senate even if it did. Moderate senators Joe Manchin (D-WV) and Kyrsten Sinema (D-AZ) haven’t committed to supporting such a proposal, though it is broadly popular with voters and other Democrats.

If Democrats are serious about closing the Medicaid expansion gap now that they control Congress and the White House, they’ll need to find another way. The stimulus bill is not going to get the job done.