Governors divided over Medicaid expansion

WILLIAMSBURG, Va. — America’s governors have long used their semiannual gatherings to lock arms in opposition to dreaded unfunded federal mandates and emphasize a pragmatic approach to problem-solving in stark contrast to a hyperpartisan, even dysfunctional Washington.

But the makings of a real divide loomed over the summer meeting of the National Governors Assn. here, as state leaders grappled with the fallout of the Supreme Court ruling that granted unexpected leeway with regard to a key component of President Obama’s landmark health law: whether to accept billions of federal dollars in return for expanding coverage for the poor through Medicaid.

Against the backdrop of a heated presidential race, some Republicans who had hoped the entire law would be struck down gained an opportunity to neuter it at home when the court invalidated part of the measure dealing with Medicaid.

“I will not be party to socializing healthcare and bankrupting my state in direct contradiction to our Constitution and our founding principles of limited government,” Texas Gov. Rick Perry said earlier in the week in a statement joining “the growing chorus of governors who reject the Obamacare power grab.”

Democrats eager to champion the law saw a partisan effort to undermine the president who signed it.

“The bottom line is that Republican governors are running around this country literally willing to cut off their nose to spite their state,” said Connecticut Gov. Dannel Malloy, a first-term Democrat.

But a greater number of governors on both sides approached the unexpected ruling with caution, largely out of concern for the long-term effect on state budgets that had been stretched to the brink by the economic downturn.

Through the Affordable Care Act, the government is set to spend an estimated $1 trillion over the next decade to help states insure Americans who make less than 138% of the poverty line, or about $15,400 annually, through an expansion of Medicaid. The provision was expected to extend coverage to about 17 million people, on top of the approximately 50 million Americans who are currently covered by the program.

Those figures depend on all states participating, a requirement that became an option because of the Supreme Court’s ruling. The ruling also opened the door for states inclined to participate to seek further concessions from the federal government in how an expansion might be structured.

Ultimately, said Gov. Dave Heineman of Nebraska, a Republican and the association’s outgoing chairman, “there are going to be 50 different state solutions.”

The governors group has taken no official position on the issue. But in a letter to Health and Human Services Secretary Kathleen Sebelius, the association pressed for “clear guidance” related to issues of implementation.

No further coordinated action was expected to come at the three-day gathering, set in the heart of Colonial Williamsburg. A discussion Saturday of controlling Medicaid costs largely sidestepped the issue.

Delaware Gov. Jack Markell, the incoming chairman, plans to hold a summit at month’s end with state Medicaid directors, insurance commissioners, and Health and Human Services representatives to tackle the questions in greater detail.

The Democrat is planning to expand his state’s Medicaid program, so long as he’s assured the funding formula holds as the law now stipulates.

“I think as people are looking at it, they want to make sure what the math looks like and what they could be exposing their taxpayers to. But there are a couple sides to that equation,” he said, referring to the cost of uncompensated care when the uninsured are treated in emergency rooms. “This should not be an ideologically driven or politically driven decision.”

Markell and Maryland Gov. Martin O’Malley, another Democrat, estimate that even when the federal contribution for the Medicaid expansion drops from 100% initially to 90% by 2020, the expansion will not cost states money. O’Malley said his state’s estimate pegs it as a cumulative $600-million gain.

“It’s not as if without [the Affordable Care Act] our healthcare costs level off,” he said.

But other governors are worried that already struggling states may be left in the lurch in the future. Republican Gov. Mary Fallin said that Oklahoma agencies had offered different estimates of how much more the state might spend when the federal government no longer subsidizes the full expansion.

Furthermore, she added: “I’m very concerned about anything that mandates that I have to expand a service that’s already in trouble.”

Many Republicans’ hesitation about expanding Medicaid rolls was based on the uncertainty surrounding November’s presidential vote.

“We’re not going to spend any taxpayer money or resources on a system that could very well be on the path to being repealed after Nov. 6,” said Wisconsin Gov. Scott Walker, a Republican.

Mitt Romney, the party’s unofficial nominee, has vowed to repeal the healthcare law on his first day as president.

The potential long-term effect on states’ budgets varies widely based on individual eligibility rules and the size of the pool of potentially insurable citizens. Tennessee Gov. Bill Haslam noted that through his state’s TennCare system, the expansion would be smaller for his state than others.

But, the Republican noted, “in 2020, nobody in here will be a governor anymore. So it’s easy to say we’ll take the easy money and deal with the consequences later.... I think that’s what people in here, Republicans and Democrats, are frustrated with … there’s no flexibility.”

The lone independent governor, Rhode Island’s Lincoln Chafee, was more hopeful.

“Let’s try something different,” he said. “We can always change it if it doesn’t work.”

michael.memoli@latimes.com