Senators Warnock, Ossoff & Baldwin launch new bill to take another crack at closing the Medicaid Gap

Medicaid Expansion map

As I (and others) have written many times, closing the so-called "Medicaid Gap" is one of the trickiest challenges President Biden and Congressional Democrats face when it comes to strengthening and improving the Affordable Care Act.

Once again: Under the ACA, all Americans earning up to 138% of the Federal Poverty Level (FPL)... roughly $17,700/year for a single adult or around $36,500 for a family of four...were supposed to be eligible to join Medicaid regardless of their health status, whether they had kids and so forth.

This was supposed to be the case in all 50 states and the District of Columbia (I'm not sure about Puerto Rico or the other U.S. territories...many ACA provisions never applied to them in the first place).

Unfortunately, one of the major consequences of the NFIB vs. Sebelius Supreme Court Case in 2012 was that expansion of the Medicaid program has to be voluntary on the part of each state.

About half the states went ahead and expanded the program right out of the gate, including every blue-leaning one along with a handful of red states such as North Dakota and West Virginia...and with good reason: It's an amazing deal for the states. The federal government agreed to cover 100% of the cost for the first 3 years, then a minimum of 90% after that (the state share went to 5% in 2017, then gradually up to 10% where it's set to remain in perpetuity).

That means hundreds of millions of dollars (or even billions in the larger states) of federal funding pouring into the state economies while they only have to pay up to 10% of the bill themselves. By comparison, every state has to pay between 25 - 50% of the cost of traditional Medicaid for the rest of the program population (children, the disabled, the elderly and so forth).

And yet...most of the red states refused to take the deal of a lifetime. Over the years, some of them have come around either due to a change in leadership in states like Virginia and Maine, or due to the voters demanding it directly via ballot proposal in states like Utah, Nebraska, Idaho and Oklahoma. Oklahoma's Medicaid expansion program actually just officially launched two weeks ago.

Even so, seven years after it was supposed to launch nationwide, as of today there are still 13 states which have refused to expand the program. One of them, Missouri, was supposed to go live July 1st as well thanks to MO voters solidly passing a ballot proposal which bakes ACA expansion into the state constitution. Unfortunately, the state legislature is refusing to chip in their 10% of the cost even though they'll forfeit a bonus payment of over $1.1 BILLION in federal funding for not funding it.

Here's what that looks like nationally (this map was originally created by the Kaiser Family Foundation (KFF); I've updated it to reflect the states which have expanded Medicaid more recently):

KFF estimate that as of today, nearly 2.2 million Americans currently fall into the "Medicaid Gap" in the 12 states which haven't expanded Medicaid under the Affordable Care Act yet (and another ~127,000 in Missouri, where expansion is still in limbo pending a state Supreme Court review).

They also estimate that another 1.8 million uninsured Americans who are eligible for subsidized ACA exchange plans who would be eligible for Medicaid instead if those state actually did expand Medicaid (and perhaps another 100K in Missouri). That's nearly 4.0 million total without Missouri or 4.2 million if you include it.

So, how to crack this nut in these holdout states, all of which are either completely or partially controlled by Republicans who have adamantly refused to expand the program no matter what all these years?

Well, there's several options:

Right now, only South Dakota seems to have a serious shot at forcing Medicaid expansion through via this route.

  • You could try flat-out bribing the states to do so...which is exactly what the American Rescue Plan (ARP) attempts to do, by offering any non-expansion state hundreds of millions of dollars on top of the 90% guaranteed funding simply to get them to do what they should have done in the first place seven years ago. This would effectively amount to the feds covering 100% of the cost of expansion for up to 5-6 years depending on the state.

This almost worked in Wyoming, with the measure coming ThisClose several times before failing repeatedly earlier this year...but it's not looking good. Last I heard, Alabama was mulling the offer over as well, but for the most part it sounds like it's not really going anywhere. Hell, as I noted above, the Missouri state legislature is refusing to fund the program even WITH the $1.1 billion they'd receive and with the voters clearly stating it's what they wanted.

It's a clever idea, but one which only partially resolves the issue while also setting up what I'm sure are a lot of logistical, administrative and potential legal headaches as local governments clash with the state leadership. It would also shift the Medicaid Gap from the state level to the local level, with blue pockets getting coverage while wide swatches of red go without (granted this is entirely due to decisions of their own leadership, but still).

The remaining options mostly involve giving up on convincing the states to do the right thing (either ethically, morally or even fiscally), shifting the solution over to the federal government. Again, there are several routes they could take:

  • Congress could simply eliminate the lower-bound ACA subsidy cliff (the one which requires a minimum income of 100% FPL or more in order to qualify for exchange plan subsidies), and then tack on some additional wraparound benefits for those enrollees below 100% FPL.

