Some states would likely end their Medicaid expansions earlier than 2024 if the Senate’s healthcare bill becomes law, according to several sources.
That dynamic could deepen concerns among several senators who are undecided about the healthcare bill because of its changes to Medicaid, the federal healthcare program for the poor and disabled.
Sen. Lisa Murkowski (R-Alaska) has been deep in talks with her state, which might have to end Medicaid expansion early if the Senate bill passes.
Murkowski is a key vote that Senate leaders cannot afford to lose. With Sens. Susan Collins (R-Maine) and Rand Paul (R-Ky.) already opposed to the legislation, one more defection — from Murkowski or anyone else — would stop the bill in its tracks.
The revised healthcare bill that Senate Republican leaders released Thursday contains much of the same Medicaid provisions, such as cuts to Medicaid; converts federal financing to funding per enrollee or a block grant; and phases out the additional federal money for the expansion over three years, beginning in 2021.
In a nod to centrists, the bill does not fully phase out extra federal funding for ObamaCare’s Medicaid expansion until 2024.
But for some states, maintaining expanded eligibility would simply become too costly if the bill became law. Other states have automatic “triggers” that, if left unchanged, would end the expansion.
On Medicaid expansion, “I think it’s highly likely that they will end it sooner than you might think because the money is just not going to be there to maintain it as it starts to drop,” Matt Salo, executive director of the National Association of Medicaid Directors, said. “You can call it a soft landing, but it’s going to mean people are losing coverage.”
Earlier in the legislative debate, moderate senators had pushed for a gradual phase out of extra federal funds for Medicaid expansion, unlike the House bill, which halted the dollars starting in 2020.
As a nod to these senators, GOP leadership released its ObamaCare repeal-and-replace bill in late June that included a three-year phase out. Yet that is shorter than the seven-year glide path pushed by centrist Republicans, such as Sens. Rob Portman (R-Ohio) and Shelley Moore Capito (R-W.Va).
“I think a three-year glide path or a five-year glide path is not going to make a big difference in terms of whether states are able to keep the expansion going,” said Cindy Mann, who served as the federal director of Medicaid during the Affordable Care Act’s administration and is now a partner at Manatt Health.
In 2021, the 31 expansion states and Washington D.C. would, as a whole, be on the hook for a total of $6.6 billion in additional Medicaid funding. That figure would increase to nearly $43 billion more in total state spending, according to an analysis from the left-leaning Center on Budget and Policy Priorities (CBPP).
States would be faced with a tough decision on how to make up for the lost federal money. They’d have several choices, but dropping the expansion would be the most straightforward solution.
“Either you raise taxes, you cut other parts of the budget or you cut other parts of Medicaid or you drop the expansion,” Edwin Park, CBPP vice president for health policy, said. “Those are the choices, and they would have to figure that out. I think the most likely scenario would be that states start dropping the expansion.”
Some states may begin dropping the expansion in 2021 — and possibly even before the funds are reduced — Park said, “because they can’t absorb even the higher increase in spending that will be required, and certainly over time more and more states would start to drop the expansion.”
Throughout the healthcare debate, the changes to Medicaid have bedeviled leadership.
Senators from expansion states don’t want thousands of their residents to lose healthcare coverage. Some of their governors have been urging bipartisan reform rather than passing the GOP bill without a single Democratic vote, which Republicans can do under the fast-track budget maneuver they’re using to repeal and replace ObamaCare.
At least nine states have provisions in their Medicaid expansions that would end it automatically or soon after if enhanced federal funds dip below a certain level. Those states are Arizona, Arkansas, Illinois, Indiana, Michigan, Montana, New Hampshire, New Mexico, and Washington, according to CBPP.
Sen. John McCain (R-Ariz.) represents a state where, under the Senate bill, the end of ObamaCare’s Medicaid expansion would be triggered in 2022.
After a closed-door meeting where rank-and-file members were presented with the bill’s revisions, McCain was asked if he supported a motion to proceed to the bill.
“My governor said that we needed three amendments for him to approve of it, and those three amendments were not included,” he replied.
One such amendment would extend the timeline of phasing out Medicaid expansion money, so as to give “states like Arizona the necessary time to adjust their budgets so citizens don’t have the rug pulled out from under them,” McCain said in a statement released Thursday.
Alaska doesn’t have a trigger in its Medicaid law, but would be at risk of losing the Medicaid expansion before the phase-out even begins.
The reason comes down to how Medicaid was expanded in Alaska. Independent Gov. Bill Walker used an executive order to expand Medicaid and could do so because Alaska is required to cover all groups federal law mandates be covered — even though the Supreme Court ruled it was optional. But the Senate bill makes covering more lower-income people optional instead of mandatory in 2020.
“We think that puts Alaska’s expansion at risk in 2020 because our state legal authority to maintain those services would be in question,” Valerie Davidson, the Alaska Department of Health and Social Services commissioner, said, adding she believes the expansion would end in 2020.
The possible policy change is paramount for Davidson, as the state saw nearly 34,000 adults covered due to the Medicaid expansion. She’s been in “constant communication” with her two state’s senators — Murkowski and Dan Sullivan.
During the week before July 4th recess, Davidson was in Washington, D.C., where her team essentially “camped out in [Murkowski’s] office, except that she was very welcoming.”
The issue has been on Murkowski’s radar screen, the senator said, and that “we would basically kick it back to our legislature who could vote to discontinue the expansion so we would not be part of that glide path that many of us have been trying to put in place.”
“It’s yet one more thing in the bucket of things that makes Alaska somewhat distinguishable,” Murkowski said.
Even if Alaska opted to find a way to keep the expansion, Davidson said it isn’t realistic due to the state’s budget deficit.
“Our state right now is looking to cut programs and cut our general fund, not add to it,” Davidson said, “and so I think for anybody to make the assumption that, well, the state will just take on more of that responsibility is not very realistic.”