Obama Administration Will Have to Weigh Job Requirement as It Weighs Medicaid Expansion in Red States

North Carolina is the latest state to express interest in a possible waiver to expand Medicaid. But CMS and President Obama will have to rethink a position taken when Pennsylvania's request for a job training requirement was rejected last year.

Yesterday came the news that yet another governor in a Republican state is suddenly willing to discuss Medicaid expansion. This time it’s Gov Pat McCrory of North Carolina, who traveled to Washington, DC, on the day the 114th Congress was sworn in for a White House sit-down with President Obama.

And, as was recently the case in Alabama and Florida, the topic of Medicaid expansion came with an element that would make it palatable for conservatives: a requirement that those newly eligible have a job or receive job training. Gov McCrory reported that the president “said he would be open to certain waivers that I’m looking at to potentially present to my legislature.”

If that's the case, it's a change of policy from what CMS told Pennsylvania last year in granting that waiver. Outgoing Gov Tom Corbett held out for a job training requirement for months before finally giving up, amid opposition from both within and beyond Pennsylvania. Unlike other social welfare programs, Medicaid has always been strictly about providing healthcare and has never included a work requirement. Advocates are determined to keep it that way.

CMS had little to lose by holding firm with Gov Corbett, however. It was apparent for months that the embattled Republican was likely to lose in November 2014, and he lost badly. Democrat Gov-elect Tom Wolf was on record stating he would pursue traditional Medicaid expansion, and that shift is expected this year.

By contrast, whether expansion moves ahead in the Deep South or survives in places like Arkansas or Iowa might hinge on CMS' willingness to be more flexible with conservative visions for the program. Medicaid has always had some local flavor, as Matt Salo, executive director of the National Association of Medicaid Directors, wrote in his forecast for Medicaid past the midterms in the most recent issue of The American Journal of Accountable Care. And just yesterday, CMS granted more flexibility to Iowa and Arkansas.

The North Carolina case is especially interesting in light of the July march by a Republican mayor, Adam O'Neal, from his home of Belhaven, NC, to Washington, DC, to highlight the closing of the town's rural hospital. Like other “safety net” hospitals, it had been devastated by the refusal of its state lawmakers to expand Medicaid. Gov McCrory refused to yield during the crisis, which took place amid a hotly contested US Senate election.

Belhaven’s situation is not unique. Because the Affordable Care Act (ACA) envisioned extending coverage to millions of working poor, and expected that facilities treating them would be paid through Medicaid, it called for CMS to scale back payments to these facilities for treating the uninsured. But because many of the poorest states have refused to extend coverage to this population, rural hospitals’ finances have been crippled. Now, more than a year into the full effects of the ACA, hospitals are pleading with Republican governors and legislature to reconsider their position on Medicaid expansion. The ACA called for the federal government to pay all the costs of expansion through 2017, and 90% through 2020.

The Obama administration and these red state governors now face a policy standoff, with hospital finances and the healthcare of those in the coverage gap in the balance. Policy purists who do not want to see job training requirements added to Medicaid may call on CMS to wait, assuming that some states will eventually give up on the job requirement as pressure mounts from hospital groups.

But others may want CMS—and by extension, the president—to act quickly. The faster the ACA becomes part of the fabric of Medicaid recipients’ lives, the harder it will be for members of Congress from these Southern states to repeal or replace it with something else.

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