From AIS Health: With New Subsidies, Holdout States May Expand Medicaid

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Reprinted with AIS Health permission from the April 9, 2021 issue of Health Plan Weekly

With the passage of the American Rescue Plan (ARP), states that haven’t expanded Medicaid have an extra reason to do so: the COVID-19 relief bill offers financial incentives to states that increase Medicaid eligibility under the Affordable Care Act (ACA). Some states where Medicaid expansion has historically been a nonstarter to conservative elected officials are reconsidering their status — and the biggest states that haven’t yet expanded Medicaid, Florida and Texas, may even change their tune in coming years.

The ARP gives states that expand Medicaid a 5 percentage-point increase in their Federal Medical Assistance Percentage (FMAP) for the first two years of expansion. That’s in addition to the 6.2 percentage-point FMAP increase that all states are getting for the duration of the COVID-19 public health emergency, and the 90% federal funding match rate that Medicaid expansion states receive under the ACA.

With the FMAP sweetener, some Republican lawmakers are reconsidering their past opposition to Medicaid expansion, and activists working on Medicaid expansion ballot initiatives have gained new momentum.

Nationally, as many as 4 million people could become eligible for Medicaid if every state holding out opts in, according to the Kaiser Family Foundation (KFF). Texas would account for the largest number of new eligible members with 1.4 million, followed by Florida with nearly 789,000.

Georgia would yield more than 450,000 new eligible members, North Carolina over 372,000, Tennessee over 226,000, Alabama more than 204,000, South Carolina 188,000, Mississippi over 166,000, Kansas over 82,000, South Dakota 27,000 and Wyoming about 15,000, per KFF.

Two states that recently expanded Medicaid by ballot initiative, Missouri and Oklahoma, are also eligible for the enhanced funding match as long as they implement their expansions by July — although Missouri’s expansion has been complicated by stalling tactics from the state’s Republican-controlled

legislature. So far, that is an outlier, with more conservative lawmakers changing their positions: Wyoming’s Republican-controlled House of Representatives passed an expansion bill in March, though it died in the Senate.

Wyoming Almost Swayed by More Funding

Robin Rudowitz, a vice president at KFF and co-director of KFF’s Program on Medicaid and the Uninsured, says that ARP changed the political equation in Wyoming.

“The Medicaid expansion bill clearly was tied to the incentive and the American Rescue Plan,” she tells AIS Health. She adds that Mississippi, South Dakota, and the Carolinas all are closer to expansion than they were before the pandemic relief law passed. Rudowitz says activists will have time to build momentum.

“Some of these states are newly discussing expansion where they have not in the past,” she continues. “So potentially, even if it doesn’t happen in this legislative session, the discussions have started and states might come back to it.”

Medicaid expansion routinely wins with voters: Ballot initiatives passed in such conservative strongholds as Idaho and Oklahoma in recent years. And liberal legislators in many conservative states have redoubled their efforts with the increased federal funding in place.

“In Georgia, Wyoming, Texas, Alabama, Florida and Tennessee, there are legislators on the Democratic side that are pushing for this,” Jerry Vitti tells AIS Health. Vitti is founder and CEO of Healthcare Financial, Inc., a firm that connects low-income, elderly and disabled populations with public benefit programs. “However, there is still a lot of resistance among Republicans.”

That’s especially true in Missouri. Voters there approved an August 2020 initiative that amended the state constitution to expand Medicaid, but the Republican-controlled legislature has dug in its heels during its current session. Republican Gov. Mike Parson projects that approximately 275,000 residents will gain coverage through the expansion. He has not been as aggressive as other members of his party in trying to stymie expansion.

“Like I have said many times, I will always uphold the will of the voters, and we will move forward with expanding Medicaid coverage,” he said during his Jan. 27 state of the state address.

But some opponents of expansion are taking a different position. According to Kaiser Health News (KHN), Republican state Rep. Justin Hill said during a recent floor debate that “even though my constituents voted for this lie, I am going to protect them from this lie.”

