In the first official guidance about the health care reform law since the Supreme Court ruling that upheld its constitutionality, the Obama Administration is warning states that they will risk losing federal funding if they do not move to expand the Medicaid program under Obamacare. Although Obamacare’s Medicaid expansion would give states federal money to extend health coverage to millions of low-income Americans who cannot currently afford it, Republican governors have resisted accepting the expansion because they say it costs their states too much money.
But Cindy Mann, the federal official in charge of Medicaid, is reminding lawmakers that rejecting the expansion will actually be more costly for states than proceeding with it, because they will lose the federal funding for the expanded populations under their Medicaid programs:
Under the new law, she said, the federal government will pay the entire cost of Medicaid coverage for newly eligible beneficiaries for three years, from 2014 to 2016. The federal share will decline to 95 percent in 2017, 94 percent in 2018, 93 percent in 2019 and 90 percent in 2020 and later years.
The federal payment rates “are tied by law to the specific calendar years noted,” Ms. Mann said. So if a state defers the expansion of Medicaid to 2016, the federal government will pay 100 percent of the costs for only one year. After 2016, the federal share will drop to the levels specified by Congress, and states will be responsible for the remainder.
“I am hopeful that state leaders will take advantage of the opportunity provided to insure their poorest families with these unusually generous federal resources,” said Ms. Mann, a deputy administrator of the Centers for Medicare and Medicaid Services.
Studies have estimated that 21 to 45 states would save money by taking the Medicaid expansion, with savings across state budgets potentially reaching into the billions. And if GOP governors don’t heed Mann’s advice and eventually opt to expand Medicaid in their states, they will not only be making an unwise financial choice — they will also be denying millions of the poorest Americans access to essential health services.