Feds will pay Wyo to expand Medicaid. Will lawmakers take the bait?

CHEYENNE – For 18 months, Maggie McAllister had health insurance.

Following a 2011 divorce, she secured affordable coverage for herself and her young son through Medicaid.

Little did she know, she said, it would only be temporary.

Roughly 18 months later, McAllister discovered she was no longer eligible for Medicaid and lost that insurance. Despite the passage of the Affordable Care Act in 2010, the plans on the market were too expensive for her farming income, she said.

Since then, neither she nor her 20-year-old son — who is now a restaurant worker — have been able to afford health insurance in Wyoming, McAllister said. She is now considering moving to Colorado, where health insurance is accessible, she said.

“It’s a real concern for me,” she told WyoFile. “And right now, some would say ‘if you don’t like it, then just leave.’”

If a few votes in the Wyoming Legislature go her way this year, she might not have to. 

On March 8, the Senate Committee on Labor, Health & Social Services advanced Senate File 154 – Medicaid expansion with federal match requirements by a 3-2 vote. The move surprised many long-time legislative observers after years of failed attempts. 

Though he recently said he would give a “fair hearing” to Medicaid expansion if the Legislature passed it, Gov. Mark Gordon has opposed Medicaid expansion in the past, and told WyoFile last week he was still undecided on the proposal currently working through the Legislature. The state’s Republican-dominated Legislature has also long been reluctant to pursue the topic, saying 50-50 federal match is too low and fiscally unsustainable for Wyoming.

“Medicaid expansion sounds like a good idea, it’s pretty sexy, and [the federal government] is willing to give us whatever it takes to get us to sign on,” Sen. Ogden Driskill (R-Devil’s Tower) told reporters last Friday morning. “But it’s a ‘Hotel California’ situation I think. Once you get in, you’re not getting out of it.”

Senate File 154’s sponsor, Sen. Chris Rothfuss (D-Laramie), believes 2021 is the year Wyoming should finally take the leap and expand its program, he said.

“We’re taking a principled stand against the poor hand that’s being given to us with the feds — not with our own access, but with the lives of 25,000 [currently uninsured] Wyomingites that don’t have the luxury of sitting here today having this chat,” Rothfuss told committee members last Monday. “Those are the lives we’re playing with, and we’ve offered them nothing for the last decade.” 

A little misunderstanding?

That Wyoming is seriously considering Medicaid expansion represents a significant turn of events

Nearly every year of the past decade, a Medicaid expansion bill has been introduced — typically by a Democrat or moderate Republican — assigned to a committee and then quickly killed. In last year’s budget session, Medicaid expansion failed to gain enough votes for debate on the floor not once, but twice.

This year, Medicaid expansion will finally be heard on the floor of the highly conservative Senate. 

Observers are surprised the proposal has gotten that far.

Last Monday, freshman Sen. Troy McKeown (R-Gillette) represented the swing vote that helped advance the bill out of committee, a surprise because he spent much of the meeting expounding on his distrust of “socialist healthcare.” While McKeown was not against that spirit of the bill, he said, he believed it amounted to a “slippery slope,” yielding to a trend toward the more expensive, but more comprehensive public healthcare that began with the passage of the Affordable Care Act.

“At what point do we say ‘enough is enough’?” he asked before the vote. He then voted to advance the measure.

McKeown did not respond to numerous, in-person requests from WyoFile for comment, including a “yes or no” question on whether his vote was intentional.

The House of Representatives is likely to take up its own version of Medicaid expansion sometime in the coming weeks either as an individual bill or as a budget amendment, House Speaker Eric Barlow (R-Gillette) told reporters Friday morning. Whether it gains the necessary votes to advance, however, is another question.

“This is a magical moment that just happened to come about in the limited time available to us,” Barlow said. “I guess I personally would be supportive of starting the discussion, understanding what the numbers are. But I don’t know what kind of support it will get on the floor.”

Growing interest

Though Wyoming has resisted Medicaid expansion — it’s one of only 12 states that have not done so — momentum has been growing in favor of it.

Early in the COVID-19 pandemic, in May 2020, the Legislature’s Management Council voted to study Medicaid expansion as an interim topic, with several long-time opponents of the measure — including former Speaker of the House Steve Harshman (R-Casper) expressing interest. After nine consecutive years of voting against Medicaid expansion, Harshman is now a co-sponsor on a bill to expand it.

The reason? A whole lot of money, he said.

Contained in the COVID-19 relief bill signed by President Joe Biden on Thursday is a sweetener that will give states that update their Medicaid programs a 90-10 match in funding. If the Legislature enacts Medicaid expansion this year, it stands to receive roughly $120 million in healthcare funding over the next two years with no additional cost to the state, while providing health insurance for an estimated 24,000 low-income, uninsured residents, according to the most recent estimates by the Wyoming Department of Health.

It’s part of a plan by the Biden administration to convince reluctant states to finally expand Medicaid, and the type of deal even longtime expansion opponents like Harshman have a hard time rejecting out of hand. The approach appears to be working: states like Arkansas have already begun the process of expanding Medicaid, joining other holdouts like Idaho, Nebraska and Missouri.

In Wyoming, Medicaid expansion has been a well-vetted idea, having undergone numerous votes with little success. In 2019, the Senate advanced a study of Medicaid expansion by a large margin, but it failed to gain the requisite support in the House. Harshman voted against introducing Medicaid expansion in 2020 and 2019.

This time is different, he said.

“To have this opportunity to leverage this thing is really important,” Harshman said in an interview. “We don’t want to let this one slide by.”