Dan Mendelson, founder of Avalere Health, says Republicans are foolish to be so intransigent.

“Trying to go in and overturn the will of the plurality of voters is a very, very risky strategy,” Mendelson says. “I was shocked when I saw that. And I don’t think it’s going to work in the longer term, because if people vote for something and then they see their legislators complain — it’s very cynical.”

Mendelson observes that the drama in Missouri is an outlier.

“We’ve seen in other states that even relatively conservative Republican legislators, if there is a ballot initiative, accept it and move on because they know that it’s just not a winning issue,” he says.

Vitti makes a similar point.

“The issue of expansion is seldom a loser with the voters, and it is up to elected officials to carry out the will of the people,” Vitti says. “In a place like Missouri, it seems that the elected officials are playing with fire. The people have spoken, and that is really the beginning and the end of the issue. It is time for state leaders to implement what the public wants, and ultimately that is what will happen in Missouri and in other states that have expanded via ballot initiatives.”

Dems Use Expansion to Advantage

Moreover, Mendelson says that Democrats know Medicaid expansion is a winning issue, and they have started to use it to build their party apparatus in states where they haven’t been competitive in recent years.

“Medicaid expansion is going to be a central tenet of the future,” Mendelson says. “In states like Florida and Texas, there’s kind of an active debate that focuses around control of the political balance of those two states, with Republicans in the lead. Democrats are trying to play catch up. The question will become, what is the best issue [to build the party]? If local organizers think that they can get a ballot initiative through to expand Medicaid, or move towards universal coverage, they’re going to do it.”

According to Vitti, Florida seems more likely than Texas to move on expansion at the moment.

“I believe that the electorate would support Medicaid expansion in both Florida and Texas, because it’s not going to come from the GOP leadership in those states. I think Florida is the next ballot initiative target for expansion advocates,” Vitti says.

Rudowitz also says that a ballot initiative could be in the offing in the Sunshine State.

“The governor is not supportive of expansion, so I don’t see much movement in this current legislative

session. But I think there is this discussion about a ballot measure — that could happen in the future,” she suggests.

However, Vitti wonders if the tactics Republicans are using in Missouri will spread.

“If successful, how far [Florida] Gov. Ron DeSantis would go to not implement it remains to be seen. I suppose he and the GOP might take something from Missouri’s playbook, but like Missouri, I think anything they try in Florida will be dead in the water, and expansion will happen per the wishes of the voters,” Vitti says.

Kim Howell, vice president of growth at ConsejoSano, a tech company specializing in culturally aligned outreach to Medicaid plan members, also invoked the idea of Missouri’s backlash becoming part of a national playbook of anti-Medicaid political tactics.

“Some of these states have some pretty deeply ingrained sort of ideology that really presents a barrier to even having these conversations,” Howell tells AIS Health. “So I can see this [Missouri opposition] becoming part of the playbook. Some of that will center around how it works, how effective it is as a tactic.…Anything that’s somewhat effective — even stalling [implementation] of this type of [ballot initiative] action — will likely become part of a playbook.”

Rudowitz says that Missouri will also serve as a legal test case. “It does seem like the state is obligated to move forward with the [expanded] coverage, but there is the potential that if it is not included [in the budget] that there would be some litigation,” Rudowitz says.

Howell expects the federal government would get involved at some point, particularly if Missouri tries to reroute federal Medicaid funds to other programs.

“I can’t imagine that would just go without any consequence,” Howell says. “Just thinking through the options, they have to move things around the budgetary level. That’s one thing we’re thinking would be a possibility [in Missouri].”

Missouri’s governor also raised the specter of litigation, according to KHN. “If it’s not funded, there’ll be challenges to that,” Parson said.

See KFF figures at https://bit.ly/3fV3FOk. Contact Howell and Vitti via Joe Reblando at joe@joereblando.com, Mendelson via Vonzy Davis at vdavis@avalere.com and Rudowitz via Craig Palosky at craigp@kff.org.

by Peter Johnson