Arizona On My Mind

Arizona Governor Jan Brewer has decided to endorse Medicaid expansion
under the Affordable Care Act. Since this decision requires state
legislative approval in Arizona, I am still puzzled as to why press
coverage implies this is also Arizona's decision. Her decision was to
stake out the governor's position. What the State of Arizona will do
remains to be seen.

Still, it is an amazing thing — a show stopper really — to see the
governor of the last state to participate in original Medicaid come out
in favor of Medicaid expansion. Governor Jan Brewer — she who
bolstered her political reputation by publicly wagging her finger at
President Obama on the tarmac — is all in on Medicaid expansion.
Whether this marks the triumph of mathematical calculation over ideology
will never be known.

The most important constellation of issues surrounding the NFIB v.
Sebelius decision, however, is not whether states will ultimately
opt-in to the Medicaid expansion. The Medicaid opt-in is, like original
Medicaid, not so much the federal government making the states an offer
that they cannot refuse as making the states an offer that they
desperately want to find a reason to accept. Even Arizona, after all,
ultimately opted-in to original Medicaid, in 1982, with the creation of
its Arizona Health Care Cost Containment System ("AHCCS"), still
advanced as "Arizona's single state Medicaid agency" under the authority
of a negotiated 1115 Medicaid waiver in place to this day.

What I really want to consider is what concessions will states
bargaining in the shadow of NFIB v Sebelius be able to exact from the
federal government in exchange for participation in the Medicaid
expansion? And how big will the federal government allow the states to
dream? Arizona's original AHCCS waiver, for example, was to include
all state employees in its program — a daring proposal that has not
survived implementation. At least six states have expressed some
interest in bartering block-grant authorization of Medicaid for their
state’s participation in the Medicaid expansion.

Medicaid is and has always been a heavily negotiated program,
particularly as it applies to “optional populations”. Now that
individuals at between the federal poverty level and 138% of the federal
poverty level are “optional populations”, the negotiations seem likely
to increase in intensity. There are currently 426 active Medicaid
waivers. This is not uncharted territory. It is merely, for the ACA, an
unexpected voyage.

The history of Medicaid reveals the existence of enormous state power
to demand unique degrees of buy-in to Medicaid expansion. That is the
lesson of the state-by-state brokered buy-in for original Medicaid.
That is also the lesson taught by the historic use of the Health and
Human Services (“HHS”) Secretary’s Section 1115 waiver authority to
allow an extraordinary range of state-level experimentation. Section
1115 strongly suggests that the HHS Secretary may offer states
individual bespoke Medicaid programs. But whether states can demand them
is a harder question.

Excerpted from "Let Fifty Flowers Bloom: Health Care Federalism After
NFIB v. Sebelius" (forthcoming, draft available on SSRN) and a follow
up work in progress: "The Medicaid Gamble."

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