Obamacare’s Survival Is Now Assured, but It Still Has One Big Problem

Some Democrats are eager to build on their Affordable Care Act victories in the Supreme Court by filling a gaping hole created along the way: the lack of Medicaid coverage for millions of low-income Americans in 12 states.

But so far, Republican leaders in those states are refusing to use the health law to expand Medicaid, despite considerable financial incentives offered under the law and sweetened under the Biden administration. Some are trying to defy the will of their own voters, who passed ballot initiatives calling for expansion.

And in Washington, Democrats who want to act are divided about when and how.

Democratic House members from states that have not expanded have begun to push for the federal government to intervene and provide coverage to the four million Americans shut out of Medicaid expansion.

“We cannot wait anymore,” said Representative James Clyburn, Democrat of South Carolina, one of the holdout states. “The states didn’t do it. We in Congress have got to move.”

But some Democrats quietly express reluctance about spending billions to fix a coverage gap created by Republican governors and legislatures when that money could go to other health care priorities. Democrats are also considering expanding Medicare, which provides coverage to older Americans, by lowering the eligibility age to 60 and covering additional benefits. For middle-class Americans, Democrats want to make Obamacare subsidies more generous in a coming legislative package.

“There are many competing priorities,” said Representative Lloyd Doggett, Democrat of Texas, who introduced Medicaid expansion legislation this month. “I’m not opposed to doing the other things, which are also very expensive, but just saying don’t leave out the economically disadvantaged.”

Fixing the Medicaid expansion gap may face long political odds because it targets benefits to a smaller group of people in states that typically vote Republican. Only three Democratic senators — Jon Ossoff and Raphael Warnock, both of Georgia, and Tammy Baldwin of Wisconsin — represent a state that hasn’t expanded Medicaid.

“If you were thinking in strictly political terms, advocating for Medicare expansion has a lot more political gold than Medicaid expansion,” said Joaquin Castro, a Democratic congressman from Texas, which has nearly 1.5 million people shut out of Medicaid eligibility, the most of any state. “But that is why we as Democrats need to redouble our efforts to focus on this vulnerable population.”

How to bring coverage to Americans in those 12 states is a problem that the creators of the Affordable Care Act never anticipated. The original law expanded Medicaid in all states to cover Americans earning less than 138 percent of the federal poverty line ($17,420 for an individual as of 2021) and required states to provide some funding. In 2012, the Supreme Court ruled that provision unconstitutional and instructed the government to make the program optional.

Eighteen states and the District of Columbia, all with Democratic leadership, joined the program when it began in 2014. Twenty more states have since joined, including six that used ballot initiatives to circumvent Republican legislatures and governors opposing the program. That includes Oklahoma, which will begin enrolling patients into Medicaid expansion this Thursday.

A number of studies show Medicaid expansion has improved health outcomes, reducing complications or improving longevity for people with renal disease, cardiovascular disease and heart failure, and people recovering after surgery.

A recent study found that people 55 to 64 living in states that chose to expand Medicaid coverage were less likely to die in the four years after expansion than people with similar demographic characteristics in states that did not expand.

Yet recent efforts to bring the expansion to more states have struggled. After Medicaid voter initiatives succeeded in a few states, some other holdout states changed their process to make it harder to secure spots on the ballot. In Mississippi, ballot efforts were recently abandoned after the state’s Supreme Court stopped the ballot initiative process until legislators and voters changed the state’s constitution.

Missouri voters passed a Medicaid expansion ballot last summer, but the state’s Republican-led legislature refused to appropriate funding. A state judge ruled in the Missouri government’s favor on Wednesday, meaning the program will not go forward as planned on July 1. Medicaid expansion supporters plan to appeal.

Republican governors and legislators have often cited the potential costs of the program — states are responsible for 10 percent of the new spending, and the federal government 90 percent — as why they resist.

“It’s a terrible time for Medicaid expansion, when we still have an economy that is failing,” said Troy McKeown, a Republican state senator in Wyoming who voted against Medicaid expansion in March.

Mr. McKeown is, like many other Republicans, opposed to the idea of enlarging the role of public health insurance. He also worries that providing free government health insurance will discourage adults in Wyoming from working — and that those who do work will have to cover the new Medicaid enrollees’ costs in the form of higher taxes.

“We’d be penalizing hardworking Americans to make sure everyone gets on a program,” Mr. McKeown said. “I think it’s terrible, and gets us closer to one-payer health care.”

To allay cost concerns, the federal government included incentives in the most recent stimulus package. The funding would more than cover the holdout states’ share of the expansion costs for the next two years. It has not yet enticed any states to join, but some top Biden officials say they still hold out hope.

“States have additional time to take advantage of the significant funding included in the American Rescue Plan,” Chiquita Brooks-LaSure, who oversees Medicaid for the Biden administration, told reporters, noting that the administration has been in conversation with multiple states.

Some in Congress contend that they have waited long enough, and don’t believe states will step forward.

“Anything that is based on what I’d call the ‘states will see the light’ approach is a false hope,” said Mr. Doggett, the Texas congressman.

The bill he introduced, the COVER Now Act, would allow cities and counties to work with the federal government to expand Medicaid locally. The bill has faced criticism that it would still leave large areas of the country uncovered.

Others have suggested that the federal government ought to intervene and directly provide coverage to those shut out of Obamacare. The Congressional Black Caucus, the Congressional Hispanic Caucus and the Congressional Asian Pacific American Caucus have sent a joint letter to Democratic leadership and the White House asking for “federal intervention.”

Black and Latino Americans represent more than half of the Americans in poverty who are affected by states deciding not to expand coverage.

Senators Ossoff and Warnock wrote to Senate leadership in late May asking that it “close the coverage gap in Medicaid nonexpansion states through federal action.”

It’s not clear what this would look like. President Biden’s budget proposed using a public option, allowing Americans to buy into Medicare, to solve the problem. That policy was not included in the $1.8 trillion American Families Plan he proposed in April, however.

Christen Linke Young, deputy director of the White House Domestic Policy Council, said President Biden “wants to work with Congress this year to close the coverage gap.”

In Congress, health policy aides are exploring whether the federal government could run Medicaid expansions in the 12 holdout states, or if it could provide better insurance subsidies that customers could use to buy private coverage on the Obamacare marketplaces.

Devising such a policy is hard because legislators do not want to encourage current Medicaid expansion states to switch to a new, federal option — or penalize them for having signed up sooner.

Health policy aides envision incentives to ensure that current Medicaid expansion states stay in the program, which would probably raise the cost of any proposal. They also described possibly penalizing states that do not expand, but they have concerns that this could face a legal challenge if it looks too much like a requirement.

One Democratic aide described the Medicaid expansion gap as one of the hardest policy issues they had ever encountered.

Still, experts say federal action will be necessary if Medicaid expansion is to reach all states. They don’t see why states that have rejected expansion for years would change their minds now.

“This is a case where federal intervention seems to be especially important, but it’s a hard lift politically,” said Jamila Michener, co-director of the Cornell University Center for Health Equity. “I don’t know that it will materialize as a real political possibility.”