Obama Approves Health Insurance Marketplaces in 6 States

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WASHINGTON -- The Obama administration gave conditional approval on Monday to health insurance marketplaces being set up by six states led by Democratic governors eager to carry out President Obama's health care overhaul.

The six are Colorado, Connecticut, Maryland, Massachusetts, Oregon and Washington.

At the same time, the administration rejected pleas from other states that want to carry out a partial expansion of Medicaid, to cover fewer people than the president and Congress originally intended. Some states want to expand Medicaid to cover childless adults with incomes up to the poverty level, $19,090 for a family of three.

But Cindy Mann, the top federal Medicaid official, said the federal government would pay the full cost of newly eligible Medicaid beneficiaries only if a state raised the threshold to 133 percent of the poverty level -- or 138 percent, with an adjustment allowed by federal law. This would guarantee Medicaid coverage for a family of three with income less than or equal to $26,340.

Matt D. Salo, the executive director of the National Association of Medicaid Directors, which represents state officials, summarized the administration's position this way: "No partial expansion of Medicaid. No phased-in expansion. It's all or nothing."

In upholding the health care law in June, the Supreme Court said the expansion of Medicaid was an option for states, not a requirement as Mr. Obama had argued. Still, the White House says the expansion would be a good deal for states because the federal government would pay the entire cost of Medicaid for newly eligible beneficiaries from 2014 to 2016 and then 90 percent or more of the costs in later years.

Republican governors expressed disappointment. "The Obama administration's refusal to grant states more flexibility on Medicaid is as disheartening as it is shortsighted," said Gov. Bobby Jindal of Louisiana, the chairman of the Republican Governors Association.

The White House policy, he said, "will make a state's decision on Medicaid expansion more difficult."

In a letter last week, Mr. Jindal and 10 other Republican governors asked Mr. Obama to meet with them to discuss Medicaid.

Dr. Bruce Siegel, the president of the National Association of Public Hospitals and Health Systems, praised the administration's decision on Medicaid, saying it was consistent with the letter and spirit of the law, "to expand health care coverage as broadly as possible."

The administration announced its policies in answering questions that state officials had asked about the expansion of Medicaid and the creation of online supermarkets known as health insurance exchanges.

Starting in 2014, the federal government will require most Americans to have health insurance, and it will offer financial assistance to millions of people to help them pay premiums.

Friday is the deadline for states to tell the federal government whether they intend to establish their own insurance exchanges. Federal officials will create and operate an exchange in any state that is unable or unwilling to do so.

Gary M. Cohen, a federal health official, said the federal government had received applications from 14 states that wanted to run their own exchanges. These include the six tentatively approved on Monday.

State legislators and governors of both parties say they cannot afford the Medicaid programs they have now, and they express two concerns about expanding the program.

First, they say many uninsured people already eligible for Medicaid will apply for coverage in 2014 and later years. For those beneficiaries, the federal government will pay its standard share of the costs, averaging 57 percent -- not the 100 percent allowed for people who become newly eligible under the Affordable Care Act.

In addition, state officials fear that Mr. Obama and Congress will reduce federal Medicaid payments to states as part of a deal to cut the federal budget deficit.

On Monday, the administration repudiated a proposal for Medicaid savings that Mr. Obama made in 2011 and repeated in his budget request this year. The proposal would reduce the federal share of payments to health care providers treating low-income people under Medicaid.

Such a reduction could shift costs to states and reduce the likelihood of their expanding Medicaid. In negotiations with the White House, Congressional Republicans have demanded savings in Medicare and Medicaid.

Abby Goodnough contributed reporting.

nation

This article originally appeared in The New York Times.


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