New federal incentives to expand Medicaid coverage do not appear to be enough to convince 12 holdout states to broaden eligibility, leaving lawmakers and advocates weighing their next steps.

Under the 2010 health care law, states can expand eligibility for their Medicaid programs for individuals who do not earn enough to qualify for marketplace insurance subsidies, with the federal government taking on most of the costs.

The $1.9 trillion COVID-19 law enacted in March offers states an additional incentive to expand during the pandemic, with a temporary boost in the federal contribution. This builds on a different COVID-19 law, which temporarily increased Medicaid reimbursements by 6.2 percentage points for all states and territories that maintained coverage during the public health emergency.

Andrew S. Kelly, an assistant professor in the Department of Health Sciences at California State University, East Bay, said the new incentive is an interesting idea but he did not think it would be enough to change the outcome in states that have held out.

Thirty-eight states and the District of Columbia adopted expansion. Two of those 39 passed ballot measures to expand but have not implemented the expansion. Another 12 have declined to expand so far.

“I was pleasantly surprised by just the beginning of the conversation because I think that does move the needle,” said Kelly. “It did spark more of a conversation and then showed that some people are maybe open to expansion that previously hadn’t been before. But I think what it also demonstrates is just the level of resistance that does exist still to Medicaid expansion.”

Data released Thursday suggest that if the 14 states that have not yet implemented expansion take advantage of the sweeteners, more than 4 million uninsured people would gain coverage and state economies would grow by $350 billion between 2022 and 2025.

The report from the Commonwealth Fund and George Washington University’s Milken Institute School of Public Health also suggests expansion would lead to the creation of 1 million jobs nationwide, mostly in Texas, Florida, North Carolina, Georgia and Missouri.

Leighton Ku, director of GWU’s Center for Health Policy Research and the report’s lead author, said expansion “could revive state economies.”

“The economic and social benefits of Medicaid expansion are immense and would ripple through the broader U.S. economy,” he said.

Roadblocks

Oklahoma residents expect to soon see the effects in their state. Voters passed a constitutional amendment in 2020 to implement expansion, and state legislators and the governor came together on a funding agreement. The budget bill cleared the Legislature on May 20, and enrollment will begin June 1.

But advocacy efforts in other states are facing obstacles.

Missouri voters passed a constitutional amendment in 2020 that required the state to implement expansion on July 1, 2021. Republican Gov. Michael L. Parson did not support the expansion but included funding in his budget proposal — but, unlike in Oklahoma, the GOP-controlled state legislature refused to include funding in the budget. In mid-May, the state wrote to the Centers for Medicare and Medicaid Services to withdraw its waiver.

On May 20, three individuals who would have been eligible for Missouri’s expansion coverage filed suit.

“The agencies claim that they lack the authority to implement Medicaid expansion because the General Assembly did not include a specific appropriations line item funding services for the newly eligible population,” the lawsuit reads. “This position has no merit.”

Jonathan Schleifer, executive director of The Fairness Project, which supported the expansion push, called the refusal to expand “a political stunt.”

“The governor is not above the law, and the state’s constitution is clear. Missouri must implement Medicaid expansion,” said Schleifer.

In Texas, the state with the highest uninsured rate, bipartisan efforts to reach a deal on expansion fell apart.

Some Republicans showed interest in taking advantage of the federal incentive to expand. One state bill had bipartisan support in the state House but faced partisan opposition in the Senate. The state legislative session for this year ends May 31.

Texas is also litigating the Biden administration’s rescission of a Medicaid waiver that would provide billions to the state for uncompensated care, arguing that the administration is attempting to force it to expand the program instead. The administration has said that Texas failed to collect input on the possibility of expanding, which was a condition for the waiver.

Elsewhere, a coalition called Yes on 76 also had a short-lived attempt to put expansion on the ballot in Mississippi. Advocates launched a campaign on May 11 but were discouraged after the Mississippi Supreme Court struck down a voter-approved medical marijuana initiative. The ruling also temporarily blocks future ballot initiatives, calling the system “unworkable and inoperative.”

On May 19, the coalition announced it would no longer move forward with a ballot campaign. The group is urging state legislators to pass an expansion bill and pushing for a special legislative session to reinstate the ballot process.

Weighing costs and benefits

Wisconsin, Alabama, Wyoming and South Dakota are also taking different approaches to considering broader Medicaid eligibility, although none is a sure bet for expansion.

Wisconsin Gov. Tony Evers, a Democrat, signed an executive order last week calling for a special session starting Tuesday in an uphill battle to expand Medicaid.

“We’re not just missing out on the opportunity to expand access to quality, affordable health care. We are also missing out on an additional $1 billion under the American Rescue Plan that is available to states like us that have not expanded,” Evers said at a news conference, referring to the March law.

Evers said the savings would be invested to pay for economic development and increase providers’ pay.

“Wisconsin’s hospitals, doctors, nursing homes, and behavioral health providers will see needed rate increases,” Wisconsin Department of Health Services Secretary-designee Karen Timberlake said in a statement. “Expanding Medicaid is the most effective way to protect the health of Wisconsin.”

In Wyoming, state lawmakers had built momentum to pass an expansion bill earlier this year, but the House-passed bill died in a Senate committee vote. The state is expected to hold a special legislative session in July, when expansion may be back on the table.

South Dakota advocates hope to put expansion to a vote in 2022.

Dakotans for Health co-founder Rick Weiland said the pro-expansion group has collected more than 10,000 signatures so far. Supporters need more than three times that by November to be on the ballot in 2022.

“There’s just no appetite in the South Dakota Legislature to do this. The sort of entrenched political establishment isn’t supportive of it,” Weiland said. “I think it’s become, in some respects, more of a philosophical argument out here where Republicans just don’t think it’s necessary.”

Alabama has a different challenge because choosing whether to pursue expansion essentially lies in the governor’s hands. Republican Gov. Kay Ivey, who is open to expansion, is reviewing the federal incentives and weighing long-term costs before deciding if she will submit a waiver to CMS.

Polling from Cygnal, a Republican polling firm, found 69 percent of Alabama voters support Medicaid expansion, including 64 percent of GOP voters.

“Our governor, her opposition was never ideological. It was on the issue of how do we pay for this and how do we continue to pay for it. I think that she’s just dotting the I’s and crossing those T’s,” said Jane Adams, campaign director with Alabama Arise, a nonpartisan nonprofit focused on poverty reduction. “We think the numbers are on our side to do it.”

Still, Adams acknowledged, “No one has expanded outside of ballot initiatives in a very long time.”