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."