Medicaid expansion is the final battle in war over Obamacare

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The final battles of any war often are the bloodiest. They’re waged by the last holdouts, dead-enders desperate to prove to themselves and their dwindling followers that their efforts were not in vain.

The final battle of the war over the Affordable Care Act is being waged today over expanding Medicaid. As the act was originally conceived, Medicaid would provide healthcare for more than 10 million of the poorest uninsured Americans, most of them childless adults with earnings up to 138% of the federal poverty level. (This year, that income ceiling is about $16,000.)

Then the Supreme Court ruled in 2012 that Congress couldn’t impose the expansion on state governments, but had to make it voluntary. Republican legislators and governors in 28 states turned the expansion down. A handful later reversed themselves. These include four that, with federal permission, are temporarily trying out novel Medicaid formats.


The refusal of more than half the states to cover so many of their neediest citizens — the number who have fallen into the “coverage gap” is estimated at 5 million — amazes and frustrates health experts. That’s especially so because the federal government covers 100% of the cost of expansion through 2016. After that, the federal share will slowly decline to 90% in 2020 and beyond.

The holdout states are “willing to sacrifice billions of dollars of injections into their economy in order to punish poor people,” observed Jonathan Gruber, a health economist at MIT who helped design the health insurance reform in Massachusetts on which the ACA was modeled. Speaking in a recent online video chat with health economist Harold Pollack, Gruber added: “It really is just almost awesome in its evilness.”

But in many of those states, the issue is either dead or the battle is still going on. On Thursday, for instance, legislators in Maine narrowly failed to override Republican Gov. Paul LePage’s veto of two measures to bring Medicaid to 70,000 of the state’s low-income residents. LePage said he vetoed the expansion “for the sake of the truly needy and Maine taxpayers.”

In Virginia, newly elected Democratic Gov. Terry McAuliffe has fought his Republican legislature to a draw. He’s determined to implement the expansion; the legislature seems equally determined to resist it even if that means a legislative deadlock that results in a state government shutdown. At stake is coverage for 400,000 citizens and budgetary savings of about $600 million through 2022.

The non-expansion states have several qualities in common, aside from their partisan coloration. Of the 20 states with the highest percentages of uninsured citizens 64 and younger, 12 have turned down expansion; non-expansion states also account for 21 of the 35 states with uninsured rates of 15% or higher.

Their existing Medicaid programs are typically among the most grudging in the nation. Their median eligibility ceilings are 46% of poverty-level income. In Alabama, the stingiest state, parents of dependent children aren’t eligible for Medicaid if they earn more than $3,221 a year. Texas, that great magnet for business, isn’t far behind: Its Medicaid ceiling is $3,737.


What’s most curious about states with Republican leaders ostensibly devoted to fiscal responsibility is that shunning Medicaid expansion makes no budgetary sense, given the huge federal financial commitment and the potential for reducing other state costs, including the public cost of treating uninsured patients.

Adding to the perplexity are the signs that citizens in the holdout states are plainly eager to take advantage of Medicaid. Michigan, one of the few states with a GOP governor and legislature that agreed to expand Medicaid, signed up nearly 159,000 residents — almost one-third of all those eligible — in the first four weeks of enrollment. But they moved too late to take enrollments before April 1.

The saddest spectacles may be those states that have tried to walk the fine line between ideology and responsibility. Consider Arkansas, where Democratic Gov. Mike Beebe attempted to finesse GOP opposition to Obamacare by concocting a “private option” Medicaid expansion. The idea was to use federal expansion funds to place low-income residents into private insurance plans identical to those available to individual enrollees on the state’s insurance exchange.

In other words, residents would be covered by Obamacare, but it would have the veneer of a private-market solution, not a government program. (The measure that Beebe signed in 2013 was called the “Arkansas Health Care Independence Act.”) Under the waiver agreement reached with the federal government, Arkansas receives about $478 per month per enrollee in federal funds for this hybrid Medicaid program.

If Beebe thought the private-option window dressing would quell conservative criticism, he was bound to be disappointed.

The problem is that private insurance is materially more expensive than Medicaid coverage — averaging $9,000 per year compared with Medicaid’s $6,000, according to an estimate by the Congressional Budget Office. Arkansas taxpayers will get the bill for any overruns — and these started to appear as early as February, when more than 100,000 residents had signed up for the private option and their costs rose to $483 per month. It isn’t clear whether the feds will agree to raise their contribution, as the state is expected to request. The cost overruns helped fuel the cliffhanger staged by the state legislature early this year, when the Medicaid program was reauthorized by a single vote (after four failed attempts in the Arkansas House).


Arkansas’ success has emboldened other Republican-led states to seek permission for hybrid Medicaid programs: Iowa already has won approval for the program that charges some enrollees modest premiums, a radical new step in Medicaid. Pennsylvania is seeking a federal waiver for an even more novel program that ties Medicaid eligibility to a work requirement, a plan that appears cynically designed for rejection by the feds.

Too many Republican officeholders appear to be intent on denying healthcare to their neediest citizens. As the Kaiser Family Foundation has documented, before the ACA, states invariably sought waivers to expand Medicaid to populations not normally covered by the program; now their goal is to expand it as grudgingly as possible.

What we are witnessing are the death throes of the anti-Obamacare crowd. Expanded access to health coverage is here to stay. The GOP’s resistance to expanding Medicaid has merely turned 5 million Americans into refugees from ideological warfare, awaiting the moment when peace offers them a chance at better health.

Michael Hiltzik’s column appears Sundays and Wednesdays. Read his blog, the Economy Hub, at, reach him at, check out and follow @hiltzikm on Twitter.