Will COVID-19 Prompt “Holdout States” to Reconsider Medicaid Expansion?

Sheppard Mullin Richter & Hampton LLP

In 2012, the U.S. Supreme Court in NFIB v. Sebelius struck down a provision in the Patient Protection and Affordable Care Act (the “ACA”) which, for all intents and purposes, made the expansion of the Medicaid program voluntary for individual states. As a consequence, the Medicaid expansion provided for in the ACA has been rolled out in piecemeal fashion, with various states opting to expand Medicaid in the years since the ACA’s passage, and other so-called “holdout” states choosing to preserve their respective pre-ACA structured Medicaid programs. These holdout states tend to be more conservative and Republican-controlled, with governors and state legislatures opposed to the ACA’s Medicaid expansion for various political and economic reasons. The COVID-19 pandemic, however, seems to have prompted some of these “holdout” states, even considerably conservative states, to reconsider their decision not to expand Medicaid.

COVID-19 and Insurance Coverage

The economic downturn brought on by COVID-19 has resulted in a huge rise in unemployment, and with it, the loss of employer-based health insurance coverage. Many of these unemployed, able-bodied adults between the ages of 55 and 64 are having difficulty obtaining affordable health insurance coverage, especially in states which have not expanded Medicaid.[1] The private insurance exchanges under the ACA enable some of these unemployed individuals to obtain insurance, but such coverage often comes with a high deductible. COBRA continuation coverage may also be available to people who have lost jobs with insurance coverage, but it likewise can prove to be prohibitively expensive for many.

The Medicaid program has proven to be an important tool for an effective state and federal response to COVID-19 since it supports public health and provides a health care safety net for vulnerable populations. Consequently, as outlined below, some states that have long rejected Medicaid expansion are now considering adopting it, in some cases, as a temporary measure or a modified version of the basic ACA-structured model.

Wyoming

Wyoming, which has repeatedly rejected all previous attempts to expand Medicaid, including efforts earlier this year, is now considering Medicaid expansion due to COVID-19. The Joint Revenue Committee of the Wyoming state legislature, which considers Medicaid expansion to be a priority topic, is considering Medicaid expansion as a temporary measure rather than a “permanent piece of Wyoming’s social safety net.” If adopted, the expansion of the Medicaid program would be in effect for 4 years but can be ended early if the federal government fails to meet its commitment of paying 90 percent of the new costs associated with the Medicaid expansion.

Oklahoma

Medicaid expansion was a hot button issue in Oklahoma even before COVID-19. A 2019 voter-initiated referendum, which called for the expansion of Medicaid under the terms outlined in the ACA, received overwhelming public support and was placed on the June 30 state primary election ballot. If approved, the Medicaid expansion would take effect as of July 1, 2021.

Oklahoma Governor Kevin Stitt, who opposes unaltered Medicaid expansion as set forth in the ACA, has introduced his own alternative plan called “SoonerCare 2.0.” SoonerCare 2.0 comes in response to the Trump administration’s Healthy Adult Opportunity (the “HAO”) initiative, which gives states the option to create a coverage program for adults under the age of 65 as an alternative to the Medicaid expansion. Under the HAO initiative, there is a per-person cap on federal payments, and states can implement conditions on eligibility. SoonerCare 2.0 seeks to expand Medicaid this year starting on July 1, 2020. However, beginning in July 2021, additional restrictions will be added to the Medicaid program, including premiums for people eligible due to the expansion, a per-capita spending cap, a waiver of retroactive coverage and a work requirement.

Interestingly the pandemic has arguably stymied rather than accelerated the push for Medicaid expansion in Oklahoma. Due to high unemployment rates brought on by COVID-19, state leaders now fear for the state’s ability to afford the July 2020 Medicaid expansion for SoonerCare 2.0. Governor Stitt has indicated that he is aiming to pay for the Medicaid expansion by increasing hospital fees.

North Carolina

North Carolina is considering Medicaid expansion as well, although there are some divisions along partisan lines as to what form such expansion should take. In response to the COVID-19 pandemic, the state House of Representatives is considering a limited expansion of Medicaid, which would only apply to coronavirus patients. This limited expansion is supported by some of the Republican leaders in the House of Representatives. Democrats in the House of Representatives, however, are seizing on the support to push for an even broader expansion of the Medicaid program.

On March 27, 2020, Mandy K. Cohen, MD, MPH, Secretary of the North Carolina Department of Health and Human Services, submitted a request for the Centers for Medicare and Medicaid Services (“CMS”) to approve an emergency waiver under Section 1115 of the Social Security Act to cover everyone who earns less than 200 percent of the federal poverty level for care related to COVID-19.

Missouri

Supporters of the Medicaid expansion in the state recently announced that they have received a sufficient amount of initiative petition signatures to place Medicaid expansion on the ballot in November’s general election. Since the ACA’s enactment, the Republican-led state legislature has resisted efforts on the part of state Democratic lawmakers to enact the ACA’s Medicaid expansion in the state.

While Republican Governor Mike Parson has already indicated his opposition to this initiative, supporters estimate that Medicaid expansion, if approved, would enable 230,000 additional low-income adults to enroll in the program.[2]

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COVID-19 has raised an interesting issue as to whether states who have rejected Medicaid expansion for years should now reconsider its stance on expansion given the growing number of uninsured people during an unprecedented public health emergency. We will have to wait and see whether some or any of the 14 “holdout” states will indeed choose to expand Medicaid and whether those changes would be temporary or end up outlasting the pandemic.

FOOTNOTES

[1] https://www.kff.org/coronavirus-covid-19/issue-brief/eligibility-for-aca-health-coverage-following-job-loss/

[2] https://krcgtv.com/news/coronavirus/petition-seeks-to-put-medicaid-expansion-on-missouri-ballot-05-02-2020

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