Due to a quirk in the Affordable Care Act, states that turn down Medicaid expansion will still have to cover legal immigrants who earn up to 133 percent of the poverty level.
This is an unintended consequence of the Supreme Court’s decision in 2012, which found that the individual insurance mandate in the law was Constitutional, but states had the right to reject the Medicaid expansion that was set to cover 17 million uninsured Americans beginning in 2014.
The federal government will cover 100 percent of the expansion at first, decreasing to 90 percent by 2020. Currently, states pay about 40 percent of their own Medicaid costs.
The requirement to cover immigrants puts Republican governors who oppose Obamacare in a difficult spot. Reportedly, it was behind Arizona governor Jan Brewer’s decision to accept Medicaid expansion, though she’s railed against the president’s signature program for years.
So Republican governors who say no to expansion will still have to cover legal immigrants—who can’t vote for them—while turning down coverage for hundreds of thousands of citizens who can. They also are potentially volunteering their residents to pay higher insurance rates while still subsidizing Medicaid expansion in other states, as states can’t opt out of the taxes that fund the law.
The growth of Medicaid was designed to drive down rates by greatly reducing the billions hospitals spend to cover so-called “free riders” who don’t have coverage but cannot be denied care, thanks to the Emergency Medical Treatment and Active Labor Act, which was signed into law by Ronald Reagan in 1986.
The growth of Medicaid was also supposed to be a hedge against a 75-percent cut in the payments the federal government offers for Medicare and Medicaid. This cut goes into effect whether the state accepts Medicaid expansion or not. Basically governors who reject the expansion are saying yes to public health care for immigrants and offering their citizens the chance to subsidize other states’ expansion, while paying more to cover fewer people in their own states.
This is why even red Texas — where Governor Rick Perry recently turned down over $200 million in federal funds just so he could defund Planned Parenthood — is being pressured to accept Obamacare, no matter how much Texans hate Obama. An independent analyst suggests that if Texas turns down expansion from the government, it will be rejecting $90 billion in economic activity, while leaving 1.5 million uninsured.
Currently 10 states have said they will not participate though the federal government has not set a deadline to accept. Presumably, states can still change their minds.
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