A growing number of states that strongly opposed Obamacare are rethinking their positions on Medicaid expansion as they watch billions in new federal dollars rain down on neighboring states

Arkansas is helping lead the shift by changing the rules: with Washington’s permission, the state has enabled the poor to buy private insurance policies using the federal Medicaid expansion money. Other red states, finding this tack more politically palatable, are exploring Arkansas’ approach. Tennessee Gov. Bill Haslam, for example, said he may submit a similar proposal to federal health officials.

Georgia, meanwhile, remains firmly opposed to expansion. But with November’s gubernatorial election less than two weeks away, the future of Medicaid expansion in the Peach State may yet be in play. At stake: access to health care for more than 600,000 low-income Georgians, $30 billion in federal funding and an estimated 70,000 new jobs.

“It seems like there’s quite a bit of momentum across the nation for states looking at different approaches to Medicaid expansion,” said Cindy Zeldin, head of Georgians for a Healthy Future, a nonprofit consumer group. “There’s a lot we can learn from Arkansas.”

A key element of the Affordable Care Act, Medicaid expansion was supposed to extend health care coverage to 17 million low-income Americans with incomes up to 138 percent of the federal poverty level, or about $27,300 for a family of three. But the U.S. Supreme Court ruled in 2012 that the federal government couldn’t force states to grow the program.

So far, 27 states and the District of Columbia have chosen to expand, and that number is poised to grow. Pennsylvania, Michigan and Iowa joined Arkansas in getting special approval from the Obama administration to experiment with alternatives to traditional Medicaid, such as requiring recipients to pay modest premiums and copays, maintain a health savings-type of account and participate in wellness programs.

Indiana is waiting for approval on its own variation on expansion. Two other red states, Utah and Wyoming, have also reportedly been in talks with the feds about expansion. More could follow.

When Medicaid first launched in 1965, it took some states years to get on board — a scenario that’s likely to play out again with expansion, said MaryBeth Musumeci, a health policy expert with the nonprofit Kaiser Family Foundation.

“(Expansion is) going to continue to be discussed as state legislative sessions start up again,” she said.

‘Put politics aside’

Georgia Gov. Nathan Deal and his supporters have remained steadfast in their rejection of expansion, saying the state simply can’t afford to grow an already overburdened and broken program. Deal’s office has estimated that doing so would cost the state $2.5 billion over a decade.

Medicaid provides health care coverage to about 1.8 million low-income Georgians, mostly children, pregnant women, the elderly and disabled. Expansion would add an estimated 600,000 people to the rolls, most of them adults without kids.

The program has already grown significantly in the number of people it serves, even though Georgia didn’t expand, Deal said in a debate with Democratic challenger Jason Carter earlier this month. He said Georgia spent $351 million this year to adjust to the new law, and that the cost would expand even more if Carter were governor.

“We had a good idea that would happen. And it did happen. And it’s costing us a lot of money,” he said. “I haven’t heard Sen. Carter explain to me where he’s going to get that new $2.5 billion.”

Expansion supporters, however, say the true cost of expansion to the state would be closer to $350 million over 10 years after factoring in new sales, income and other tax revenue — a drop in the bucket compared to the roughly $30 billion in additional federal funds it would bring. They also argue expansion is a moral imperative in a state where nearly one in five people doesn’t have insurance.

“There will be more acceptance and understanding that you don’t have to embrace the whole law to embrace parts of it that are sort of without question a good deal for the state,” said Tim Sweeney, a health policy analyst with the Georgia Budget & Policy Institute, a left-leaning think tank.

Georgia is being left behind by both red and blue states that are engaging in the debate, Carter said in a recent interview with The Atlanta Journal-Constitution.

“When people are looking for answers, they tend to find them – if you can put politics aside and look out (for) what’s best for your state, your residents and your economy,” he said. “This governor is not.”

The Arkansas Model

Health care providers, insurance executives and lawmakers from around the country are watching closely as the Arkansas approach unfolds. The state’s three-year waiver enables it to use Medicaid dollars to buy private insurance for the poor on its insurance exchange.

The idea behind the so-called “private option” is that even though commercial insurance is more expensive than Medicaid, the private sector is more innovative, efficient and more effective in treating patients, said Bill Custer, a health insurance expert at Georgia State University. Requiring Medicaid recipients to also share in some of the costs makes the idea of a private option more politically tolerable, Custer said.

The Medical Association of Georgia, a physician advocacy group with nearly 7,500 members, has advocated in favor of adopting Arkansas’s model.

Carter, too, has favored exploring the idea, enabling him to tap into Democratic angst over Deal’s rejection of expansion and pitch it as a way for Georgia to keep more tax dollars. Voters should be outraged, he says, that Georgia turns away roughly $9 million in health care dollars every day.

Deal said in an interview he isn’t worried about Georgia falling behind states opting to expand.

“Expanding an entitlement program is not going to solve the problem — either short term or long term,” Deal said.

‘Carrots and sticks’

Medicaid expansion is still unlikely if Republicans remain in control.

In April, Deal signed a new law that gives the final say over expansion to the Republican-controlled Legislature. Carter, a state senator, said he’s confident he could work with lawmakers to hash out a “creative solution.”

Whatever that solution is, it will face a steep challenge. Some GOP lawmakers say there’s little chance of any sort of expansion. But House Speaker Pro Tem Jan Jones, R-Milton, said recently that Carter’s plan isn’t necessarily moot.

“Jason would have numerous carrots and sticks at his disposal as governor because Georgia has a strong-governor structure as established in the state Constitution,” she said, adding: “Although I would not support such a costly proposal, who knows how a future Legislature would vote any given year?”

State Sen. Chuck Hufstetler, R-Rome, is among the few elected Republicans who has been supportive of a Medicaid expansion. He sounded more optimistic about the possibility of an expansion, no matter who wins.

“While I was against the ACA, I don’t want us to subsidize other states while many of our hospitals are struggling,” he said. “Now that the Legislature has taken on the responsibility for the issue, I believe the Senate will have hearings in January and look at the successes and failures in other states.”