Obama seeks to offer new incentive for states to expand Medicaid

With full federal funding for expanding Medicaid set to expire at the end this year, President Barack Obama is proposing to indefinitely extend the health law provision for any of the 19 states that have not yet adopted the enhanced eligibility.

But Obama would need the Republican-controlled Congress to approve the offer. That appears unlikely considering Congress voted last week to repeal the Affordable Care Act, though the GOP critics did not muster enough support to override the president's veto.

Obama will seek congressional approval for extending the three years of full federal funding in his 2017 fiscal year budget proposal, which is scheduled to be released Feb. 9.

"This common-sense proposal makes the expansion as good a deal for states that expand now as it (is) for the states that already have done so," said Shaun Donovan, director of the Office of Management and Budget, and Cecilia Muñoz, director of the White House Domestic Policy Council, in a blog post released today. They said the offer shows the Obama administration's flexibility to help states expand health coverage under the law.

[Also: Matt Bevin elected governor of Kentucky, leaves future of state's Medicaid expansion in jeopardy]

Louisiana this week became the 31st state, plus the District of Columbia, to extend Medicaid eligibility under the health law. But 19 other states -- including Texas and Florida -- have decided against enacting the provision. That's left 4 million people in those states without access to Medicaid, the state-federal health insurance program for the poor.

The health law called for expanding Medicaid eligibility to most people earning up to 138 percent of the federal poverty level (about $16,000 for an individual). But the Supreme Court, in upholding the health law in 2012, made the Medicaid expansion optional for states.

Under the health law, the federal government pays the full cost for the Medicaid expansion for the first three years, through 2016, after which the federal funding will begin phasing down, but to no lower than 90 percent. States that have opposed expansion have listed a host of reasons, including concerns that Medicaid is a "broken" system, that they won't have enough money to pay their share in coming years, and that they don't trust the federal government to meet its obligations.

[Also: Census confirms rate of uninsured dropped post-Obamacare; Medicaid expansion states fared better]

Medicaid enrollment nationally has grown by more than 13 million people since 2014, and it's a major contributor to the more than 18 million people gaining health coverage under the law.

Experts said they were skeptical that Obama's newest proposal will gain support in Congress.

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"I assume they will reject a proposal to incent what they would wipe off the books," said Sara Rosenbaum, professor of health law and policy at George Washington University.

Joan Alker, executive director of the Georgetown Center for Children and Families, said the proposal shows the White House is still serious about pushing for full implementation of the law. "It is a sound idea and might entice some states, but it seems unlikely that Congress will pass this in 2016," she said.

Kaiser Health News (KHN) is a national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation.

Twitter: @HC_Finance