The Tempting of Republican Governors

Obamacare’s promise to pay added Medicaid expenses upfront and the desire of the health-care industry to obtain government funding for uninsured walk-ins to local hospitals have eroded some governors’ opposition.

By Andrew Thomas | April 17, 2013

If anything has united Republicans and the conservative movement in recent years, it has been their staunch opposition to so-called Obamacare, the chief policy initiative of President Barack Obama. Formally known as the Affordable Care Act, this sweeping overhaul of America’s health-care system galvanized conservative activists, rocked the 2010 elections with a Republican retaking of Congress, and helped give birth to the Tea Party movement. Fighting Obamacare has been a mainstay of conservative thought, policy and politics ever since.

It is, then, extraordinary that 2013 has seen a series of conservative political dominoes falling in Republican governors’ houses on this very issue. Key red states with Republican governors thought to be reliable conservatives have cited financial and economic concerns as reasons for urging expansion of Medicaid in their states and acceptance of Obamacare’s central tenets. The lure for this policy shift: promised windfalls of federal Medicaid funds.

Obama’s health law passed Congress in 2010 without a single Republican vote. In 2012, the U.S. Supreme Court upheld Obamacare as constitutional but noted the federal government could not conscript states into participating. States were left to decide whether to opt in. At present, Obamacare promises to reduce the approximately 15 percent of Americans who are uninsured and extend federally subsidized insurance over the next decade to about 27 million people who are currently without insurance. Other analysts have predicted a much larger enrollment and costs as the “woodwork” effect takes hold and uninsured people sign up in unexpected droves for free health care.

While Obama’s re-election last fall cleared the way for full implementation of his eponymous legislation, Republican governors previously had held firm against parts of the plan that remained optional. Many declined, for example, to assume responsibility for online marketplaces or “exchanges” that are to provide subsidized private coverage to middle-class consumers.

Republican Governors Start to Flip

Yet the promise of “free” federal money from Obamacare has proved too great a temptation for a growing number of governors. For states agreeing to provide Medicaid to those Americans who earn up to 133 percent of the federal poverty level, the federal government has pledged to pay the full cost of enrolling newly eligible people for the first three years, from 2014 to 2016. After that, the states would pay up to 10 percent of the cost, but federal funds would cover the rest.

Critics of this pledged pot of federal gold have expressed concern that the federal government could cut back its contribution in the future. It is all but impossible politically, they note, for state lawmakers to cut back on public benefits when the federal spigot is turned off. Still, Obamacare’s promise to pay these added Medicaid expenses upfront and the desire of the health-care industry to obtain government funding for uninsured walk-ins to local hospitals have eroded some governors’ opposition. At present, 25 governors support Medicaid expansion, but Republicans are starting to defect.

Partisan opposition has softened substantially as eight Republican governors have signed on to this expansion. They are Jan Brewer of Arizona, Chris Christie of New Jersey, Jack Dalrymple of North Dakota, John Kasich of Ohio, Susana Martinez of New Mexico, Brian Sandoval of Nevada, Rick Scott of Florida, and Rick Snyder of Michigan.

These governors have offered similar explanations. Michigan’s Snyder said, “This is a federal program that we would not have necessarily created for Michigan,” but ‘this is saving money and improving lives.”

Hospital and medical associations have teamed up with other business interests, liberal newspapers, and interest groups to pressure Republican governors to accept Obamacare’s promised federal funds. Typical of the political alliances that have sprouted up was the coalition in Ohio. As described in the Washington Post, “Hoping to bring billions in federal funding to his state while shielding himself from the political pain of complying with Obamacare, Ohio Gov. John Kasich has spent the past few months reaching out to some odd allies that would support the Medicaid expansion. . . . The Republican administration worked shoulder to shoulder with Obamacare supporters and opponents, crafting a lobbying campaign aimed at making a key portion of the health overhaul more palatable to businesses and legislators.”

The lobbying effort in Ohio was typical of those taking shape across the country. It involved public rallies at the state capitol, churches and elsewhere, friendly newspaper editorials urging Medicaid expansion, and other such offensives. In Arizona, business interests funded a media advertising campaign, the governor’s office launched multiple websites, and the governor held news conferences with her alongside health-care professionals at the state capitol.

Conservatives, however, were not buying. Viewing the expansion as a gorging of the welfare state and embrace of an unsustainable entitlement program, the Wall Street Journal recently described Brewer and Kasich as “Obamacare Flippers” who accepted “Mr. Obama’s Medicaid bribe.”

Republican legislatures also are balking. For the eight Republican governors backing Medicaid expansion, five hold office in states where their party also controls the legislature. Florida legislative committees took just seven days of a 60-day legislative session to defeat Scott’s plan. The proposed expansion would add an estimated 42 percent to Florida’s Medicaid enrollment.

The North Dakota House of Representatives passed the plan but it faces more opposition in the Senate. Other legislatures are still considering the initiatives.

Republican legislators are right to be cautious. In Arizona, Magellan Strategies released a poll of likely Republican primary voters in six key battleground legislative districts. They found 30 percent supported Medicaid expansion, 51 opposed it and 19 percent were unsure. When asked about a proposed hospital “bed tax,” which would help fund the expansion plan, 68 percent said they would be less likely to vote for legislators who voted for the tax, 11 percent would be more likely, and 15 percent were unsure.

Shaky Arguments

Conservative concerns about the expansion of Medicaid under Obamacare are straightforward. Already Medicaid consumes one-third or more of state budgets. Obamacare will only add to this demand on state coffers.

In the past, federal health-care disbursements were limited to matching state spending in a 1-to-1 ratio. Now, the promised match is 9 to 1. Obamacare writes a “bad check” for federal funds that the U.S. treasury does not have, as federal deficits have routinely exceeded $1 trillion throughout Obama’s presidency. The promised “match” for state Medicaid outlays is, in reality, a draft note on future generations’ national credit.

And what will be done if, as often happens, the federal government breaks its promise and reneges on its funding commitments? The costs will simply shift to states and their taxpayers. As noted by a recent bipartisan State Budget Crisis Task Force, chaired by former New York Lt. Gov. Richard Ravitch and former Federal Reserve Chairman Paul Volcker, deficit-reduction plans being batted around in Washington, D.C. typically include jettisoning the 9-to-1 federal match.

As Republican governors sign up for full implementation of Obamacare, states continue to surrender autonomy to federal control. The welfare state grows even as governments at every level struggle to pay their existing bills. And the president’s signature policy victory earns the imprimatur of the opposition party, blurring the essential distinctions between the parties at a time when the ranks of registered independents nationally continue to soar.

Andrew Thomas is a graduate of the University of Missouri and Harvard Law School. Twice elected as Maricopa County Attorney, the district attorney for greater Phoenix, Arizona, Thomas served a county of four million residents and ran one of the largest prosecutor’s offices in the nation. He established a national reputation for fighting violent crime, identity theft, drug abuse and illegal immigration. He is the author of four books, including The People v. Harvard Law: How America’s Oldest Law School Turned Its Back on Free Speech. Mr. Thomas is also a contributor to SFPPR News & Anslysis.