President to propose incentive to lure more states to expand Medicaid

President Obama plans to propose giving new states that expand Medicaid coverage to the poorest of the poor more time before they have to chip in to cover the new recipients, the White House said in a blog post early Thursday.

In 2012, the Supreme Court upheld the Affordable Care Act, but left it up to states whether or not they wanted to expand their Medicaid programs to all residents who make up to 138% of the federal poverty limit, or about $28,000 for a family of three.

Medicaid is funded jointly by the federal government and states. Beginning in 2014, the federal government had already agreed to fully fund coverage for three years for those adults who were newly eligible for Medicaid.  The percentage phases down to 90% by 2020.

Obama's fiscal 2017 federal budget will include a legislative proposal to provide any state that expands Medicaid with the same three years of full federal funding and same phase down as the states that expanded the program in 2014, according to the post by Office of Management and Budget Director Shaun Donovan and Domestic Policy Council Director Cecilia Muñoz. Thjs would be the case no matter when the state expands the program.

Until this Supreme Court decision, all states were expected to expand Medicaid in 2014. By the end of 2015, 30 states and Washington, D.C., had expanded their Medicaid programs to cover their lowest-income residents. The governors of South Dakota, Virginia, and Wyoming included the option to expand Medicaid in their budget request,

Louisiana's new Democratic Gov. John Bel Edwards took action this week to give all low-income Louisianans access to Medicaid coverage starting on July 1, 2016.

The proposal provides a big incentives for states to expand Medicaid, says Judith Solomon, vice president for health policy at the non-partisan Center on Budget and Policy Priorities.

"This is a well-crafted proposal that takes into account the fact that states are likely to expand on different timelines," Solomon said. "As states weigh whether to expand, this is another positive factor in addition to the budget savings and decreased uncompensated care that result from increases in coverage."

The proposal "makes the expansion as good a deal for states that expand now as it is for the states that have already done so," Donovan and Munoz wrote. "It is further evidence of the Administration’s willingness to work with states to build on recent progress in improving health coverage and making Medicaid affordable to states and taxpayers alike."

Jimmy Lewis, CEO of the Georgia rural hospital trade group Hometown Health, predicted that the proposal wouldn’t persuade Republican Gov. Nathan Deal, a longtime expansion opponent, to expand Medicaid. Just Wednesday, in his "State of the State" address, Deal estimated Medicaid expansion would cost the state far too much money when it had to pick up a share of the cost.

Lewis' members struggle with the Affordable Care Act's mandates, even though Medicaid expansion would reduce their costs for treating patients who don't have insurance.

"Any change in coverage that extends the 100% payment by the Feds is obviously potentially positive for rural hospitals," says Lewis. "But because of all the other negative aspects of the ACA , such as penalties when patients are readmitted, it's hard to determine where the value really is."

Democratic Virginia Gov. Terry McAuliffe, however, tweeted Wednesday night that every day his state doesn't have expanded Medicaid, "we forfeit $6.6 million in federal money."

It will be up to Congress whether or not to include the proposal in the budget voted on by the House and Senate. Congressional Republicans have tried to repeal all and parts of the ACA and many are outspoken critics of Medicaid.