The Buckeye Institute Assesses Consequences of Proposed Wyoming Medicaid Expansion in New Policy Brief

Jan 31, 2022

Columbus, OH – On Monday, The Buckeye Institute released its latest policy brief, Federal Rates are Temporary, But Expansion is Forever: The Significant Financial Risks for States Considering Medicaid Expansion, which outlines the permanent consequences for Wyoming should it opt into Medicaid expansion and later seek to opt-out.

“Advocates of an opt-in/opt-out strategy for Medicaid expansion in Wyoming naïvely assume that Medicaid expansion can be explored risk-free when a clear reading of NFIB v. Sebelius states otherwise,” said Robert Alt, president and chief executive officer of The Buckeye Institute and co-author of Federal Rates are Temporary, But Expansion is Forever. “Instead, courts would most likely look to the plain terms of the Social Security Act and authorize Health and Human Services to withhold all Medicaid funds for failure to adhere to the terms of expanded Medicaid. Obamacare’s Medicaid expansion is the Hotel California: ‘You can check out anytime you like, but you can never leave.’”

In the brief, Alt and co-author Nathaniel Stewart—a visiting legal fellow at The Buckeye Institute—analyze the U.S. Supreme Court’s ruling in National Federation of Independent Business v. Sebelius. The authors outline the impact on states that expand Medicaid only to later seek to opt out of that expansion. In their analysis, Alt and Stewart state that the NFIB decision “reaffirmed the discretion of the secretary of U.S. Department of Health and Human Services to withhold funding from states that do not comply with the requirements of the program—including from those states that subsequently and voluntarily choose to opt into expanded eligibility under the Patient Protection and Affordable Care Act.”

As Alt and Stewart note, the question is “whether a state, after entering the expansion, may revert to its pre-expansion status without jeopardizing all of its Medicaid funds.” The authors clearly demonstrate that states cannot.

“Section 1396c of the Social Security Act gives the secretary of the U.S. Department of Health and Human Services the discretion to withhold the first dollar of funding for a state’s failure to comply with the program’s requirements. Given that Medicaid accounts for more than 20 percent of an average state’s budget, and accounts for 13 percent of Wyoming’s annual budget, the decision to withhold all federal Medicaid dollars would be crippling for Wyoming, and would likely compel it to reconsider an attempt to opt-out of the expansion.”

Alt and Stewart concluded that “[a]ny decision to enter the Medicaid expansion today should be made with eyes wide open, confronting the reality that under the NFIB decision, the federal government has the authority to both increase the state’s share of the cost, and to withhold all federal Medicaid dollars if a state attempts to opt out of expansion.”

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