Feds rule on health care law's Medicaid expansion

Associated Press

WASHINGTON (AP) — States must commit to fully expanding their Medicaid programs to take advantage of generous funding in the federal health care law, the Obama administration said Monday.

The ruling affects a federal-state program that covers nearly 60 million low-income and severely disabled people, caught in a tug-of-war between Republican governors and the Democratic administration.

President Barack Obama's health care law expanded Medicaid to cover people up to 138 percent of the federal poverty line, or about $15,400 for an individual. The change mainly affects low-income adults without children at home, as well as low-income parents who can't get coverage under current Medicaid rules.

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Under the law, the federal government will cover 100 percent of the cost of the first three years of the expansion, gradually phasing down to a 90 percent share — still a far more generous match than states have traditionally received. The expansion, scheduled for 2014, is expected to provide coverage to about half the 30 million people uninsured people who will benefit from the law.

But some governors said Medicaid was already straining their state budgets to a breaking point, and the Supreme Court in June gave states the right to opt out of the expansion. Since the court decision, Republican governors have been asking if they can do a partial expansion.

The administration's ruling puts the ball back in the states' court. Administration officials said states can expand Medicaid part way, but they wouldn't get the three years of full federal funding provided under the law.

"The law contemplated that every American would have a way to get health insurance coverage," said Medicaid administrator Cindy Mann. "It's very significant federal support, unlike any other federal support provided to any other coverage initiative.

"We are going to remain true to that intent of Congress and not waive that provision," she added.

Mike Schrimpf, a spokesman for the Republican Governors Association, said the decision was "disappointing for many governors who hoped the administration was more serious about providing the states flexibility."

Most states are still pondering their decision. Twelve have said they'll turn down the expansion, although legislators are still debating the issue in some cases. Another 14 states have said they'll accept it. There's no deadline for states to decide, and they can try the expansion and later cancel it if it doesn't work out.

Two nonpartisan groups, the Kaiser Family Foundation and the Urban Institute, said in a recent report that states can expect to receive $9 in federal funds for every $1 they spend on the expansion.

Also on Monday, the Obama administration granted conditional approval to six states to set up new insurance markets called exchanges. Under the law, the exchanges will serve as a one-stop shop for consumers, steering middle-class people to subsidized private coverage and low-income people to Medicaid. Colorado, Connecticut, Massachusetts, Maryland, Oregon, and Washington all received approval.