Why Medicaid Expansion Has Reached a Standstill

Republican governors who want to make more people eligible for the low-income health insurance program face daunting obstacles nationally and in their GOP-controlled legislatures.
by | April 2015
Supporters cry after Tennessee Gov. Bill Haslam's plan to expand Medicaid was rejected for the second time this year Tuesday.
Supporters crying after Tennessee Gov. Bill Haslam's plan to expand Medicaid was rejected for the second time this year on Tuesday. (AP/Mark Humphrey)

Tennessee Gov. Bill Haslam won all 95 counties, taking 70 percent of the statewide vote, in a historically lopsided re-election victory last November. A few weeks later, he was rewarded by his fellow GOP state executives with the chairmanship of the Republican Governors Association, a signal of Haslam’s high standing within the party.

About a month after that, Haslam called for a special legislative session to pass a Medicaid expansion package two years in the making, and he crisscrossed the state to sell it. He had the business lobbies and the hospitals on board, with the latter agreeing to finance the state share of the program. Haslam couched expansion of the health-care program as a biblical duty to care for the poor in much the same way Ohio’s Republican governor, John Kasich, had done. And the week before the session started, solidly Republican Indiana announced a deal under Gov. Mike Pence, immediately becoming the new standard-bearer for conservative spins on Medicaid expansion and prompting speculation about which state would be next.

But in Tennessee, after two days of hearings in February, a state Senate committee handily dispatched Haslam’s proposal, marking the first time a Republican governor had staked so much on a health-care expansion only to be undone by a GOP-controlled legislature. A House committee didn’t even bother taking it up. “It was a little embarrassing to do all that and come away with nothing,” Haslam admitted to reporters. Then again at the end of March, a Senate committee rejected Haslam's retooled plan.

For the remaining 22 states -- nearly all of them under Republican governors -- that haven’t taken advantage of the funding available under the Affordable Care Act to expand their Medicaid programs, what happened in Tennessee likely represents the new normal. It’s a dynamic in which governors, who often take less-ideological approaches to their jobs, find themselves at odds with legislatures that have become even more conservative in the last few years. Adding another formidable hurdle will be groups like Americans for Prosperity, the advocacy organization founded by the conservative billionaires Charles and David Koch. That organization played a key role in killing Medicaid expansion in Tennessee. All told, it means new expansion will slow to a crawl, if not a total standstill, for the near future.

Other Republican governors who are supportive of some form of Medicaid expansion are seeing that dynamic play out now. Wyoming soon followed Tennessee’s lead in shooting down an expansion favored by Gov. Matt Mead, who argued that extending Medicaid to more beneficiaries would help stem the cost to taxpayers of uncompensated care. Gov. Gary Herbert of Utah is similarly facing strong headwinds from his legislature, though he’s still the most likely of any governor to get something passed this year.

Republican governors in Alabama and North Carolina have expressed interest in expansion but also would face forbidding opposition from their legislatures. Gov. Bill Walker of Alaska is facing not only legislative pushback but also an Americans for Prosperity challenge, and with chapters in 32 states, the group will likely look to replicate its Tennessee success across the country.

During Tennessee’s brief debate over expansion in February, Americans for Prosperity filled the legislative chambers with at least a hundred angry opponents wearing matching T-shirts. But it also targeted Republican legislators locally with town hall meetings and attack ads to guard against defections.

The group has effectively rallied Republican legislators who want to avoid a primary challenge from the right. But for govenors balancing the needs of a broader constituency, Medicaid expansion can offer some hard-to-ignore upsides, from transferring costs to the federal government to generating economic development. As more states explore the possibilities of expanding access to Medicaid, the friction between GOP governors and Republican legislatures won’t be going away anytime soon.

*This story has been updated to reflect a Tennessee state Senate committee's rejection of Gov. Haslam's plan on March 31.