Obama wants to reset clock on Medicaid expansion

President Obama wants to sweeten the deal for 19 states that have refused to expand their Medicaid programs under Obamacare, saying Congress should reset the clock on generous federal matching funds that were set to wind down after this year.

Louisiana Gov. John Bel Edwards, a Democrat, moved to expand Medicaid on the first day of his tenure this week, meaning 31 states, plus D.C., have decided to extend government-sponsored insurance to those making up to 138 percent of the federal poverty level.

A key pillar of the Affordable Care Act, the expansion was supposed to fill gaps in health coverage for low-income Americans. People who make more than the federal poverty level can qualify for subsidies that make it easier to afford private plans from web-based health exchanges.

But the Supreme Court in 2012 said states could refuse to expand the federal-state health program without forfeiting existing federal funds.

While some Republican leaders seized the chance to cover tens of thousands of residents with new federal funding, others held out, saying expansion would bust their state budgets when the federal government stopped picking up the full tab for newly eligible residents.

Mr. Obama wants to allay those concerns by letting states enjoy a full three years of 100 percent matching funds out of Washington.

As it stands, the federal government was set to pay 100 percent of the cost of expansion in 2014-16 before scaling back its contribution to 90 percent in 2020 and beyond.

The White House says Mr. Obama’s fiscal 2017 budget proposal will offer that 100 percent match and gradual phasedown to any state “no matter when the state takes up the option.”

“This common-sense proposal makes the expansion as good a deal for states that expand now as it is for the states that have already done so,” White House aides Shaun Donovan and Cecilia Munoz said in a blog post. “It is further evidence of the Administration’s willingness to work with states to build on recent progress in improving health coverage and making Medicaid affordable to states and taxpayers alike. We hope Congress will act to provide this extra incentive to states that haven’t yet expanded, encouraging them not to miss out on the benefits other states are already enjoying.”

It is unlikely that Republicans who control Congress will pony up the funding, however, as the party plots to repeal Obamacare outright with a GOP president in 2017.

Already, the House sued the president over implementation of his signature health law, saying he robbed them of their “power of the purse” by funding an obscure cost-sharing program that reimburses insurers who reduce low-income exchange customers’ out-of-pocket costs.

It would also kick the same problems down the road for states worried about the gradual phasing out of the federal match.