A contentious political fight in Florida over the future of Medicaid expansion — the optional Obamacare policy that seeks to extend health coverage to additional low-income Americans — could signal a path forward for federal officials who have been trying for years to convince stubborn anti-Obamacare lawmakers to move forward in this area.
Because GOP-controlled states have resisted expanding their Medicaid programs, the effects of health reform have been uneven. Anti-expansion states, which are home to people who tend to be poorer and sicker than the people in other parts of the country, are still struggling with high rates of uninsured residents.
The federal government has attempted to convince anti-expansion states to change course by emphasizing the potential benefits of expanding the public health program. They could receive a significant amount of federal funding in order to implement the expansion, which helps free up other areas of their budgets. They would also effectively reduce their uninsurance rates, which helps the hospitals located in their states save money by cutting down on the number of uninsured residents they treat.
But that reasoning hasn’t been persuasive enough for GOP politicians who want to resist being associated with Obamacare at any cost. So now, officials from the Centers for Medicare and Medicaid Services (CMS) are playing hardball.
Federal officials are currently standing their ground as Florida Gov. Rick Scott (R) demands a pool of Medicaid money that helps pay for the hospital services for uninsured people who can’t pay their bills. (In health policy terms, that’s known as “uncompensated care.”) The government says Scott wouldn’t need that money — which has previously been doled out through a Medicaid pilot project called the Low-Income Pool, or LIP — if he simply agreed to expand Medicaid, which would help reduce the number of uninsured Floridians in the first place.
Last week, Scott threatened to sue the government for coercing his state into expanding Medicaid, saying that it’s not fair to cut off LIP funding to force him into implementing the Obamacare policy. Without the federal money that used to go toward LIP, Florida is left scrambling to fill a $1 billion gap in hospital funding.
But CMS officials appear to be unperturbed. This week, the agency confirmed that it’s warning Tennessee and Kansas about the same thing: You shouldn’t necessarily expect us to keep giving you LIP money, because it would be easier for you to take the money designated for states that expand Medicaid.
CMS spokesman Aaron Albright told Kaiser Health News that the agency has “been in contact” with other states that have similar hospital programs, and has been clear about the fact that its response to Florida’s request “articulates key principles CMS will use in considering proposals regarding uncompensated care pool programs in their states.”
Every state has some flexibility in the way that can design their Medicaid programs and implement pilot health care programs, like LIP. But the federal government retains the power to sign off on the proposals. Now that the health care reform law has changed the landscape, extending insurance to millions of people and reducing the burden of uncompensated care, some health policy experts say that it simply makes sense to end some of the previous funding arrangements.
“If the strong-arm tactic works, the White House may have found a model to use again and again to overcome one of the most significant remaining hurdles to Obamacare’s goal of universal health-care coverage. That could mean millions more Americans could get covered,” Vox’s Sarah Kliff notes.
The government has experimented a lot with potential avenues to convince GOP-controlled states to stop resisting Medicaid expansion. The state-level flexibility built into the public program has also worked to CMS’s advantage, as federal officials have been able to nudge Republican officials toward expansion with the promise of more control over the policy. Some red states like Tennessee, Arkansas, Oklahoma, and Iowa have indicated a willingness to compromise with CMS: Even though they won’t accept the traditional expansion as it’s laid out in Obamacare, they’re moving toward a privatized version of the policy that would still cover additional low-income residents.
But that type of compromise can come with a cost. As a new paper from the National Health Law Program suggests, approving some of GOP states’ reforms can end up weakening the program and ultimately undermining Medicaid’s goal of coverage expansion. In that context, perhaps less compromise in favor of more firm stances — like yanking LIP funding — could be the next strategy on the horizon for federal officials.