Supreme Court ruling on Medicaid tees up campaign issue

Some Republican governors and state lawmakers are eager to opt out of the expansion of Medicaid under 'Obamacare,' now that the Supreme Court has removed the penalty. But millions could remain uninsured. Expect this to play big in some state elections.

Just four months before Election Day, the US Supreme Court has served up a juicy campaign issue: expansion of Medicaid.

Suddenly, states now have the option of refusing to expand eligibility for Medicaid – the federal-state health-insurance program for the poor – without penalty, under the court’s health-care ruling last week. And some Republican governors are leaping at the chance to assert their opposition to Medicaid expansion, in the name of fiscal responsibility. As a result, millions of low-income Americans who would have gained health coverage now may not.

The issue is likely to play big in competitive gubernatorial elections. Ditto races for state legislatures, which will also play a role in deciding whether a state opts out of expanded Medicaid.

Leading the charge is Gov. Rick Scott (R) of Florida, who announced Sunday that his state will opt out of Medicaid expansion, which would have covered more than 950,000 people in his state. Other GOP governors pledging to ditch Medicaid expansion include Nikki Haley of South Carolina, Bobby Jindal of Louisiana, and Scott Walker of Wisconsin. Still others, like Dave Heineman of Nebraska and Chris Christie of New Jersey, say they’re leaning against expanded Medicaid.

And in states with Democratic governors and Republican-controlled legislatures, like New Hampshire, state lawmakers say they’re already working on a plan to block Medicaid expansion.

“There’s a deep suspicion among people who didn’t like Obamacare to begin with over the costs,” says Susan MacManus, a political scientist at the University of South Florida in Tampa. “And the other side is saying, ‘Well, how can you dare leave this money on the table?’ ”

Since the Supreme Court ruled last Thursday, “the line in the sand has gotten much deeper and clearer,” Ms. MacManus says.

Under the Affordable Care Act (ACA), which goes into full effect on Jan. 1, 2014, eligibility for Medicaid expands to cover those with incomes up to 133 percent of the federal poverty line (or $25,390 for a family of three). As originally envisioned, states that choose to opt out would be penalized by losing their existing federal Medicaid funding. But the court struck down the penalty as coercive.

If all states chose to participate, expanded Medicaid would cover some 17 million uninsured, low-income people by 2022, according to the Congressional Budget Office – more than half the total boost in insured Americans projected under the ACA. Now that number could fall far short.

Proponents of the plan point to what they call the generous terms offered to states: The federal government will cover all of the costs of Medicaid expansion for the first three years, and at least 90 percent thereafter.

But for a large state like Florida, with 3.8 million uninsured people, the money his state would have to kick in is still too much, says Governor Scott.  

Scott also says he will not go along with another part of the law: establishment of a state insurance “exchange,” or marketplace, that allows people to comparison shop for an insurance policy. Under the law, the federal government will set up an exchange for any state that doesn’t set it up itself. 

“Floridians are interested in jobs and economic growth, a quality education for their children, and keeping the cost of living low,” Scott said in his July 1 statement. “Neither of these major provisions in Obamacare will achieve those goals, and since Florida is legally allowed to opt out, that’s the right decision for our citizens.”

On television, Scott has said Medicaid expansion would cost Florida $1.9 billion a year, though his written statement does not set a time frame for the $1.9 billion cost. The group PolitiFact disputes Scott’s $1.9-billion-a-year assertion.

“Scott’s Medicaid figure is an oversimplified estimate that relies on several assumptions and ignores how the Medicaid expansion would actually be implemented as part of the health-care law,” the PolitiFact authors write.

Still, Scott has made headway in reducing the budget deficit he inherited, and many Floridians remember the decision early in his term to turn down federal funds for high-speed rail. And if they consider California, whose high-speed rail project is now projected to cost twice as much as originally estimated, they may be inclined to listen to Scott on Medicaid costs.

The refusal to set up an insurance exchange may be more about rejecting federal control than about money. The Washington-based tea-party group Freedomworks has put out a five-point plan for repealing “Obamacare,” beginning with “stop your state from setting up an Obamacare exchange.”

Some Republicans say they are hopeful that Obama’s health reform will soon be overturned, if Mitt Romney is elected president and Republicans take over both houses of Congress in November.

But if the ACA remains law, health-care experts expect that over time, all states will eventually opt into the expansion of Medicaid. That’s what happened with the expansion of Medicaid coverage for children in the 1990s.

“For most of these big expansions, over time, states have looked at the dollars and realized that’s a lot of money to leave on the table,” says Rachel Garfield, senior researcher at the nonpartisan Kaiser Family Foundation.  

Many states, such as Washington and Illinois, are moving ahead enthusiastically with Medicaid expansion.