GOP State Election Victories Dim Chances for Medicaid Expansion

by Virgil Dickson

Source: Modern Healthcare

Republicans' big election gains Tuesday in governorships and legislatures around the country diminish but do not eliminate the prospects that more states will expand Medicaid to low-income adults as allowed by the healthcare reform law, political analysts say.

Republicans picked up governorships in at least three additional states, giving them at least 31 governorships and full party control of state government in at least 23 states. They even snared the governor's mansion in Democratic-leaning states like Illinois, Maryland and Massachusetts. GOP incumbents held their seats in all strongly contested races except in Pennsylvania. The fate of Alaska's gubernatorial race remains up in the air as absentee votes are counted, but for now an independent candidate who favors Medicaid expansion leads the race.

A number of Republican governors who were staunchly opposed to Medicaid expansion, including those in Georgia, Kansas, Maine and Wisconsin, survived tough races, and political observers say there is little chance Medicaid expansion will go forward in their states in the near future. For instance, Gov. Scott Walker in Wisconsin, who has rejected federal funds to expand Medicaid, easily won re-election over a Democratic challenger who attacked him for not accepting the federal expansion funding. And Republicans strengthened their control of the Florida Legislature, making the already long odds of expansion there even longer.

On top of that, Republicans who have expressed skepticism or opposition to Medicaid expansion won elections in Arizona and Arkansas to succeed governors who pushed through expansion. That raises the possibility of Medicaid expansion being rolled back in red states that already have implemented expansions.

Prior to the election, Republican governors in Indiana, North Carolina, Tennessee, Utah and Wyoming, none of which had gubernatorial elections Tuesday, had signaled cautious interest in expanding their state's Medicaid program under the Patient Protection and Affordable Care Act to adults earning up to 138% of the federal poverty level. They indicated they wanted to explore conservative models typically featuring reliance on private health plans and requiring beneficiary premium contributions.

But expansion may be in doubt even in those states, given Republicans' broad ideological opposition to all things Obamacare. “It seems unlikely to me you would see additional movement toward expansion of Medicaid or any further implementation of the Affordable Care Act,” said Lee Weingart, a Republican political analyst and president of LNE Group, a government affairs firm.

With Republicans taking control of Congress and up to 10 more state legislative chambers shifting to GOP control as well, it may be more difficult to get expansion bills passed. So far 27 states and the District of Columbia have expanded their programs, extending coverage to an estimated 8.7 million Americans over the past year. But there are an estimated 5 million more people living in the 23 non-expansion states who meet the ACA income threshold for coverage and remain uninsured.

“I don't think the wind is in the sails the way it was,” said John Graham, a senior fellow with the conservative National Center for Policy Analysis in Dallas. “I think energy will start to flag.”

Supporters of expansion argued, however, that GOP governors who previously expressed interest in expansion will continue to pursue their plans. “My sense is that they're responding much more to trends within their states rather than to national political trends,” said Stan Dorn, a senior fellow at the Urban Institute's Health Policy Center. “Hospitals within their states are suffering financially without Medicaid expansion, and state economies are losing out because of the absence of federal Medicaid dollars.”

The GOP takeover of Congress may not dissuade Republican governors who already were considering expansion but it could slow them down, said Ford O'Connell, a Republican strategist who worked on Sen. John McCain's presidential campaign in 2008. That's because they know congressional Republicans may try to repeal Obamacare taxes that help fund Medicaid expansion, such as the medical-device tax. Such revenue losses could make conservative warnings come true that the federal government will not be able to live up to its promise of paying 100% for the Medicaid expansion through 2016 and paying 90% thereafter, he added.

Supporters worry about Medicaid expansion being rolled back in at least two states. In Arkansas, which pioneered the conservative-friendly “private option” model emulated by several other GOP-led states, newly elected Asa Hutchinson has vowed to put new limits on a program that has meant coverage for more than 200,000 residents with no other options. In addition, Republicans won supermajorities in both the Arkansas House and Senate, which may make it difficult to renew the expansion program next year with the required three-quarter vote majority in both chambers.

“I view the private option as a pilot project; a pilot project that can be ended if needed,” Hutchinson said on his campaign website. “As governor, I will assess the benefit of the private option and measure the long-term costs to the state taxpayers.”

In Arizona, where outgoing Gov. Jan Brewer became one of the first Republican governors to push through Medicaid expansion, her Republican successor, Doug Ducey, has expressed doubts about the program. But he also said he would seek its repeal only if the federal match drops significantly. The law eventually reduces federal matching funds to 90% of the cost of the program.

In Ohio, re-elected Republican Gov. John Kasich, who expanded Medicaid by sidestepping the Republican-controlled Legislature, will have to win reauthorization of the expansion in 2015 in a Legislature that is now even more strongly Republican. But he's reportedly considering running for president in 2016 and may have second thoughts about antagonizing the conservative Republican base.

HHS Secretary Sylvia Mathews Burwell seemed to recognize the Obama administration would face a more hostile landscape in statehouses across the country in 2015. She told the National Association of Medicaid Directors on Tuesday that “your state can choose to expand at any time. You also reserve the right to change your mind.” She added that “to those governors who are about to get elected or re-elected today, my message is that I'm happy to meet with you before your inauguration.”

Expanding Medicaid in the face a reluctant GOP-controlled state legislature will be hard but not impossible, said Ron Pollack, executive director of Families USA, a supporter of the healthcare reform law. “We have learned lessons from the nine states that have expanded Medicaid and that have conservative Republican leadership,” he said. “What's needed are close alliances made up of strange bedfellows that have a common purpose.”

In states like Arizona, New Jersey, New Mexico, North Dakota and Pennsylvania, coalitions of hospitals, business groups, insurers and patient advocacy groups came together and successfully lobbied governors and lawmakers to expand the program. They argued that the expansion would bring billions of new federal dollars to their states, boost employment, help state budgets, and prevent hospital financial failures and closures.

Now the Obama administration is likely to come under greater pressure from Republican governors to make concessions in allowing states to include conservative features in their expansion models, such as requiring beneficiaries below the poverty level to pay premiums and to tie enrollment to employment activities. Up until now, the CMS has rejected some of the most conservative proposals. Some experts warn that such features reduce enrollment.

“You have a HHS secretary who's very practical and who has an interest in working with states,” said Dan Mendelson, CEO of consulting firm Avalere Health. “As long as there are states that need to expand, I think she's going to look for ways to find a compromise.”