Governors Still Resisting Dems’ Medicaid Expansion Proposal

One of the central elements of the Democrats’ plans to cover the tens of millions of uninsured Americans is a sweeping expansion of Medicaid, the state-federal partnership to cover the lowest-income folks. But the success of that strategy is in doubt for a couple of reasons.

First, Medicaid pays providers at such low rates (roughly 72 cents for every dollar Medicare pays) that a huge chunk of the nation’s physicians refuse to treat new Medicaid patients outright. The trend begs the question: What good is health coverage if no one accepts it?

And second, as The Washington Post points out today, state budgets are so squeezed already that governors are reluctant to adopt any new financial burdens, even if it means getting health coverage for more residents. (Although Medicare is subsidized exclusively by the federal government, states are on the hook for a percentage of Medicaid costs.) Indeed, many governors oppose the Medicaid expansion in the Finance bill.

Medicaid is difficult to analyze, because the 50 states and the District of Columbia each have different payment structures and eligibility rules. In poor states, for example, the federal government picks up a larger percentage of the tab, relieving the burden on state coffers.

Also, some states have taken it upon themselves to expand Medicaid to cover a larger portion of their low-income population. Maine, for example, covers parents up to 206 percent of the poverty level, while many other states have kept Medicaid largely focused on kids, disabled folks and pregnant woman — the populations they’re required to cover under federal law. Indeed, in 34 states, parental Medicaid eligibility is set below the federal poverty level.

The differences in programs complicate the push for universal uniform. The Finance Committee’s bill would expand eligibility enormously, in effect offering coverage to every American earning less than 133 percent of poverty ($14,404 a year), including childless adults, who are currently prohibited from participating. That provision has been skewered by those states facing the largest enrollment hikes because they don’t already cover many adults.

The Finance bill (as amended) also requires states with expanded coverage to maintain those heightened eligibility levels for pregnant woman and the disabled above 133 of poverty until state insurance exchanges become operational, which is expected to occur at the start of 2013. That maintenance of eligibility requirement has been blasted by the states with the most generous Medicaid programs, which wouldn’t have the option of dropping higher-income adults if the budget situation worsened.

The Finance Committee is expected to approve the larger health reform proposal this week. But you’d be crazy to think that the debate over Medicaid won’t resurface in a big way when the bill moves to the Senate floor.