Five GOP governors said they would consider expanding the program. GOP govs name price on expansion

Two dozen Republican governors fought all the way to the Supreme Court to win the right to reject President Barack Obama’s expansion of Medicaid under the health care law.

However, just a few weeks after the Supreme Court sided with them, some of these governors are leaving themselves an opening to expand Medicaid anyway — but on their own terms.


Five Republican governors said Friday they would consider expanding the program if the feds gave them Medicaid dollars in block grants, which has been a goal of Republicans since the 1990s.

That was when the states had their strongest leverage, with the help of a Republican Congress, to demand freedom from federal rules to reshape the social safety net the way they wanted it. They pushed a welfare reform bill that President Bill Clinton signed into law, and almost had the same success with Medicaid block grants. That idea was too much for Clinton, and he vetoed the bill that passed Congress.

And the idea mostly dropped away after that. It stayed on the Republican radar, but it didn’t get far enough to become part of a serious national conversation.

But now, the GOP governors have a friendly audience in the Republican House for that kind of flexible, no-strings-attached approach to Medicaid. And they think that, thanks to the Supreme Court ruling on the Medicaid part of the health law, they now have more power to demand it from the Obama administration.

At the National Governors Association meeting in Williamsburg, Va., on Friday, Virginia Gov. Bob McDonnell, Nebraska Gov. Dave Heineman, Utah Gov. Gary Herbert, Tennessee Gov. Bill Haslam, and Wyoming Gov. Matt Mead all said their opposition to expanding Medicaid wasn’t absolute. If the Obama administration would throw in more flexibility to run their Medicaid programs their way, they said, they might be more willing to talk about expanding their programs.

Here’s how Herbert put it: “They ought to be giving all states more flexibility, block grant the money and let us find our own unique ways with our own unique populations and demographics to find the best way to provide health care. … The key word is flexibility.”

McDonnell stopped short of refusing Medicaid expansion outright, suggesting only that he’d oppose growing the program “without reforms.”

Mead said that “before we make a decision, we’ve got to do a full cost-benefit analysis to see how it will impact our citizens” — but added that block granting Medicaid would make the expansion “more palatable.”

And here’s how Haslam named his terms: “Obviously, as a Republican, I’m with those folks who say, if you can block grant us Medicaid, we’d look at it differently.”

Not all of the governors said the goal had to be block grants, which implies throwing out pretty much the whole book of required benefits and eligibility standards. Some of the governors just want more freedom to make other Medicaid changes that have been high on their lists — like charging co-payments to low-income patients for the first time.

“I wish the federal government would allow all states to determine the eligibility and benefits … I’d like to see co-pays, for example, exist in our Medicaid system so you’ve got a little skin in the game,” Heineman said.

And McDonnell rattled off a short list of the rule changes he’d need, including adjustments to the way patients eligible for both Medicare and Medicaid are covered and clarification of states’ maintenance-of-effort requirements. “Unless we get some federal relief, those things are not going to happen,” he added.

Still, that’s a lot different than the hard line at least five other Republican governors have taken, including Texas Gov. Rick Perry and Florida Gov. Rick Scott, who say they won’t even consider expanding the program.

And it’s a reminder that even though at least five of the red states have ruled it out completely, others are being careful to leave themselves an out.

There’s just one problem: The Obama administration is still dead set against Medicaid block grants. At least, in their purest form, with virtually no rules on who has to be covered or what services they have to get. At a meeting with governors last year, for example, Obama said he was worried that “a block grant would make children vulnerable.”

“We think it’s important to protect Medicaid as something that people have a right to in whatever states they’re in, and there have to be some requirements that states meet about who’s covered and what’s covered,” White House chief of staff Jack Lew said earlier this month after the Supreme Court ruling.

The real question, though, is whether the Obama administration might agree to ease some rules — but not wipe out all of them — to get the GOP governors on board so the health care law’s Medicaid expansion doesn’t fail.

Governors and state officials have put forward a raft of ideas about greater flexibility: state-initiated changes in eligibility rules, the ability to charge low income people co-pays or deductibles, more use of health savings accounts in Medicaid, and new ways of caring for poor sick elderly people on both Medicare and Medicaid.

One official, Pennsylvania Secretary of Public Welfare Gary Alexander, at a Washington think tank this week even held out the idea of imposing work requirements on some people on Medicaid. If states were to expand Medicaid, “I think they would look for concessions to impose real work requirements on those who can go to work,” Alexander said at the American Enterprise Institute. He suggested minimum wage jobs in the retail industry.

That’s important because the Obama administration and congressional Republicans are gearing up for another fight over restructuring entitlement programs to cut the deficit — including not just Medicare, which has gotten most of the attention, but also Medicaid, where House Republicans support block grants and Obama doesn’t.

They won’t be able to negotiate a solution this year, but if Obama wins a second term and has to negotiate a long-term deal with a Republican House — and maybe a Republican Senate — the governors might have more leverage to get what they want.

It would be a much different negotiation with a President Mitt Romney, who has already endorsed Medicaid block grants and would be happy to give the GOP governors what they want. “I would take the Medicaid dollars that comes with all sorts of strings attached today, send them back to the states … and let states care for their own people in the way they think best. That — in my view — is the best way to care for the uninsured,” Romney said in Orlando last month.

But, of course, Romney wants to repeal the entire health care law — including the Medicaid expansion. If he wins and has a Republican Senate to help him, the GOP governors wouldn’t have to broaden their Medicaid coverage to get the flexibility they want. They would just get it — and Medicaid would become a far different program than it is today.

Joanne Kenen contributed to this report.

This article first appeared on POLITICO Pro at 7:01 p.m. on July 13, 2012.