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Jul 11 2012

Medicaid expansion and health exchanges provisions of the ACA

In all the hoopla over the main verdict concerning the individual mandate in the Affordable Care Act and the Chief Justice’s vote on it, two other important features have had less attention paid to them.

The ACA sought to decrease the number of poor uninsured by expanding the eligibility of Medicaid to those earning up to 133% of the federal poverty level, compared to the current 100% for most people. The federal government would pay 100% of the extra costs incurred for the first three years and at least 90% (probably around 93%) subsequently, with the states covering the balance. Under the original law, the federal government could coerce the states into accepting this expansion by withdrawing all their Medicaid funds if they refused. The Supreme Court ruled 7-2 that this was unconstitutional and that states could resist the expansion without paying the penalty of losing all their current Medicaid funding.

Initially the administration did not seem that concerned about this setback since the terms of the expansion seemed so generous to the states that it seemed unlikely that they would reject the opportunity to cover more of their poor uninsured at relatively little cost to them.

But they had overlooked the doctrinaire attitude of some Republican-dominated states that are so opposed to the ACA that they say they are willing to forego the funds and not expand Medicaid eligibility, thus continuing to deny some poor people access to regular health care and forcing them to continue to depend on the more expensive emergency rooms, which actually costs a lot more. Seven states have definitely said no, while another eight are supposedly undecided, but leaning towards no. Some are even going so far as to argue that the ruling allows them to actually cut Medicaid eligibility to less than what it is now, throwing even more poor people onto the rolls of the uninsured.

It is quite extraordinary the extent to which these Republican-dominated states are willing to let the lower-income people suffer from inadequate health care coverage, even rejecting ‘free’ money from the federal government to do so. It remains to be seen if and when greater awareness of what they have done sinks in, the people in those states will be angry enough at their leaders cutting off their noses to spite their faces that they will demand that they reverse course and accept the expansion. After all, even if they don’t care about health care for the poor, more money coming into the state will help its economy, and so even naked self-interest will work in favor of accepting it.

Some Republican-dominated states are also not going to create the health care exchanges that are required to be set up by the ACA, through which individuals can more easily compare competing health insurance options and purchase coverage, with financial support offered for those earning between 133–400% of the federal poverty level. The states that have so far not taken any action to create these exchanges include Louisiana, Florida, Nebraska, Alabama, Oklahoma, Georgia, Indiana, Kansas, Missouri, Michigan, South Dakota, Texas, Virginia and Wisconsin, though they still have until the end of the year to change their minds and create one. Under the law, the federal government will step in and create exchanges for those states that do not meet the deadline for doing so.

In this case, the states’ rejection may actually be a good thing. The exchanges set up by the federal government will be more uniform is design and operation and if they turn out to be better than those set up by other states, more states may adopt them. The more people that get covered by a single federal system (Medicare, Medicaid, Veterans Administration, health exchanges), the easier it will be to transition to a single payer system in the future.

9 comments

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  1. 1
    Steve LaBonne

    It’s going to be interesting to watch how the Medicaid expansion war plays out. Hospitals (and nursing homes) in idiot Republican states are not going to be well pleased that they have to keep absorbing the cost of indigent care when all that Federal money is there for the taking, and they can afford plenty of lobbying and campaign contributions.

  2. 2
    jamessweet

    I think when the time comes to actually refuse the free money, the states in question will come up with some excuse to take it. That seems to be the way of things with national politics… you grandstand about how you’re not going to take the dirty federal money, then you take it anyway, because srsly, who’s not going to take free money???

  3. 3
    ImaginesABeach

    I really don’t understand the Republican objection to exchanges. Making it easier for people to purchase private health insurance on the open market seems like a pretty Republican idea.

  4. 4
    Steve LaBonne

    Which is no accident, since the idea original came from the Heritage Foundation. But as a friend of one of my sisters likes to say, if Obama came out in favor of oxygen, Republicans would asphyxiate themselves. (To which my reply is, it may be worth a try!)

  5. 5
    northstar

    The opposition is easy to explain: the poor folks in those states vote, and if their lives suddenly get better, they might vote Democrat. I live in MI and see it in my own family: some are dirt-poor conservative Christian birther Republicans who now under the provisional aspects of the ACA are, for the first time, getting cheap but vital health care: for example, drugs for diabetes and hormonal regulation. That they are benefiting from something they vociferously objected to is starting to penetrate their heads, and they might even start getting a dawning realization they’ve been voting against their best interests. How many of the states rejecting the federal money have Republican governors? I am betting every single one.

  6. 6
    Eric R

    That they are benefiting from something they vociferously objected to is starting to penetrate their heads

    Would that it were true, maybe it will be, but I have no confidence that any but an infinitessimal minority of conservatives will make such a decision. The cognitive dissonance is too great. Most will take advantage of the benefits and continue to rail against them at the same time.

    I do believe though that many of the states declining to take part in the ACA will eventually reverse their decision.

  7. 7
    Greg P.

    A recent story on NPR (sorry, can’t remember who they were interviewing) said that the large hospital systems in the Republican states will put great pressure on those governors to accept the Medicaid expansion money. Seems like a reasonable conclusion.

    jamessweet is probably right: they need enough grandstanding to save face with the base before they quietly cave.

  8. 8
    Zinc Avenger

    Fine! I’ll take your free money, but I will resent it bitterly, and if at all possible I won’t spend it on the poor people it is meant for. My last breath I spit at thee!

  9. 9
    F [i'm not here, i'm gone]

    Here’s a way to fix one part of the healthcare puzzle:
    India Moves Even More Of Its Healthcare Away From Western Pharma

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