The American Rescue Plan already partially does this, by reducing premiums for those earning less than 150% FPL down to $0 and by allowing those receiving unemployment benefits (this year only) to qualify for the $0 plans even if their actual income is below 100% FPL.

However, there are some downsides to this as well:

First, Medicaid is far more comprehensive than nearly all ACA plans, and usually costs the enrollees nearly nothing, so it would be an inferior form of coverage for most of the Medicaid Gap population.

Secondly, if the lower-end subsidy cut-off were removed, it's almost certain that quite a few states which have already expanded the program would reverse themselves and allow Medicaid expansion to expire, in order to save the 10% portion of the cost that they have to pay.

In other words, instead of adding 2.2 million people to Medicaid, this move would effectively backfire and cause as many as 19 million current Medicaid enrollees to lose that coverage (to be replaced with for-them-inferior ACA exchange policies instead).

Again, the American Rescue Plan and "wraparound services" would resolve the first problem, but the second one would remain...and it would be adding insult to injury since it would effectively amount to rewarding the states which didn't expand the program while punishing those which did.

Another option would be to simply eliminate that 10% state share entirely by raising FMAP from 90% to 100% across every state. I ran the numbers on this back in May, and it would cost a lot less than you might think (though still quite a bit): Around $341 billion over 10 years (adjusted for inflation), or roughly $34 billion per year.

The 37 states which have already expanded Medicaid would love this, of course. The biggest downside is that it would still rely on the holdout states agreeing to expand the program...and as the Missouri debacle illustrates, it's NOT "budgetary concerns" or "fiscal responsibility" which is causing them to act this way. If that's all it was, most of them would have expanded Medicaid long ago, and the remainder would almost certainly have taken the ARP's bribe offer by now.

All of this leaves one more possible option...which seems to be what Senators Warnock & Ossoff of Georgia (one of the holdout states) along with Senator Baldwin of Wisconsin (another holdout state) to be trying next:

Senators Ossoff, Reverend Warnock, Baldwin Introduce New Legislation to Expand Affordable Health Care Coverage to Low-Income Americans

  • The Medicaid Saves Lives Act would create new Medicaid-style federal program to allow Americans in non-expansion states to access affordable health care coverage
  • Legislation would provide health insurance to an estimated 4.4 million Americans with low-incomes who live in the 12 states that have so far refused to expand Medicaid
  • Black, Hispanic, Asian and Pacific Islanders make up 60 percent of people in the health insurance coverage gap
  • New bill follows push by Sens. Reverend Warnock, Ossoff to President Biden and Senate Leadership to include legislation to close the health care coverage gap in any forthcoming economic recovery package
  • Legislation endorsed by Georgia Hospital Association, Georgia’s Grady Health System, Wisconsin Primary Health Care Association and more

Washington, D.C. – Today, U.S. Senator Reverend Raphael Warnock (D-GA), joined by U.S. Senators Tammy Baldwin (D-WI) and Jon Ossoff (D-GA), introduced new legislation to provide critical health care coverage to more than 4 million Americans who had previously been denied access to affordable health insurance because of where they live.

The Medicaid Saves Lives Act would provide health care insurance to Americans with low incomes in the twelve states that have refused to expand their state Medicaid programs under the Affordable Care Act. By closing the coverage gap in these states and providing free and affordable health insurance to millions of Americans, the Medicaid Saves Lives Act would also provide access to preventative health care services; improve health outcomes and prevent premature deaths; lower costs for uncompensated care, which would in turn reduce hospital and provider closures; and improve economic mobility for Americans with low-incomes by enabling them to work.

“I was fighting to expand Medicaid and strengthen access to affordable health care before I was elected to the Senate, and since day one I’ve been focused on what the federal government can do to provide health insurance for the nearly 275,000 Georgians who are in the coverage gap and the 500,000 Georgians who would be eligible for Medicaid. I believe health care is a right, and the Medicaid Saves Lives Actwould ensure Georgians and other Americans with low incomes who would qualify for Medicaid in most other states finally have access to the health care they need to keep our communities and economy moving forward,” said Senator Warnock.

“For too long leaders in Georgia and the other non-expansion states have put politics over people, refusing to strengthen public health by expanding Medicaid even after myself and others helped to secure billions of additional dollars in the American Rescue Planfor states to do just that. That’s why Congress must pass the Medicaid Saves Lives Actto help improve health care outcomes in communities across Georgia and other similar states, and I’m going to be working hard alongside my partners in this fight, Senators Baldwin and Ossoff, to make sure the next recovery package includes this critical legislation.”

The Medicaid Saves Lives Act would direct the Centers for Medicare & Medicaid Services (CMS) to create and standup a federal Medicaid look-alike program would provide the same full, essential benefits of Medicaid, and that is run and administered by CMS; this would allow everyone in non-expansion states who is eligible for Medicaid coverage, including many individuals who are currently enrolled in marketplaces plans under the Affordable Care Act but could qualify for free Medicaid coverage, up to 138 percent of the Federal Poverty Level (FPL) full Medicaid benefits.

