Medicaid is financed mostly by Congress, though states have to put in their own money to qualify for the cash from Washington. The federal amount is determined by a state’s per-capita income, with poorer states getting more help. On average in 2012, the feds paid 57 cents of every Medicaid dollar. It was 74 cents in Mississippi, 71 in Kentucky, 70 in Arkansas and South Carolina, 68 in Alabama. Those numbers would be even higher counting bonuses from Obama’s 2009 stimulus bill.
Obama’s law mandated that states open Medicaid to everyone with household income up to 138 percent of the federal poverty rate — $15,420 a year for an individual or $31,812 for a family of four. The federal government would cover all costs of new Medicaid patients from 2014 to 2016 and pick up most of the price tag after that, requiring states to pay up to 10 percent. The existing Medicaid population would continue under the old formula. In its ruling on the law, the Supreme Court left the details alone, but declared that states could choose whether to expand.
Hospital and physician lobbying groups around the country have endorsed a bigger Medicaid program. Becker said he explains on his road show that the Obama law paired Medicaid growth with cuts to payments to hospitals for treating the uninsured. Just as they do with Medicaid insurance, states already must contribute their own money in order to get federal help with those so-called “uncompensated care” payments.
The idea was instead of paying hospitals directly, states and Congress could spend that money on Medicaid and have those new beneficiaries — who now drive costs with preventable hospital admissions and expensive emergency room visits — use the primary care system. But the Supreme Court ruling creates a scenario where hospitals can lose existing revenue with getting the replacement cash Congress intended, all while still having to treat the uninsured patients who can’t get coverage.
Becker said that explanation has gotten local chambers of commerce across Tennessee to endorse expansion. “These are rock-ribbed Republicans,” he said. “But they all scratch their heads and say, ‘Well, if that’s the case, then of course we do this.’”
In Louisiana, Jindal’s health care agency quietly released an analysis saying the changes could actually save money over time. But the Republican Governors Association chairman is steadfast in his opposition. In Georgia, Deal answers pressure from his state’s hospital association with skepticism about projected “uncompensated care” savings and Congress’ pledge to finance 90 percent of the new Medicaid costs.
Altman, the Kaiser foundation leader, predicted that opposition will wane over time.
Arkansas Republicans, who oppose Democratic Gov. Mike Beebe’s call for expansion, have floated the same idea as Haslam: pushing would-be Medicaid recipients into the insurance exchanges. Jindal, using his RGA post, has pushed the Obama administration to give states more “flexibility” in how to run Medicaid.
Deal convinced Georgia lawmakers this year to let an appointed state board set a hospital industry tax to generate some of the state money that supports Medicaid. That fee — which 49 states use in some way — is the same tool that Arizona Gov. Jan Brewer is using to cover her state’s Medicaid expansion. Georgia Democrats and some hospital executives have quietly mused that Deal is leaving himself an option to widen Medicaid in his expected term.
“These guys are looking for ways to do this while still saying they are against ‘Obamacare,’” Altman said. “As time goes by, we’ll see this law acquire a more bipartisan complexion.”