The Biden Administration’s incentives are specifically tailored to attract red states that have been reluctant to expand their programs, said Heidi Allen, an Associate Professor of Social Work at Columbia University. By expanding the increase in the federal match to the entire Medicaid population — rather than just the newly enrolled — even low-federal-match states like Wyoming are suddenly facing an offer they’ll have difficulty turning down, she said

“It was a very strategic decision on the Biden administration’s part to tie the [federal match] increase to the traditional Medicaid population, instead of the expansion population,” Allen said.

The case for expansion

To qualify for Medicaid currently, a Wyoming resident needs to either be pregnant, responsible for a child 18 years of age or younger, disabled or 65 years of age or older. While that covers a good percentage of the population, it doesn’t cover everyone, leaving thousands of low-income people without coverage at all. And when health crises occur, those people often end up in the emergency room.

“Everyone has access to healthcare now, but that’s not the issue,” Harshman said. “The emergency room can’t refuse you, even if you can’t pay. So everyone in the state has universal healthcare. The question is, who’s going to pay?”

The answer to that is hospitals, which, according to figures from the Wyoming Hospital Association, typically absorb an estimated $100 million in uncompensated healthcare expenses every year.

And the Medicaid-eligible population is rife with disparities that expansion could help to address, advocates say. Women make up most of the state’s Medicaid-eligible population, according to figures by the Wyoming Department of Health.

“Twice as many women are expected to enroll as men [if the program is expanded],” said Jen Simon, founder of the Wyoming Women’s Action Network and a senior policy advisor for the Equality State Policy Center. “And for women under 30, there are even larger coverage disparities by gender. The WDH projections also show that the younger enrollees are not only more likely to be women, but also more likely to be working and more likely to be living at about 100% of the federal poverty line.”

Advocates for expansion also say offering health insurance to those populations has a multitude of positive effects. Beyond reducing poverty, numerous studies have shown that Medicaid expansion not only leads to better health coverage for reproductive-age women, but also earlier initiation of prenatal care and lower rates of maternal and infant mortality rates. But there’s also the fiscal case for Medicaid expansion. Ever since the ACA passage, Wyoming has paid taxes into a public system it’s not using, Rothfuss noted in presenting the bill, helping to subsidize Medicaid expenses in other states without reaping any of the benefits.

While it wouldn’t do anything to immediately fix the state’s already lofty healthcare costs, expansion, advocates say, would allow Wyoming to get some of that money back, get more people insured and create a healthy enough population to begin the process of reducing those costs organically.

“This is a means to start to fix [the broader problem of health insurance costs],” Sheila Bush, the executive director of the Wyoming Medical Society, said last Monday. “It may be a roundabout way and it may run counter to core beliefs, but I do believe it’s there. We already have a system where we pay for those services. This is just a way to do it in a more affordable and humane way.”

Expansion also has compounding economic benefits, Allen said, helping not only to free up room in already stressed hospital budgets but bolstering  the people who use those facilities as well.

“[Medicaid expansion] means that consumers have more money to spend,” she said. “And there’s just so much research to show that it decreases medical debt, that it improves creditworthiness.”

Allen has conducted research that showed Medicaid expansion resulted in people using payday loans less, she said, and pointed to studies that show Medicaid expansion was associated with reductions in housing evictions. 

“So there’s all of these kinds of financial spillover effects that really bode well for all states, because red states aren’t exempt from having issues related to providers needing to get paid,” Allen said

“These things that people say in opposition to expansion don’t at all match up with the evidence,” she added.

Hesitancy

Some conservatives remain concerned that Medicaid expansion will prove too expensive for the state, even with the newly sweetened deal.

Critics of expansion have long said front-end demand for Medicaid coverage might overwhelm their initial expectations, though the Wyoming Department of Health has argued that enrollment would likely stabilize after two years. Critics’ argue, however, that once the high level of federal support returns to its original levels over the next decade, the state will be unable to cover its share of the program.

Wyoming’s federal match — even under the Biden proposal — would fund roughly 55% of the program’s total cost. That is well below that of other states, primarily due to high median wages inflated by the high wage jobs in sectors like mining and drilling. For comparison, the federal government currently funds Medicaid programs in other states, like Mississippi, at rates in excess of 70%

While the current Medicaid expansion bill up for debate in the Senate has a trigger written in that would pull the plug on the program should that match ever drop below 55%, some lawmakers have expressed hesitancy about what would replace the program should Wyoming drop below that share.

Others fear some residents currently on private insurance could potentially shift themselves over to Medicaid in the coming years, impacting providers and exacerbating costs even further.

“I understand the federal government is offering a much bigger bribe to expand Medicaid, and that’s a gift horse we’re going to have to look straight in the mouth,” said Sen. Charlie Scott (R-Casper), former chair of the Senate Committee on Labor, Health and Social Services and a longtime skeptic of expansion. “We’re going to have to count the teeth very carefully because it has some strings attached that could bankrupt us.”

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Those who support the bill, however, see an opportunity to use Medicaid expansion to pressure a new presidential administration into changing the federal government’s share of the program. By writing in a provision that would essentially boot people off of their insurance if the rates ever dropped too low, advocates for expansion say they could potentially tip the scales in the state’s favor.  

“The bill is written so that we are ‘out’ if [the federal match] ever drops below 55, so you’re almost holding the federal government hostage instead of them holding us hostage,” Harshman said. “You put the pressure on them instead of them putting it on us.”

“I think we’ve got a unique opportunity to literally bring hundreds of millions of dollars into this state every year and do some good for people,” he added. 

CORRECTION: This story has been updated to reflect that Sen. Charles Scott no longer chairs the Senate Committee on Labor, Health and Social Services. – ED.