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Governors Seek Flexibility on Medicaid Expansion

Governors Seek Flexibility on Medicaid Expansion

December 10, 2012 — Eleven Republican governors last week sent a letter to President Obama requesting a meeting to discuss the effects of the Affordable Care Act (PL 111-148), particularly the requirements of the Medicaid expansion and the extent to which states would have control over the program, the Washington Post reports.

"To make any health care reform truly successful, [the administration] should let states do what they do best -- innovate and tailor solutions to the needs of their citizens," wrote the governors of Arizona, Florida, Iowa, Louisiana, Maine, Mississippi, Ohio, South Dakota, Utah, Virginia and Wyoming.

The U.S. Supreme Court in June upheld the ACA on the basis that states can opt out of the Medicaid expansion without any effect on current funding. Under the expansion, individuals with incomes of up to 138% of the federal poverty level will be eligible to enroll in the program beginning in 2014. The federal government would fund the full cost of coverage for newly eligible recipients for three years and then cover a declining percentage of the cost until it reaches 90% in 2020. The standard federal match rate for Medicaid varies from 50% to 78%, the Post notes.

Republican governors who want to receive the enhanced federal match rate to help pay for their Medicaid programs have promoted the idea of a partial expansion to individuals with even lower incomes at a lower level, such as up to 100% of the poverty level. Those denied Medicaid coverage could still purchase private coverage with help from federal tax credits, but those plans would likely be less generous and cost the federal government more.

Legal Questions

There is disagreement among experts over whether the Obama administration has the legal authority to authorize partial expansions.

Charles Miller, a senior attorney at Covington & Burling, said the Supreme Court's decision allowed for the possibility of partial expansions. "The court said ... we're not allowing you to enforce this so-called mandate," Miller said, adding that "it's not un-sensible to say that a mandate then becomes an option. ... And in that context does it have to be all-or-nothing? Neither the Supreme Court nor the original statute addressed that point."

However, Sara Rosenbaum -- a professor of health law and policy at George Washington University -- said that in approving the expansion, Congress designated a new mandatory-coverage group under Medicaid. She noted that the Supreme Court's ruling on the expansion left the rest of the law "unaffected," adding that the "court did not say its decision was adding new state flexibility."

Other experts contend that despite the legal obstacles, HHS might still be able to permit partial expansions through the secretary's long-standing authority to waive certain Medicaid rules for states seeking to run demonstration projects (Aizenman, Washington Post, 12/8).