On Friday, the House passed the American Rescue Plan Act, a $1.9 trillion package to address our nation’s public health and economic crises. A key focus of the legislation is making sure Americans have access to health care during the pandemic, and Democrats are leaning on the Affordable Care Act to fulfill this promise. In fact, in order to give about 4 million Americans access to Medicaid coverage, the bill offers a seriously sweet deal to non-expansion states. But will it work?
Remember, the federal government already has a standing offer to the 14 states that have refused to expand Medicaid: they will cover 90% of the cost of expansion. Of course, this has always left states with 10% of the bill, and a financial argument for rejecting the federal funds. The American Rescue Plan Act keeps that 90% match and adds another generous provision: a 5 percentage point bump in the federal medical assistance percentage (FMAP) for all populations. That’s right, not just a bump for the expansion population, for everyone in the Medicaid program.
Let’s put this offer in perspective. The Center on Budget and Policy Priorities calculates that over the two years the bill offers this 5-point bump, the provision would be worth over $3.5 billion to the State of Florida. North Carolina would receive almost $2.5 billion. Georgia would receive almost $1.9 billion. Texas alone would receive nearly $6 billion. These additional funds wouldn’t simply cover the cost of the expansion, they exceed the cost of the expansion group over these two years, leaving states with excess dollars to spend.
So, will it work? A couple states like North Carolina and Kansas have been on the fence for a while. Governor Roy Cooper of North Carolina has been pushing for expansion since he was elected in 2016, but has not been able to overcome Republican objections. Governor Laura Kelly of Kansas has been on a similar crusade in her state, recently proposing that Kansas pay for Medicaid expansion through revenue from the sale and taxation of medical marijuana. Perhaps this generous deal tips the scales ever so slightly in these states.
There’s a more interesting dynamic at play in states like South Dakota and Mississippi, where Medicaid expansion is likely to be on the ballot in 2022. Ballot initiatives, of course, have been an enormously successful mechanism for expanding Medicaid over the past four years, far more successful than legislative efforts. So far, ballot measures have succeeded in six states where legislative opposition had completely stalled any chance of expansion: Maine in 2017, Idaho, Nebraska, and Utah in 2018, and Oklahoma and Missouri in 2020. It could be that this generous deal, if well-communicated to voters, could dampen the financial gloom-and-doom arguments of expansion opponents.
And what about states like Texas, Florida, Alabama, or even South Carolina? Given the amount of money the federal government is offering, arguments about cost should be moot. Expansion on its own generates state savings in the form of lower spending on programs for the uninsured, and in many states, increased revenues from taxes on managed care plans. The new American Rescue Plan Act provision only makes the deal better.
Even given all that, we still don’t expect these deeply red states to take the federal government up on its new offer. No amount of sweetening the pot financially will overcome what was always, at its core, an ideological objection.