ACA backlash
Republican governors reject Medicaid expansion after SCOTUS ruling
WASHINGTON - While opponents of the Patient Protection and Affordable Care Act may not have won the war when the Supreme Court upheld the bulk of the law, they did claim a battle victory, as it also ruled the law overstepped its bounds via a threat to withhold all funds for Medicaid should states not comply with its expansion.
And it didn't take long for Republican governors across the country to use the opportunity to declare their intention not to expand Medicaid as their latest protest against this version of healthcare reform.
"We're not going to participate in the exchanges. We are not going to expand Medicaid. We are just not going to be a part of again socializing healthcare in the state of Texas," said Texas Governor Rick Perry in an announcement in early July.
In rejecting the expansion, Perry joined a number of other prominent Republican governors who have also said they won't expand Medicaid, including Bobby Jindal of Louisiana, Rick Scott of Florida, Nikki Haley of South Carolina and Terry Branstad of Iowa. But exactly how these governors will get their own state healthcare spending in line is another question altogether and a particularly pressing one for a governor like Perry who governs a state where nearly one-in-four is uninsured.
Barring a complete repeal of ACA after the election, these governors would be turning their backs on a significant shot of federal dollars that would allow the states to offer Medicaid to those who don't qualify for it now, largely adults with no children and those earning between 100 and 130 percent of the federal poverty level (FPL).
"When you step back from all of this, there are billions of dollars of federal money that are going to flow into the states and we think the states are going to need to take it," said James Carlson, chairman and CEO of Amerigroup in a recent conference call announcing a merger with private health insurer WellPoint (see story page x). "They've got a 100 percent match of the costs in the early years and winds down to 90 percent. That is very compelling from a state budgetary standpoint."
By not taking the federal funds, Carlson said, the states would be effectively creating an insurance doughnut hole of people between 100 percent and 133 percent of FPL who don't qualify for Medicaid, but also don't qualify for fully subsidized health insurance from the state insurance exchanges.
"The target population that the Medicaid expansion was meant to cover are going to be left out in the cold. These would be the working poor," said Gregory Pemberton, an attorney in the healthcare practice at Indianapolis-based law firm Ice Miller. "Let's face reality: these are (the) same people who are going to present at the emergency room for their care and somebody is going to pay for that care, so indirectly that is a cost shift."
This could have a potentially devastating effect on hospitals and providers in the states where this population is not covered, particularly hospital in urban areas, Carlson noted.
According to Ceci Connolly, managing director of PwC's Health Research Institute, healthcare providers have been engaged in a constant struggle over the years of how to handle the uninsured.
"That is a big uncompensated care burden for those hospitals today," Connolly said. "One of the reasons we saw the provider community and insurers generally support the Affordable Care Act was they want to have millions more people covered. So I think in some states where you have large numbers of uninsured, it may be the industry who speaks up and says: 'we really want to get these people covered.' It is not only good for them from a health perspective, but it is important in terms of running a healthcare company."
While Connolly acknowledges the tradeoffs states will need to make if they choose to expand Medicaid as outlined in the ACA - quality measures and different payment for primary care and prevention - she also sees opportunity.
"I think this is going to spark some real innovation out there across the country and probably one of the unexpected positive developments of the court ruling will be encouraging that kind of experimentation,"
Connolly concluded. "We know that when states try to solve the problem from different angles we come up with some really neat ideas. We know that it is not a one-size-fits-all situation when it comes to the delivery of healthcare. I'm excited to see what some of the states will come up with."
