NOTE: The abstract below is a shortened version of the Health Plan Weekly article “With New Subsidies, Holdout States May Expand Medicaid.”

By Peter Johnson

With the passage of the American Rescue Plan (ARP), states that haven’t expanded Medicaid have an extra reason to do so: the COVID-19 relief bill offers financial incentives to states that increase Medicaid eligibility under the Affordable Care Act (ACA). Some states where Medicaid expansion has historically been a nonstarter to conservative elected officials are reconsidering their status.

The ARP gives states that expand Medicaid a 5 percentage-point increase in their Federal Medical Assistance Percentage (FMAP) for the first two years of expansion. That’s in addition to the 6.2 percentage-point FMAP increase that all states are getting for the duration of COVID-19, and the 90% federal funding match rate that Medicaid expansion states receive under the ACA.

Two states that recently expanded Medicaid by ballot initiative, Missouri and Oklahoma, are also eligible for the enhanced funding match as long as they implement their expansions by July.

Meanwhile, Wyoming’s Republican-controlled House of Representatives passed an expansion bill in March, though it died in the Senate. Robin Rudowitz, a vice president at the Kaiser Family Foundation, says that ARP changed the political equation in Wyoming.

“The Medicaid expansion bill clearly was tied to the incentive and the American Rescue Plan,” she says. She adds that Mississippi, South Dakota, and the Carolinas all are closer to expansion than they were before the pandemic relief law passed.

“In Georgia, Wyoming, Texas, Alabama, Florida and Tennessee, there are legislators on the Democratic side that are pushing for this,” says Jerry Vitti, founder and CEO of Healthcare Financial, Inc. “However, there is still a lot of resistance among Republicans.”

That’s especially true in Missouri. Voters there approved an August 2020 initiative that amended the state constitution to expand Medicaid, but the Republican-controlled legislature has dug in its heels during its current session, despite Republican Gov. Mike Parson’s pledge to implement expansion. According to Kaiser Health News, Republican state Rep. Justin Hill said during a recent floor debate that “even though my constituents voted for this lie, I am going to protect them from this lie.”

“Trying to go in and overturn the will of the plurality of voters is a very, very risky strategy,” says Dan Mendelson, founder of Avalere Health. “I don’t think it’s going to work in the longer term, because if people vote for something and then they see their legislators complain — it’s very cynical.”