Senate Democrats call for Medicaid-like plan to cover non-expansion states

Legislation from three Senate Democrats from states that have refused to expand Medicaid would have the federal government step in and establish a mirror plan to provide coverage for up to 2 million people.

The bill from Georgia Sens. Raphael Warnock (D) and Jon Ossoff (D), as well as Sen. Tammy Baldwin (D-Wis.) would provide health insurance to Americans with low incomes in the twelve states that have refused to expand their state Medicaid programs under ObamaCare.

Under the law, expansion states receive federal funding to cover up to 90 percent of the costs of covering the expansion population of people who earn up to 138 percent of the federal poverty line. But conservative governors have refused to do so,

People making more than 138 percent of the federal poverty level are eligible for federal health insurance subsidies through ObamaCare’s online marketplace. 

But according to estimates from the Kaiser Family Foundation 2.2 million low-income people are currently in a “coverage gap.” These people do not make enough to qualify for subsidies, but since they live in a non-expansion state, they also make too much to qualify for Medicaid. 

The legislation would mandate the creation of a federal Medicaid “look-alike” program administered by the federal government. It would provide the same essential benefits of Medicaid, and would not charge any premiums or large copayments.

The senators said coverage is already paid for because Congress appropriated money for a 50-state expansion when it passed the original Affordable Care Act in 2010. Therefore, they said the legislation’s “mirror” plan requires no additional offsets.

“For too long leaders in Georgia and the other non-expansion states have put politics over people, refusing to strengthen public health by expanding Medicaid even after myself and others helped to secure billions of additional dollars in the American Rescue Plan for states to do just that,” Warnock said in a statement.

The senators are aiming to push to include the legislation in the Democrats’ budget reconciliation measure.

The American Rescue Plan offered holdout states two years of additional money as an incentive to expand Medicaid, but none have budged. The Senate bill would add even more money, and extend the funding for ten years. 

But any new government-run option risks triggering opposition from the health care industry, which is concerned that a government plan would have an unfair competitive advantage by setting reimbursement rates lower than private plans. 

Many states also contract with managed care networks to provide Medicaid services, and it’s not clear how the government would be able to do so. 

The Senate bill is also not the only option being considered. Rep. Lloyd Doggett (D-Texas) would allow counties or other localities to go around their state governments to work directly with the federal government to expand Medicaid.

President Biden’s budget called for creating a federal-run health insurance option to cover people in the Medicaid expansion gap, but the White House has not endorsed a specific policy.