Look who’s expanding Medicaid now

Seven Republican governors have broken ranks and declared their support for expanding Medicaid in their states under Obamacare. The latest is Florida’s Rick Scott, who made his surprise announcement this week.

To hear some of them explain their decisions, you might think they had undergone ideological conversions. Rick Scott declared, “I cannot, in good conscience, deny the uninsured access to care.” Gov. John Kasich of Ohio, citing the Bible, called expanding Medicaid a “moral imperative.” New Mexico’s Susana Martinez noted an obligation to provide care “for those most in need in our state.”

But there’s a deeper force at work – money. And the draw is not just money to help the poorest citizens gain access to health care. It is support for the providers that serve those citizens, primarily hospitals. Expanding Medicaid is a financial bonanza for many facilities and a financial lifeline for others.

Expanding Medicaid is a fundamental part of Obamacare. It is as central as the insurance exchanges, the mandate to obtain coverage, or any other provision of the law. It was projected to add 16 million people to coverage rolls – half of the total who will be newly insured.

It does this by eliminating variations among states in eligibility rules. It directs all states to cover all residents with incomes up to 133% of the federal poverty level. As things now stand, some states set limits for certain categories of the poor as low as 20%, and many of the poorest citizens, including adults without small children, receive no benefits at all.

The carrot to entice states to go along is money – lots of it. The federal government will pick up the entire tab for the added coverage for the first three years and at least 90% after that. That’s millions of dollars each year for states like Pennsylvania and New Jersey to support health care.

As originally designed, the law also included a large stick for federal officials to use against states that declined to go along. They would lose funding for their entire Medicaid programs. With that kind of carrot and stick, it seemed like an offer they couldn’t refuse.

But the Supreme Court decision last summer changed that. The Justices left the carrot in place but ruled that the stick was unconstitutional. That made the offer a good one, but no longer one that states couldn’t necessarily pass up.

Many Republican governors, including Pennsylvania’s Tom Corbett, seized on this newfound opportunity to show their continued displeasure with Obamacare. If enough of them end up going along and declining to expand Medicaid, they could throw a hefty monkey wrench into health reform’s gears.

But money talks, often loud enough to drown out ideology. That’s especially true when a powerful mainstay of a state’s economy is involved. Hospitals are major employers and serve as financial engines for many regions, like Philadelphia. It’s difficult to leave millions of dollars on the table that could support an industry like that. And hospitals have aggressively lobbied to make their case.

Medicaid is about much more than health care for the poor, as important as that is. It is also about supporting a large portion of the entire health care system. Without it, many hospitals in poorer neighborhoods would find it impossible to survive. That’s enough to make most politicians pay attention.

According to the nonprofit Urban Institute, Obamacare’s Medicaid expansion will send almost a trillion dollars to the states over the next 10 years. What fiscally responsible politician would want their state to be left out of that? 

Despite the recent defections, most Republican governors remain opposed to expanding Medicare. (Click here to see where each state stands.) They have made their ideological position clear as they create yet another roadblock to Obamacare. But their states may pay a steep price for their decisions. They will pay it not just in the wellbeing of their poorest citizens but also in the vigor of their health care industries and even of their overall economies.

By Robert I. Field