Friday, January 18, 2013

HHS: partial Medicaid expansion still not on the table

Posted By on Fri, Jan 18, 2013 at 2:00 PM

Sen. Michael Lamoreux image partial expansion
  • Brian Chilson
  • LAMOUREUX: Still hoping for partial expansion option.

Republican lawmakers continue to hold out hope that “partial expansion” might be an avenue to get the generous federal match rates authorized by the Affordable Care Act without having to offer the full coverage stipulated by the law. When we asked Gov. Mike Beebe about this Wednesday, he seemed to think partial expansion might still be a possibility even though the feds have explicitly stated that it’s not, and he has tentative plans to meet with them in February.

What do the feds say? I asked the Department of Health and Human Services and officials said only that they are sticking with their previous answer from publicly available documents (it’s all or nothing) on the partial expansion question and declined to comment further than that.

One thing to note — the way the law is set up, moving the expansion line from 138 percent of the federal poverty level to 100 percent is theoretically possible while covering the same number of people. If Medicaid expansion only went up to 100, the group between 100 and 138 would be eligible for subsidies to buy health insurance on the exchange.

If the 100-138 FPL group (for an individual, that’s about $11,000 to $15,000 a year) is on the exchange instead of on Medicaid, the subsidies would be generous, though you’d be forcing folks with very low incomes to make premium payments. For example, with no expansion, an individual making 138 percent of FPL (a little more than $15,000 a year) would pay $26 per month out of pocket for a subsidized health-insurance plan bought on the exchange.

Basically, partial expansion up to 100 percent would 1) Shift some of the costs from the states (who eventually will have to chip in 10 percent on Medicaid) to the federal government (who would have additional folks they had to subsidize on the exchange). 2) Shift costs to low-income people just above the poverty line who have to pay premiums, albeit heavily subsidized. 3) Give more customers to insurance companies.

How many people are we talking about in the 100-138 group? The latest study from the Urban Institute projects that there are about 218,000 Arkansans who would be newly eligible for Medicaid if we go forward with full expansion. 51,000 of those fall between 100 and 138 percent of FPL (the rest, 167,000, are below 100 and would not be eligible for the exchange regardless of what the state does on Medicaid expansion).

Sen. Jonathan Dismang (R-Beebe) tweeted this morning that moving the costs from the states to the feds was “a fantastic idea.” Whether the Obama Administration agrees remains to be seen, but it seems likely that they’ll be squeamish about adding to the federal price tag and forcing low-income folks to buy insurance. Presumably, despite Sen. Michael Lamoureux (R-Russellville)’s belief that Gov. Mike Beebe is “is uniquely situated to get a little extra negotiation power for our state,” if Arkansas got this deal, the feds would have to offer it to every state.

To understand the feds’ reluctance, it’s helpful to keep in mind just how good of a deal they’re already offering. Standard match rates for Medicaid are between 50 to 75 percent — states that say yes to Medicaid expansion will get a full 100 percent match rate for the first three years, slowly falling to a 90 percent match rate in 2020 and for subsequent years.

This is also an especially good deal for states like Arkansas with a stingy Medicaid program. Those sweet matching rates are available for the difference between what states currently cover and the 138 line established by the ACA. That means hundreds of thousands of people and billions of additional federal dollars for Arkansas; for states like Massachusetts, already covering all or most of the ACA expansion target, it’s nothing extra.

In other words, expansion is a massive giveaway from blue states to red states, to help places like Arkansas catch up with other states and provide coverage to needy citizens.

Despite this, Republican lawmakers have been frustrated that the feds have so far been unwilling to budge. Lamoureux complained that the expansion issue “became more difficult when they said they weren’t willing to compromise at all.”

One editorial note here: The notion that the feds are being inflexible, given what they’re offering, is surreal.

Imagine a kid — let’s call him Johnny — whose grandmother offers to buy him a car and asks that he use it to do some errands. Grandma says she’ll cover all the expenses for the first three years, but after that the kid will have to chip in a little bit for gas and repairs. Most kids would probably take the car, but maybe Johnny is worried that he can’t afford his share of the gas down the road. Maybe he’s worried that Grandma will run out of money in ten years and won’t keep chipping in. So he says to Grandma, thanks but no thanks.

And fair enough! That’s Johnny’s choice. But what if Johnny said to Grandma, okay, I’ll take the car and all that gas money but only if you give me less errands. Grandma says, sorry, I’m only willing to give you all this money if you’ll do all the errands. Johnny says, “I can’t believe you’re being so inflexible!”

That’s the position of Republicans when it comes to partial expansion.

Remember, no one is forcing anyone to do anything at this point. Legislators can say no to a great deal if they want to. As we've said before — if they really want to continue having one of the stingiest Medicaid programs in the country, they’ll just have to be willing to turn down federal dollars to keep the privilege.

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