In a recent perspective article at the Journal of General Internal Medicine, Patrick O’Mahen and Laura Petersen lay out the current status of Medicaid Expansion and how they have slight expectations that the American Rescue Plan financing enhancements will do much to change the situation.
In March 2021, President Joseph Biden signed into law the American Rescue Plan Act (ARPA), providing $1.9 trillion to combat the COVID-19 pandemic. ARPA broadens numerous Affordable Care Act (ACA) policies extending health insurance to the uninsured.1 These reforms include generous financial incentives for states to accept the ACA’s Medicaid expansion. However, because the primary opposition to Medicaid expansion in holdout states is ideological and not economic, the effectiveness of these incentives in coaxing more states to expand is likely to be limited.
Under current law, states that had not expanded Medicaid by the day that the ARP was signed are eligible for the regular 90% federal match for the expansion population plus a bonus 5% match on all Legacy Medicaid expenditures for two years if the state expands Medicaid. This makes Medicaid Expansion a state budget profit center for two years, or half a governor’s term and at least one electoral cycle for the state legislature. Once the two years are up, the state would get the regular 90% match for the expansion population and the standard federal match for Legacy Medicaid. On net, expanding Medicaid under regular conditions is a break even proposition as the states are often able to move people that are covered with state dollars to the enhanced federal program.
The ARP treats Medicaid expansion resistance as a matter of the hold-out states not having the means to expand. When a problem is one that is just a “means” problem, accessing external resources to acquire those additional means will solve that problem.
However, O’Mahen and Petersen are building on the political science literature that shows the resistance is ideological. Rocco and Haeder (2018) argue that intense policy demanders on the right have made Republican elites indifferent, at best, to Medicaid Expansion in the hold-out states. Institutional features such as laws that prohibit governors from expanding Medicaid via executive action as in North Carolina where the Democratic governor wants to expand Medicaid lock in these preferences that likely have majority public support. These views on the role of the public purse and its interaction with individuals in need is not just limited to Medicaid Expansion. We saw this recently in Wisconsin where a school board refused to accept federally funded lunch for all students is a crude example of this ideological opposition to programs that cost the governing body that can accept or reject the program nothing:
A school district opted out of free and reduced-price meals, saying students could “become spoiled” https://t.co/sKOVLjdvkc
— The Washington Post (@washingtonpost) August 27, 2021
The school board reversed itself after it was nationally mocked.
But in the context when it is just a matter of enhancing means versus entrenched mores, the mores, especially when reinforced with status-quo enabling institutional design, will almost always win in a direct confrontation. O’Mahen and Petersen argue that Medicaid Expansion in these hold-out states will only win by non-direct confrontations in the legislatures and governors’ officers. Instead, direct democracy through referendums and a likely federal parallel system will be more fruitful systems of change.