(Bloomberg) — Republican-led states that blocked the Patient Protection and Affordable Care Act (PPACA) Medicaid expansion have found a way to embrace it, under pressure from businesses to tap the flood of federal dollars it brings.
Tennessee’s Republican Gov. Bill Haslam called lawmakers into a special session this week to consider accepting federal money to extend public health-care assistance to more of the poor. Indiana announced its expansion last week. Alabama, Florida, Idaho, Utah and Wyoming are considering it. All are adding free-market, anti-welfare embellishments that backers say distance the proposals from a federal program they once spurned.
See also: PPACA repeal bill moves ahead in House.
“We kept looking at it and looking at it,” said Charlie Howorth, executive director of the Tennessee Business Roundtable, who supports the governor’s plan. “We saw the mood shift from pure politics to pragmatism.”
Money is driving states to reverse course, said Richard Nathan, a fellow with the Nelson A. Rockefeller Institute of Government in Albany, New York. States that balked at accepting more residents into Medicaid stand to lose $424 billion in federal funding through 2022, according to an August report by the Robert Wood Johnson Foundation, a Princeton, New Jersey-based nonprofit that supports expanding access to health care.
“There’s been a lot of politicking from employers, from hospitals, from providers saying, ‘Don’t leave this money on the table’,” said Nathan, who’s studying how states are implementing PPACA. “There’s a shift. You can feel it. You can feel that the sands are shifting.”
The Republican opposition to increasing the scale of the federal program left many earning as much as 138 percent of the poverty line, about $27,700 a year for a family of three, still without coverage even as more than 15 million received benefits under the law. Medicaid is administered by states under rules set by the federal government, which is currently covering 100 percent of the cost of those who are newly eligible. That share will be phased down to 90 percent by 2020.
When the U.S. Supreme Court rejected a challenge to the PPACA individual mandate provision in 2012, it ruled that the federal government couldn’t require states to add more residents to Medicaid. Some Republicans rejected doing so, saying it could leave them with soaring costs if federal funding is cut.
Twenty-eight states have opted to expanded Medicaid, including 10 with Republican governors.
Those considering following suit are asking President Barack Obama’s administration to waive certain Medicaid rules and allow them to create more Republicanized versions, with private insurance vouchers or nods to individual responsibility, such as premiums.
The Wyoming Senate on Monday gave initial approval to an expansion after adding a requirement that enrollees must work as much as 32 hours a week. In North Carolina, Gov. Pat McCrory said he would want new Medicaid recipients to be required to look for work. The Obama administration has rejected imposing work requirements.
Indiana, whose plan was approved, is encouraging employees to direct new beneficiaries to the state employment office.
The additional requirements may discourage enrollment, leave some still without care and make Medicaid more expensive to run, said Joan Alker, executive director of the Center for Children and Families at Georgetown University in Washington. In Indiana, for instance, the program has six sets of rules for enrollees, depending on their incomes and other categories.
“What you are seeing, because of the intense politics around this, are some very complicated agreements,” Alker said. “Intense politics doesn’t always make good policy.”
Hospitals and the business community are driving the reconsideration.
See also: 3 things hospitals are saying about PPACA.
In states that accepted Medicaid money, hospital revenue rose as fewer went without coverage, according to a September report by PricewaterhouseCoopers Health Research Institute. Dallas-based Tenet health care Corp., the third-largest publicly traded hospital chain, in January said its charity care and uninsured admissions declined 62.4 percent last year in states that expanded Medicaid.
Hospitals stand to lose $168 billion in states where additional Medicaid funds were rejected, according to the Robert Wood Johnson Foundation’s report. They are also losing federal money to pay for treating the uninsured.
Florida hospitals are set to lose $2.2 billion of such subsidies this year. That may encourage the legislature to reverse its opposition to Gov. Rick Scott’s Medicaid-expansion plans, said Mark Wilson, president of the Florida Chamber of Commerce.
“I think the situation and the timing may be right for something to happen in Florida,” Wilson said.
In Tennessee, Gov. Haslam called the legislature into a special session that began Monday to consider his proposal, which would extend health care to as many as 470,000. Under it, working people who can’t afford employer-sponsored health insurance could get vouchers to defray the cost. Everyone else would be served by the state’s Medicaid program, though they would have to pay premiums in some cases and would get credits for healthy lifestyle changes.
“There’s an overwhelming amount of persuasion going on right now,” said Tennessee Rep. Glen Casada, chairman of the Republican caucus in the House of Representatives. He opposes Haslam’s plan but gives it even odds of passing.
Tennessee exemplifies the politics of health care in Republican states.
Republicans outnumber Democrats more than three to one in the state legislature. Haslam got 70 percent of vote last year against his Democratic challenger, a 72-year-old squirrel hunter who didn’t campaign and misspelled his own name on his Facebook page.
It’s also a health care capital. A business coalition that supports Haslam’s plan includes Tennessee-based hospital companies HCA Holdings Inc. of Nashville, LifePoint Hospitals Inc. of Brentwood and Community Health Systems Inc. of Franklin.
Two years ago, health-care companies asked the Tennessee Business Roundtable, which represents corporations, to make an economic case for expanding health care to the poor, said Howorth, the group’s director. A University of Tennessee study funded by the group estimated it would create 15,000 jobs.
“We will see $7.8 billion go out the door over 10 years if we do not do this,” said Craig Becker, president of the Tennessee Hospital Association in Brentwood. “We were all pushing really hard.”
Tennessee’s chapter of Americans for Prosperity, the Tea Party-affiliated group backed by Charles and David Koch, and the Beacon Center of Tennessee, a Nashville nonprofit that advocates for smaller government, are urging the legislature to scuttle the governor’s plan. They say its an expansion of Medicaid and an endorsement of PPACA.
“There’s a difference between free-market and pro-business,” said Justin Owen, president of the Beacon Center. “This is bailout for hospitals.”
Supporters say Haslam’s proposal isn’t Medicaid expansion as envisioned by PPACA because of the changes it includes.
“This isn’t Medicaid,” said Becker. “This is anything but Medicaid.”
The Tennessee proposal is a reasonable middle ground, said Bryan Jordan, chairman of First Horizon National Corp., the Memphis-based bank, who supports it.
“It will make insurance available and do it in a way that supports the overall fabric of the community,” Jordan said.
“It’s better than adopting no version of the benefits of the Affordable Care Act at all. And on the surface, it seems easier to sell.”
—With assistance from Alex Wayne in Washington and Mark Niquette in Columbus.