Has Obamacare's Medicaid expansion reached a tipping point?

They like their plans, and they're likely to keep their plans.

Despite suffering from a past heart attack and diabetes, Kentucky resident Mary Blair was able to receive medical coverage through Medicaid expansion under the Affordable Care Act.
Luke Sharrett | The Washington Post | Getty Images
Despite suffering from a past heart attack and diabetes, Kentucky resident Mary Blair was able to receive medical coverage through Medicaid expansion under the Affordable Care Act.

Despite continued Republican efforts to repeal Obamacare, a key component of the law that has given millions of people health coverage — Medicaid expansion — could prove very difficult to undo, experts say.

A growing number of states have signed up for that expansion of the government-run program for poor people, or are discussing doing so. Hospitals are becoming accustomed to the money that comes with expansion, and a majority of new enrollees are saying they are happy with their coverage.

The difficulty of getting rid of Medicaid expansion, which uses federal dollars to give health benefits to previously ineligible adults, was sharply underscored this fall by the election of ardent Obamacare foe Matt Bevin as governor of Kentucky.

The Republican Bevin originally promised to repeal expansion of Medicaid in Kentucky, where about 400,000 have joined the Medicaid rolls since the Affordable Care Act was implemented. He since has backed away from that vow. Bevin most recently has talked about redesigning the state's Medicaid program, but has not yet offered a plan.

At the same time, this month the new Democratic governor of Louisiana, John Bel Edwards, has signed an executive order to expand Medicaid. That state expects about 300,000 people to join its Medicaid rolls by this summer.

Louisiana is the 31st state to expand Medicaid; Washington, D.C., also has expanded benefits. Three other states, South Dakota, Wyoming and Virginia, are discussing such a move.

The addition of those states would provide the program even more critical mass and complicate efforts at widespread repeal or a piecemeal undoing.

"I do think we've reached the tipping point," said Diane Rowland, executive vice president of the Kaiser Family Foundation. "It's part of the fabric of our health-care system now."

"I think there are still states that are strongly resistant to it, but I think the tide is beginning to sweep more states in," Rowland said.

Before expansion, traditional state Medicaid programs, which are jointly run and split costs roughly evenly with the federal government, rarely covered poor adults who did not have dependent children. After the ACA became law, states that adopted expansion offered benefits to nearly all adults who earned up to 138 percent of the federal poverty level, which this year is $16,242.

A 2012 Supreme Court decision made expansion optional for states. Initially, less than half the states adopted expansion, with many GOP-led states refusing to expand because of their opposition to Obamacare. But since then a number of states that were headed by Republican governors — Ohio, Indiana, Michigan and Pennsylvania — accepted expansion.

Rowland said one thing that could "sweeten the pot" for the 19 remaining holdouts is President Barack Obama's plan to propose a budget that would have the federal government fully finance the costs of Medicaid expansion for three years in future states that enter the program.

Under the ACA, the federal government paid 100 percent of the costs of newly eligible Medicaid recipients in the program's first three years: 2014, 2015 and this year. The federal share of the costs then will drift down over time, but by law will go no lower than 90 percent.

Obama's proposal would give new states in the program the same, full, three-year funding deal that the initial adopting states got. Even if that proposal doesn't pass, the federal government's 90 percent subsidy for the costs of newly eligible Medicaid recipients as of 2020 would continue to act as an incentive for states to adopt expansion.

Sara Collins, vice president for health-care access and coverage at the Commonwealth Fund, pointed out that in expansion states, hospitals have seen a sharp reduction in their expenses due to "uncompensated care" — the costs of treating people who don't have health insurance.

Health providers in nonexpansion states have taken note of that.

"Hospitals and (health) providers have put significant pressure on their leadership to push forward in the states that haven't expanded," Collins said.

Earlier this month, the White House's Office of Management and Budget tweeted a message that said if the 19 nonexpansion states were to expand, more than 4 million people would gain health coverage, and $4 billion "in uncompensated care costs could be avoided."

The potential to lose that kind of financial aid would also come into play in any discussion about repealing Medicaid expansion in an individual state, or if a new Congress and president tried to do so on a national scale.

So would the issue of yanking coverage from people who were previously uninsured.

Collins said that there is no firm number on how many previously ineligible Medicaid recipients now have coverage due to expansion. But she said that "the majority" of the 13.5 million people who have joined the overall Medicaid rolls since October 2013 are people who wouldn't be covered if expansion wasn't available.

Commonwealth Fund surveys have found that among "people who have enrolled in Medicaid, large majorities of them are satisfied with it," Collins said. "I think there is very strong support among people who have gained insurance through expansion."

If those expansion beneficiaries lost coverage, "they would have very few options" for health coverage, Collins said. People who earn less than 100 percent of the poverty level are not eligible for federal subsidies to help buy private Obamacare insurance plans on government marketplaces.

"People would lose coverage in large numbers" if expansion was repealed, Collins said.

Two years ago, the Obama administration took sharp criticism when about 4 million people with private insurance were informed by their insurers that their plans were being canceled because they were not ACA-compliant. Although most of those people obtained coverage elsewhere, elected officials remain aware of the potential for political backlash if significant numbers of insured people risk losing coverage.

Medicaid expansion critic Joshua Archambault, senior fellow of the Foundation for Government Accountability, said he doesn't believe expansion has reached a tipping point, He also said there is plenty of groundwork being laid for trimming back expansion — and possibly getting rid of it altogether at some point.

"There are a lot of conversations on Capitol Hill right now about what would happen [regarding Medicaid] if a Republican is elected to the White House or a pragmatic Democrat," he said.

''Congress has effectively voted to repeal Medicaid expansion," Archambault noted, referring to recent legislation passed by the GOP-controlled Congress. Obama vetoed that effort.

And he said that although some small states such as South Dakota are discussing expansion, "I don't see a rush for the remaining states," which include Texas and Florida. Governors of those two states — both of which have high numbers of uninsured, poor residents — have resisted pressure from business leaders and hospitals to implement expansion.

Archambault also said "the challenge in those states" that have expanded already is "they're going to see this reality of decreasing federal dollars" subsidizing the costs of the newly eligible.

Over time, Archambault said, several states might get rid of expanded Medicaid because they won't want to pay their share of the costs. And further defections could come if a new Congress, and a Republican president, lower the federal share of costs below 90 percent, he said.

"If they were to change the match rate to 70-30" — meaning 70 percent borne by the federal government, the rest by the states — "the majority of states would not have expansion," Archambault said. "States could just not afford it."