Why the GOP's Resistance to Medicaid Expansion Is Eroding

Ronald Brownstein
February 7, 2013

PHOENIX—Jan Brewer, Arizona’s feisty Republican governor, is better known for wagging her finger at President Obama than for linking arms with him. That’s why Brewer’s recent announcement that her state intends to join the expansion of Medicaid central to Obama’s health care law may represent an important shift.

If even Brewer, who has battled repeatedly with Obama, finds the case for expansion compelling, other Republican governors now resisting may also reconsider. “I think the vast majority are going to switch,” predicts Caroline Pearson, who follows state responses to the health care law for Avalere Health, a consulting firm. “I think we will end up with only a handful of states that don’t expand in January [2014].”

To say the Obama-Brewer relationship has been rocky is an understatement. The Obama administration sued Arizona over its tough immigration-enforcement law; Brewer returned the favor over federal health care reform. When Brewer greeted Obama during a January 2012 visit, the two sparred in an unusual tarmac confrontation punctuated by the governor pointing her finger at the president in a way that did not suggest she was alerting him to lint on his lapel.

But last month, in her State of the State address, Brewer declared that Arizona should join the health law’s expansion of Medicaid. Her decision represented a major crack in GOP resistance to the expansion, which the administration initially expected to provide about half of the law’s total increase in coverage by extending eligibility for the program to adults earning up to 138 percent of the poverty level.

In the decision last year upholding the Affordable Care Act as constitutional, the Supreme Court made it easier for states to opt out of expanding Medicaid. After that, an array of Republican governors promised to do just that.

Before Brewer, only the Republican governors in Nevada, New Mexico, and North Dakota had broken party ranks to support expanding eligibility. But each of those seemed special cases: North Dakota is flush from its oil and gas boom, and Nevada and New Mexico are increasingly blue-leaning states with Democratic-controlled legislatures. Arizona is different: Although the growing Hispanic population is boosting Democrats, the state still leans right, and it solidly preferred Mitt Romney over Obama. “There isn’t any question that Arizona is the state that caught people by surprise,” says Matthew Benson, Brewer’s communications director.

Some local factors encouraged the governor’s decision. By ballot initiative in 2000, Arizona had already expanded Medicaid eligibility to childless adults earning up to 100 percent of poverty. During a budget squeeze in 2011, the state suspended enrollment in that program. By agreeing to the full expansion under the health care law, Arizona will receive more federal funds to restore coverage for those eligible under its state initiative.

But, mostly, Brewer has justified her decision by factors relevant to every state. Under the health care law, Washington will pay all of the expansion’s cost for the first three years, and eventually 90 percent, far more than it contributes in the existing state-federal split for Medicaid costs. The Urban Institute has calculated that over the next decade, Arizona will spend $3.1 billion on the expansion and receive $17.3 billion in federal funds. As Brewer noted in her speech, that money will “protect rural and safety-net hospitals” from excessive costs for uncompensated care; create “thousands of jobs”; and provide health care to large numbers of uninsured people.

Arizona’s Republican-controlled Legislature might still balk. Nancy Barto, chairwoman of the state Senate’s Health and Human Services Committee, said in an e-mail that “it may be difficult to convince many Republican legislators to support this level of expansion for many reasons,” including “deep philosophical opposition to entrenching federal control even further in our state.”

Yet other GOP state legislators predict approval—largely because Arizona’s medical community, led by its hospitals, is mobilizing so passionately behind expansion. Hospitals have a big stake in expansion because the health law, anticipating fewer uninsured, reduces their federal aid for providing uncompensated care. States that don’t expand coverage will sentence their hospitals to treating big pools of uninsured people even as payments for doing so fall. “For certain safety-net hospitals, that is insolvency right there,” Pearson says.

Most Republican governors are still resisting—and facing pressure from conservatives to stay in line. (The Wall Street Journal editorial page, the Right’s hall monitor, rapped Brewer’s knuckles this week.) But Ohio Gov. John Kasich and Michigan Gov. Rick Snyder this week proposed joining the Medicaid expansion, too, making arguments similar to Brewer’s. Even in Florida, Gov. Rick Scott is wavering, and in Texas, although Gov. Rick Perry has promised Alamo-like resistance, some GOP legislators are quietly seeking ways to join. For good reason: Each state, the Urban Institute calculates, would receive more than $7 in federal aid for every $1 it contributes to expanding coverage.

Even with their states home to a combined one-fifth of the nation’s uninsured, Scott and Perry wouldn’t work with Obama enthusiastically. But as they and other GOP governors weigh the merits of expansion, more may conclude that Brewer is pointing the way.