Expanding the Umbrella: Medicaid Expansion 2015 Review and New Year's Preview

With 2016 right around the corner, and several new governors moving into office, it's as good of time as any to take stock of where the Medicaid expansion has gone and the prospects for progress in the new year.  Despite massive Democratic setbacks at the state level in the 2014 midterm elections, Medicaid expansion fared reasonably well in 2015, and 2016 posts several opportunities for new states to expand as well, as well as one at risk of backsliding.

First, we visit the ghosts of Medicaid expansion past:

As Chart I shows,  the ACA Medicaid expansion has proceeded at a similar overall pace to the original Medicaid take-up in the late 1960s, though the holdouts to Obamacare are likely to offer stiffer resistance than the late adopters of the initial program.

Democratic defeats in the 2014 elections likely prevented expansions in Maine and possibly Florida, and may have influenced resistance to expansion plans in several other states, including Tennessee, Utah and Wyoming. However, Four new states joined the expansion -- Indiana, Pennsylvania, Alaska, and Montana -- which increases the number of states fully expanding Medicaid from 26 to 30. 

Head below the fold for state-by-state analysis and a peak at 2016.



Indiana was the first to expand in February 1, after the federal Department of Health and Human Services approved its waiver to expand its Healthy Indiana plan. The plan differs from traditional Medicaid in that it is based around several different flavors of Health Savings accounts. The HSAs are primarily funded by the state, but many participants are required to contribute small amounts of their income based on their poverty level.  The plan is considerably more complicated and inefficient than a traditional expansion, but it does cover most of the needs of recipients.  Most notably, HHS blocked an attempt by Indiana to link Medicaid to a work requirement. Considering the total Republican control of the state government, advocates have to see this plan as a big win.

Pennsylvania originally had filed for a complicated waiver under Republican Governor Tom Corbett in 2014, but newly elected governor Tom Wolfe changed course and opted for a more straightforward traditional expansion, which will mean lower costs for beneficiaries and cost savings for the state.

Montana had blocked expansion in 2013 when a Democratic state legislator accidentally voted the wrong way on a procedural vote and several Republican supporters got cold feet on the revote. But in 2015 the tables turned when the minority Democrats used a procedural trick to get a modified expansion bill on the floor, where it passed with support from several Republicans. Democratic Governor Steve Bullock quickly signed the plan, which required some minor waivers from HHS.

Alaska's new independent Governor Bill Walker attempted to negotiate with his Republican Legislature to extend Medicaid coverage. Frustrated, he then issued an executive order opting for a traditional expansion over his the objections of legislature. Court battles have ensued, but the program is moving forward.

On the negative side, several states didn't expand that had plans in place to do so. 

The 2014 election results stopped Maine from expanding when it re-elected implacable ACA foe Paul LePage to a second term, and the re-election of Rick Scott in Florida scuttled any potential expansion in that state.

Conservative legislatures also stopped plans backed by Republican governors in Utah, Tennessee and Wyoming. Each of those three states had agreements in place with HHS for waivers allowing non-traditional expansion. In each case, the legislature blocked action.

However, the most intriguing aspect of 2015 was the durability of the expansion in states newly hostile to it.

Arkansas elected conservative Republican Asa Hutchison governor to replace moderate Democrat Mike Beebe, along with an extremely conservative state legislature. But instead of eliminating the expansion, the state passed legislation consolidating it.

Arizona replaced Jan Brewer, who  accepted expansion, with rabid Obamacare opponent Doug Ducey. Along with  But instead of repealing expanded Medicaid  the state passed a piece of boilerplate legislation condemning Obamacare filled with sound and fury signifying nothing, while quietly continuing taking federal monies.

Finally,  Iowa quietly abandoned its own private-option model and implemented a traditional Medicaid expansion envisioned by the architects of the ACA. (Thanks to Charles Gaba for this catch.)

No we turn to the Ghost of Medicaid expansion future:

2016 is filled with several opportunities and one potential pratfall.

Kentucky is the location where the expansion might be in peril. The state replaced a moderate Democratic governor with a fire-breathing tea-partier named Matt Bevin who has pledged to dismantle both the popular state exchange and pull Kentucky out of the Mediciad Expansion. He's taken steps to do the former, but has started to walk back his rhetoric on gutting Medicaid. The smart money (by which I mean Richard Mayhew) suggests that Bevin will try to get an Indiana-style waiver through HHS that will keep the expansion intact while making it somewhat harder for beneficiaries to get benefits. If things play out this way, it will add another piece of evidence supporting the proposition that the Medicaid expansion is a one-way ratchet: once you accept expansion, it tends to stick.

Louisiana offsets the bad news from Kentucky. The Democrats won both a surprising and a surprisingly convincing victory in the gubernatorial election to replace extremely vocal ACA foe Bobby Jindal. Incoming governor John Bel Edwards has promised that expansion is very high on his agenda. What's more surprising is that a GOP-dominated state legislature has given him the means to do so. Louisiana is all but certain to become the second state of the former Confederacy to expand Medicaid, which will cover another quarter million citizens. This is an extremely large victory for health-care reformers.

Wyoming will likely take another stab this year. The state faces a budget crisis caused by the crash in oil and gas prices and the corresponding severance taxes that the state relies on to fund its operations. Governor Matt Mead is pitching Medicaid expansion and its infusion of federal dollars as a way to stem the budget deficit in addition to covering 17,000 more state residents. Mead has pushed for expansion in the past, but this year he is including the proposal in his budget. Stay tuned.

Virginia could be a dark horse expansion candidate in 2016. In 2014, the Republican-dominated House of Burgesses blocked Democratic Governor Terry McAuliffe's and the state senate's attempt to expand Medicaid. Democrats failed to make inroads in the legislature in the 2015 elections, which makes another attempt an uphill battle. However, it looks like one major stumbling block -- a mechanism to fund the state's share of expenses in 2017 and beyond --  has been solved by hospitals agreeing to a bed tax.  We'll see. Getting Virginia into the expansion column would be as big of win or bigger than getting Louisiana in the expansion column.

Another state making noise about accepting some form of the Medicaid expansion is South Dakota. Additionally, Tennessee and Utah still have their own plans floating around that could be adopting in special sessions.

So this year will likely see slow, but steady progress on the expansion. On one hand, it's a bit frustrating because millions of people still need covered. However, progress is better than the alternative.