With half of states embracing federally financed Medicaid expansion and the other half slow to follow suit, hospitals are key players in one of the hottest healthcare policy clashes in the country.
Medicaid expansion appears to be following the same trajectory as the original program that was created in 1966, with about half of the states joining the expansion effort quickly and the rest gripped in a highly politicized struggle.
If history repeats itself, the battle over Medicaid expansion could be grueling campaigns in some states. Arizona resisted joining the Medicaid program until 1982.
But a handful of states, including Arkansas and New Hampshire have apparently found a way to break the political impasse: using federal Medicaid expansion dollars to fund the expansion of Medicaid through the new public health insurance exchange for individuals. And Missouri is fully engaged in an effort to move legislation forward.
"This is definitely the playbook states are using," says Brendan Saloner, PhD, lead author of a perspective piece on Medicaid expansion published in the New England Journal of Medicine on March 27. In a phone interview last week, he said, "there is a certain toxicity to the [Patient Protection and Affordable Care Act] that makes it hard to make progress."
Federally finance Medicaid expansion, which provides a mechanism to offer health coverage to low-income adults under the age of 65, is a crucial component of the PPACA. At the heart of the federal Medicaid expansion push is a guarantee from Washington to pick up the entire tab through 2016. In subsequent years, through 2020, the federal reimbursement rate to the states will be tapered to 90 percent.
About 15 million uninsured and underinsured people will have no affordable option to obtain health coverage if their state governments decide not to expand Medicaid, according to a Commonwealth Fund study released last week.
Republicans in several states including Georgia, Missouri, and Texas have staunchly resisted the federal government's offer to fund 100 percent of a straight expansion of existing Medicaid programs. But Arkansas, New Hampshire and a handful of other states have taken an alternative route to Medicaid expansion that many Republican lawmakers across the country find enticing.
A waiver from the federal Medicaid expansion law "allows states to customize their approach to a model that may be more palatable politically," Saloner said.
In New Hampshire, where the Republican-controlled Senate firmly opposed a straight expansion of Medicaid, turning to the state's new public exchange was a solution GOP lawmakers could swallow.
"A straight expansion product would not have gotten past the Republicans," NH Rep. Tom Sherman, a Democrat, said last week in a phone interview after the House approved the Senate's plan to expand Medicaid through the public exchange.
"In the end, it had to come from the Republican Senate," Sherman said of the Granite State's Medicaid expansion plan. "We couldn't get anything through that they couldn't live with… Nobody got exactly what they wanted out of this."
He says expanding Medicaid in New Hampshire took political will and the realization that expansion of the program was needed to address uncompensated care in the Granite State.
"The real winners are all of the residents of New Hampshire because we are all affected by the people who lack health insurance," said Sherman, a freshman lawmaker and practicing gastroenterologist. "This isn't welfare. This is not a handout. This is financial security for people with health needs."
Resistance Could be Futile
States that are resisting Medicaid expansion are feeling heavy pressure from healthcare providers and business leaders.
"Hospitals that see people who are uninsured are putting lots of pressure on political leaders," Saloner said. "Some hospitals more than others do see people who are uninsured… The money is there to help hospitals finance their care."
Business leaders in states that have not expanded Medicaid fear competitive pressures from neighboring states that have moved forward with expansion, he said. "Your workforce is going to be different," Saloner said of states without Medicaid expansion, citing the negative economic impact of poor access to healthcare on individuals and employers.
In the Show Me State, the Missouri Hospital Association has joined forces with the Missouri Chamber of Commerce and Industry to break the political gridlock over Medicaid expansion.
"What's certain is that Missouri will need a state-specific solution," David Dillon, vice president of media relations at the MHA, said in an email last week. "We have at least two 'Medicaid reform and transformation' bills in the legislature that could provide a path forward. The question is whether lawmakers will keep the bills moving and provide an appropriation for the program if common ground can be found."
Alex Feldvebel, NH deputy insurance commissioner, says there are compelling reasons for other states to follow the Granite State's lead. "We can't speak for other states, but we know that in New Hampshire, Medicaid expansion will address the coverage chasm for those people below 133 percent of the federal poverty level."
He cites "many benefits" to Medicaid expansion:
- It promotes efficient use of a state's health care resources. Giving more people secure coverage can lower overall costs by moving patients to more cost-effective care settings such as primary care offices rather than emergency rooms.
- It may improve the average health status in the commercial insurance risk pool.
- Many hospitals write off any payment liabilities from patients earning less than 200 percent of the federal poverty level. A Medicaid expansion would decrease the number of self-pay patients and reduce collection efforts.
Looking to the future
Dillon, Saloner, and officials at the Arkansas Hospital Association say the odds are good for Medicaid expansion to take hold nationwide.
"Missouri will eventually move forward," Dillon says. "We hope it will be this year. Other states have provided a laboratory for state-specific reform efforts. … We believe that the momentum is gathering."
In an email last week, Arkansas Hospital Association officials said they are bullish on the prospects of nationwide Medicaid expansion because the federal agency in charge of the effort has shown a willingness to finesse the issue. "[The Centers for Medicare & Medicaid Services] has shown it is open to ideas that allow coverage of those eligible, and states are now exploring those alternatives. This will lead to more states expanding their coverage over time."
After states have expanded their Medicaid programs to serve adults under the age of 65, it will be hard to turn back the clock, Saloner said.
"Once a program is in a state, it's really hard to unravel," he said. "Once benefits are expanded, it's difficult to go back to a place where you don't have that level of coverage and level of federal financing."
Christopher Cheney is the CMO editor at HealthLeaders.