Iowa’s Alternative To Obamacare’s Medicaid Expansion Wins Federal Approval


Medicaid proponents rally in Ohio (Credit: Columbus Dispatch)

The Obama administration has approved the bulk of Iowa Gov. Terry Branstad’s (R) alternative to Obamacare’s Medicaid expansion, potentially giving 150,000 of the poorest Iowans access to health coverage, the Washington Post’s Greg Sargent reported on Tuesday. The move might encourage more GOP-led states to pursue their own versions of the Medicaid expansion, eventually extending health benefits to hundreds of thousands of low-income Americans.

States have the option to expand Medicaid eligibility to all Americans making up to 138 percent of the Federal Poverty Level (FPL) under the health law. Many Republican-led states have balked at the expansion over the GOP’s general disapproval of the public insurance program. But these states are also home to huge numbers of uninsured and poor Americans, spurring hospitals that serve primarily low-income residents and advocates for the poor to pressure lawmakers to expand Medicaid.

Iowa’s plan is a more conservative version of the so-called “private option” that has already been a massive success in Arkansas. Instead of expanding the public Medicaid program, Iowa will be able to take generous federal funds and use them to help people making up to 138 percent FPL buy private insurance through the state’s Obamacare marketplace.

Branstad’s submitted plan, unlike the Arkansas model, would also impose monthly premiums on Medicaid beneficiaries who become eligible for coverage through the expansion. Federal law currently prohibits charging premiums on Medicaid enrollees if they make less than 1.5 times the poverty level — and yet the federal government partially approved Branstad’s proposal on Tuesday. Under the granted waiver, Iowa will be able to charge premiums on Americans between 100 and 138 percent of the poverty level, although federal officials rejected Branstad’s original plan to charge premiums on those below the poverty line as well.

The administration’s openness to Iowa’s model is a sign of how critical the program is to Obamacare’s success, and may be a harbinger of future deals with Republican governors like Pennsylvania’s Tom Corbett. Corbett proposed a private expansion alternative in September that would make beneficiaries who make as little as half the poverty level pay premiums and impose work requirements on certain enrollees. Today’s events suggest that the administration may approve at least parts of Corbett’s plan. Republicans in Tennessee have also signaled that they’re open to possibility of some form of Medicaid expansion.

All told, GOP opposition to expanding Medicaid will leave over 5 million poor Americans in a coverage gap where they won’t qualify for either Medicaid or for Obamacare’s insurance subsidies, leaving them with few options for health coverage. Virginia, North Carolina, Georgia, and other anti-expansion states with high numbers of uninsured residents have seen multiple public hospitals shut their doors because they can’t afford to keep treating patients who can’t pay for their care.