The legislation would also add to the significant financial incentives included in the American Rescue Plan for states to expand Medicaid, giving these states an additional and extended federal medical assistance percentage (FMAP) increase to expand their state Medicaid programs. Importantly, since Congress already appropriated funding for Medicaid expansion in the Affordable Care Act, the federal program in the Medicaid Saves Lives Act has already been funded once and requires no additional offsets.

“For nearly a decade in Wisconsin, Republicans have refused to accept a federal investment in BadgerCare that would make 91,000 Wisconsinites eligible for high quality health care. Right now, they are denying the quality coverage that BadgerCare provides to someone working and only making $13,000 a year. That’s just wrong,” said Senator Baldwin. “Our legislation will open the door to those who have been shut out and expand access to affordable health care, including preventive care, that people want and need.

"We are also once again providing another strong incentive for Wisconsin Republicans to finally do the right thing and accept a federal investment that will save taxpayers money, expand coverage, and improve health outcomes in Wisconsin. I look forward to working in the Senate to pass this legislation and overcome the obstruction we have faced for far too long.”

“Our state government’s refusal to expand Medicaid has sentenced countless Georgians to needless suffering and contributed to the closure of nine Georgia hospitals in the last decade,” said Senator Ossoff. “Sen. Rev. Warnock and I secured $2 billion earlier this year for Medicaid expansion in Georgia, and now we are introducing the Medicaid Saves Lives Actto ensure all Georgians have great health care and sustain Georgia’s hospitals.”

Currently there are an estimated 275,000 Georgians—including 47% of whom are Black, 9% of whom are Latino, and 63% are working families—in the coverage gap, and 60 percent of people in the coverage gap are Black, Hispanic, Asian, or Pacific Islander. Prior to introducing the Medicaid Saves Lives Act, Senators Reverend Warnock and Ossoff have persistently pushed President Biden and leaders in the Senate to include a provision in any forthcoming recovery package to close the coverage gap in Georgia, Wisconsin and the other non-expansion states

The bill itself is interesting in that it actually includes two routes towards getting the remaining 12 (or 13) states onboard:

  • If they expand Medicaid under the ACA itself, they would double the amount of the ARP's bribe offer from a 5-point FMAP bump to 10 points, while actually extending the offer from 2 years to ten years. This basically amounts to increasing the total federal money on the table a whopping 10-fold.

In short, this would completely wipe out any legitimate "budgetary" or "fiscal restraint" excuse that any GOP lawmaker is still trying to cling to as an excuse not to expand the program.

  • If the state still refuses to expand the program, well, at that point the feds would step in and enroll those in the coverage gap into the federal program instead themselves.

As far as I can tell, the bill resolves the "what if expansion states reverse their decision" dilemma in a harsh but hopefully effective way: Both the money and the federal program are only available to any state which hadn't expanded Medicaid prior to the date of the bill being signed into law:

(b) DEFINITION OF ELIGIBLE INDIVIDUAL.—In this section, the term ‘‘eligible individual’’ means an individual who—

(1) is described in section 1902(a)(10)(A)(i)(VIII) of the Social Security Act (42 U.S.C. 1396a(a)(10)(A)(i)(VIII));

(2) resides in a State that—

(A) does not expend amounts for medical assistance under title XIX of the Social Security Act (42 U.S.C. 1396 et seq.) for all individuals described in such section; and

(B) did not expend amounts for medical assistance under such title for all such individuals as of the date of enactment of this Act; and

(3) would not be eligible for medical assistance under such State’s plan for medical assistance under title XIX of the Social Security Act (42 U.S.C. 1396 et seq.), or a waiver of such plan, as such plan or waiver was in effect on such date.

In other words, the other 37 (or 38?) states which will already have expanded Medicaid prior to this bill being signed may be upset about the holdout states getting rewarded for acting like assholes for the past 7 years...but they won't have any incentive to stop Medicaid expansion either, since that would just mean them losing the 90% matching funds and kicking hundreds of thousands of their own residents back onto the Medicaid Gap as well.

As this AP story puts it:

Financial incentives could be required to keep other states from dropping Medicaid expansion to avoid current costs. The bill doesn’t address that.

As I said, it doesn't prevent any states from doing so...but it's also a hell of a lot easier to prevent a benefit from going into effect in the first place than it is to rip it away from people once they have it. Just ask the GOP circa 2017 how that went for them.

Will it work? Who knows, but nothing else has so far...and it sounds like this may end up being the Gap solution baked into the Democrats big "American Families Plan" reconciliation bill:

BREAKING: Democrats' budget resolution will include funding to cover 2m people in red states that refuse to expand Medicaid. From @rachel_roubein and me:

— Alice Miranda Ollstein (@AliceOllstein) July 14, 2021