• What happens if a state refuses to expand Medicaid?

    The Supreme Court decided today that states can refuse the ACA Medicaid expansion without having to give up federal funding for their existing Medicaid program. This was the threat in the ACA, the stick that was intended to pusuade (or coerce, if you like) states into compliance. According to the court, that stick is unconstitutional. In terms of health policy, this is the most significant aspect of the court’s ruling.

    On Twitter, I’m seeing a lot of questions about what happens to the would-be Medicaid eligible people in states that refuse the ACA Medicaid expansion. I believe that Jared Bernstein has it right:

    Because the law was written assuming that the uninsured poor would be covered by Medicaid, subsidies to purchase health insurance in the exchanges don’t kick in until higher income levels [above the federal poverty level*]. The poor won’t have to pay the tax penalty formerly known as the mandate because of a hardship exemption in the law, but neither will they get the subsidy until their incomes go up enough.

    It’s a very weird reversal of the usual means-test for government benefits.  Typically, as your income rises you become ineligible for benefits.  Here, you become eligible.

    I agree with Bernstein and Aaron and Kevin Drum (all posts worth reading) that it is unlikely many states will actually refuse the money that comes with Medicaid expansion due to the pressure they’re likely to receive from providers. But it is possible some may try, and in particular they may do so to extract concessions from regulators. “Hey, let that waiver through and we’re on board.” It’d be an ugly game, threatening the affordability of coverage of low-income individuals, but that doesn’t mean some states won’t play it.

    *UPDATE: I originally wrote 133% of FPL. See a the follow-up post for some additional detail.


    • “It’d be an ugly game, threatening the affordability of coverage of low-income individuals, but that doesn’t mean some states won’t play it.”

      Can you say Texas?

    • There’s little doubt in my mind that republican governors will opt out. Ugly is the name of their games. There is nothing they and republican politicians in general would like better than to see the ACA to fail under their watch.

      But I do have a question. If a state opts out can they opt in at a later point? If they can opt in, will there be a penalty for not taking advantage of the provision from the beginning?

      • I just don’t see the practicality and sustainability of these OPT OUT governors. Its inhumane and unjust to deny medical care to any human being! I believe in the end, most of these OPT OUT governors will be known as despots or dictators in the eyes ofJohn Q. Public. No good can come from a governor who denies poor people hospital care. It reminds me of the former Governor of Alabama, George Wallace denying Black students from entering state universities. Perhaps these OPT OUT governors are hoping to win Romney’s Vice Prez candidacy opening by ballyhooing against everything Obama!

    • I agree with Carol.

      The politics around this law didn’t end today. Many states haven’t even set up the insurance exchanges yet or even started!

      This could actually result in more uninsured than if the mandate had been declared unconstitutional.

    • Louisiana (my state) is already refusing to do it.

      What happens to the poor in this state, then? Poor people in this state, with the exception of children, the elderly, and pregnant women, are completely denied health insurance. And most of the state is poor. It’s criminal, IMO, for Bobby Jindal to refuse help for them, but he is saying this.

      Is there any way around it for us, then? Or do we have to continue to suffer?

    • Medical providers, doctors, nurses, and physician assistants, will flock to the ACA Medicaid expanding states versus Medicaid non-expanding states. You’ll be left with a mediocre MD I encountered a few months ago, Couldn’t read an x-ray photo to see if I had a broken foot. Sent me home with a diagnosed foot sprain! Another MD saw the xray a few days later to confirm I had a broke foot! The good doctors follow the money. The mediocre doctors are just happy to be working anywhere. Good Luck Texas, Florida, New Hamp and others.Maybe these governor’s just wants to get rid of their present Medicaid Users to another state, since most of the uncaring wicked see Medicaid users as losers.