Sebelius

HHS Secretary Kathleen Sebelius said yesterday that the blended FMAP (matching rate) proposal was off the table

The Supreme Court’s decision to make the Medicaid expansion optional may have indirectly protected the program from cuts during the current fiscal cliff negotiations.

Last year the Obama administration supported the idea of reducing federal Medicaid spending by using a “blended rates” formula, but now the idea is off the table. The HHS firmly came out against the idea Monday in a Frequently Asked Question document about the Affordable Care Act. From the HHS:

27. Do you still support the Medicaid blended FMAP (matching rate) proposal in your budget?
A. No. We continue to seek efficiencies and identify opportunities to reduce waste, fraud and abuse in Medicaid, and we want to work with Congress, states, and stakeholders to achieve those goals while expanding access to affordable health care. The Supreme Court decision has made the higher matching rates available in the Affordable Care Act for the new groups covered even more important to incentivize states to expand Medicaid coverage. The Administration is focused on implementing the Affordable Care Act and providing assistance to states in their efforts to expand Medicaid coverage to these new groups.

The big difference between now and last year is the Supreme Court ruling. With several states threatening to not expand Medicaid, the Obama administration understands they have a real political fight on their hands if they want to see the President’s signature law implemented. They can no longer cut Medicaid funding and automatically assume the states will just take up the slack.

The Obama administration must keep the Medicaid expansion as good a deal as possible if they want to encourage states to take part in it. That makes it easier for Democrats to put pressure on the currently reluctant Republicans governors.

As long as Medicaid expansion is a political football it appears to be off the deficit cutting table.