Can Obama persuade reluctant states to expand Medicaid? New aid plan aims to do so

President Obama, in a bid to keep up momentum behind the Affordable Care Act in his final year in office, plans to propose new federal aid to persuade more states to expand their Medicaid programs through the 2010 law.

The proposal, to be included in the president’s 2017 budget blueprint, comes as Obama visits Louisiana, which is poised to become the 31st state to offer Medicaid coverage to all its residents.

The newly elected governor, Democrat John Bel Edwards, signed an executive order this week that will allow low-income adults in the state to begin signing up for Medicaid starting July 1, making the state the first in the Deep South to undertake the expansion.

Elected officials in several other traditionally conservative states, including South Dakota and Wyoming, are also pushing for expansion.

Medicaid, along with new insurance marketplaces created by the health law commonly called Obamacare, has helped expand coverage to about 17 million Americans since 2013, driving the largest reduction in the nation’s uninsured in half a century.

Medicaid now provides coverage to nearly 1 in 4 Americans at an annual cost to taxpayers of more than $500 billion. And the program is growing rapidly, thanks largely to the law, which provides hundreds of billions of dollars of federal aid to states to expand Medicaid eligibility to low-income, working-age adults. (Medicaid historically has served poor children, their mothers and the disabled.)

But the expansion has been rejected by many Republican governors and state lawmakers, who, despite growing evidence about the benefit to patients, have argued that Medicaid is ineffective and too costly to states.

Though the law provided federal funding to fully pay for the expansion in 2014, 2015 and 2016, the aid is gradually phased down so that states will ultimately foot 10% of the cost in 2020, a prospect many state lawmakers find worrisome, given doubts about the price tag.

That means that if a state such as Florida, which has opposed the law, decides in 2017 to expand Medicaid, the state would never get the full federal support.

Obama’s new proposal would change that, allowing any state that decides to expand Medicaid eligibility under the law to get three years of full federal funding, no matter when the expansion starts.

“This common-sense proposal makes the expansion as good a deal for states that expand now as it is for the states that have already done so,” Shaun Donovan, director of the Office of Management and Budget, and Cecilia Muñoz, head of the Domestic Policy Council, wrote in a blog posted Thursday morning by the White House.

“It is further evidence of the Administration’s willingness to work with states to build on recent progress in improving health coverage and making Medicaid affordable to states and taxpayers alike,” they wrote. “We hope Congress will act to provide this extra incentive to states that haven’t yet expanded, encouraging them not to miss out on the benefits other states are already enjoying.”

Providing this additional assistance would probably be expensive. The White House did not provide a cost estimate.

It also would require congressional approval, which is likely to be difficult, given persistent GOP antipathy to the health law. Congressional Republicans this month passed legislation, which Obama vetoed, that would have repealed large sections of the law, including the Medicaid expansion.

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