The Clinton Herald, Clinton, Iowa

AP story section

April 22, 2013

Fallout for states rejecting Medicaid expansion

WASHINGTON, D.C. — Rejecting the Medicaid expansion in the federal health care law could have unexpected consequences for states where Republican lawmakers remain steadfastly opposed to what they scorn as "Obamacare."

It could mean exposing businesses to Internal Revenue Service penalties and leaving low-income citizens unable to afford coverage even as legal immigrants get financial aid for their premiums. For the poorest people, it could virtually guarantee that they will remain uninsured and dependent on the emergency room at local hospitals that already face federal cutbacks.

Concern about such consequences helped forge a deal in Arkansas last week. The Republican-controlled Legislature endorsed a plan by Democratic Gov. Mike Beebe to accept additional Medicaid money under the federal law, but to use the new dollars to buy private insurance for eligible residents.

One of the main arguments for the private option was that it would help businesses avoid tax penalties.

The Obama administration hasn't signed off on the Arkansas deal, and it's unclear how many other states will use it as a model. But it reflects a pragmatic streak in American politics that's still the exception in the polarized health care debate.

"The biggest lesson out of Arkansas is not so much the exact structure of what they are doing," said Alan Weil, executive director of the nonpartisan National Academy for State Health Policy. "Part of it is just a message of creativity, that they can look at it and say, 'How can we do this in a way that works for us?'"

About half the nearly 30 million uninsured people expected to gain coverage under President Barack Obama's health care overhaul would do so through Medicaid. Its expansion would cover low-income people making up to 138 percent of the federal poverty level, about $15,860 for an individual.

Middle-class people who don't have coverage at their jobs will be able to purchase private insurance in new state markets, helped by new federal tax credits. The big push to sign up the uninsured starts this fall, and coverage takes effect Jan. 1.

As originally written, the Affordable Care Act required states to accept the Medicaid expansion as a condition of staying in the program. Last summer's Supreme Court decision gave each state the right to decide. While that pleased many governors, it also created complications by opening the door to unintended consequences.

So far, 20 mostly blue states, plus the District of Columbia, have accepted the expansion.

Thirteen GOP-led states have declined. They say Medicaid already is too costly, and they don't trust Washington to keep its promise of generous funding for the expansion, which mainly helps low-income adults with no children at home.

The remaining states are still weighing options. Concerns about the unintended consequences could make the most difference in those states.

A look at some potential side effects:

—The Employer Glitch

States that don't expand Medicaid leave more businesses exposed to tax penalties, according to a recent study by Brian Haile, Jackson Hewitt's senior vice president for tax policy. He estimates the fines could top $1 billion a year in states refusing.

Under the law, employers with 50 or more workers that don't offer coverage face penalties if just one of their workers gets subsidized private insurance through the new state markets. But employers generally do not face fines under the law for workers who enroll in Medicaid.

In states that don't expand Medicaid, some low-income workers who would otherwise have been eligible have a fallback option. They can instead get subsidized private insurance in the law's new markets. But that would trigger a penalty for their employer.

"It highlights how complicated the Affordable Care Act is," said Haile. "We wanted to make sure the business community understood."

—The Immigrant Quirk

Arizona Gov. Jan Brewer, a Republican, called attention this year to this politically awkward problem when she proposed that her state accept the Medicaid expansion.

Under the health law, U.S. citizens below the poverty line — $11,490 for an individual, $23,550 for a family of four — can only get coverage through the Medicaid expansion. But lawfully present immigrants who are also below the poverty level are eligible for subsidized private insurance.

Congress wrote the legislation that way to avoid the controversy associated with trying to change previous laws that require legal immigrants to wait five years before they can qualify for Medicaid. Instead of dragging immigration politics into the health care debate, lawmakers devised a detour.

Before the Supreme Court ruling, it was a legislative patch.

Now it could turn into an issue in states with lots of immigrants, such as Texas and Florida. It could create the perception that citizens are being disadvantaged versus immigrants.

—The Fairness Argument

Under the law, U.S. citizens below the poverty line can only get taxpayer-subsidized coverage by going into Medicaid. But other low-income people making just enough to put them over the poverty line can get subsidized private insurance through the new state markets.

An individual making $11,700 a year would be able to get a policy. But someone making $300 less would be out of luck, dependent on charity care at the emergency room.

"Americans have very strong feelings about fairness," said Weil. "The notion of 'Gee, that's just not fair' is definitely a factor in the discussion."

1
Text Only
AP story section
  • State to reopen Juvenile Home DES MOINES -- A district court judge on Wednesday ordered the state to reopen the Iowa Juvenile Home, telling Gov. Terry Branstad he cannot unilaterally change a law approved by the state Legislature. Judge Scott Rosenberg said the home in Toledo was

    February 6, 2014

  • Panel OKs ban on remote abortion pill distribution DES MOINES -- A legislative panel approved a measure Wednesday that would ban the remote distribution of abortion pills, a proposal the bill's sponsor said is intended to delay the procedure and give women more time to change their minds. The subcomm

    February 6, 2014

  • Sioux City gambling group halts local grants SIOUX CITY -- The nonprofit that holds the gambling license for the Argosy Sioux City riverboat casino has voted to temporarily stop sending grants to local charities and government agencies. A legal dispute with the operator of the casino, Penn Nati

    January 15, 2014

  • Davenport pays, apologizes to hearing impaired man DAVENPORT (AP) -- The city of Davenport has issued an unusual apology to a former alderman after a police employee was caught on tape saying that he intentionally knocked softly on the hearing-impaired man's door when responding to a service call. Th

    January 15, 2014

  • Budget Branstad presents budget for next fiscal year DES MOINES -- Gov. Terry Branstad offered a budget proposal Tuesday that includes a tax break for veterans, a tuition freeze for college students and incentives to encourage Internet expansion in rural Iowa, a more modest list of priorities one year

    January 15, 2014 1 Photo

  • Gov. restores more felons' voting rights IOWA CITY (AP) -- Gov. Terry Branstad restored voting rights to more felons in 2013 than the prior two years combined, but thousands of others remain disenfranchised under a 2011 policy change. Data released by the governor's office to The Associated

    January 15, 2014

  • Man fatally shot at Fla. theater over texting WESLEY CHAPEL, Fla. (AP) -- A 71-year-old retired police officer accused of shooting a man dead in a Florida movie theater told authorities that "he was in fear of being attacked" during Monday's confrontation. Curtis Reeves is charged with second-de

    January 15, 2014

  • Iowa Senator: Congress must confirm election board DES MOINES -- An Iowa senator asked a U.S. Senate committee Wednesday to confirm appointees to a federal election commission so a decision can be made about whether Iowa Secretary of State Matt Schultz is properly using money for voter-fraud investig

    January 9, 2014

  • School Discipline Gov't: End overly zealous discipline in schools WASHINGTON, D.C. -- The Obama administration is urging schools to abandon overly zealous discipline policies that civil rights advocates have long said lead to a school-to-prison pipeline that discriminates against minority students. The wide-ranging

    January 9, 2014 1 Photo

  • Governor, lawmakers set modest goals for 2014 DES MOINES -- After reaching bipartisan agreements on several major policy initiatives last year, Gov. Terry Branstad said Wednesday that he is setting more modest expectations for the 2014 legislative session. Speaking at The Associated Press' annua

    January 9, 2014

AP Video
Facebook
National News