HHS to Republican governors: Medicaid option 'is a good deal'

States can receive federal grants to plan for the implementation of President Obama’s healthcare law even if they’re not sure whether they want to actually implement it, the Obama administration said Friday.

Centers for Medicare ad Medicaid Services (CMS) Administrator Marilyn Tavenner responded Friday to questions posed earlier in the week by the Republican Governors Association. The RGA asked a detailed series of questions about states’ options for implementing new insurance exchanges as well as the law’s Medicaid expansion, which the Supreme Court made optional.


Tavenner said that states can accept “extra funding” to plan for exchanges and the logistics of the Medicaid expansion, even if they ultimately decide not to pursue one or both of those policies. States won’t have to pay back the money they received, she wrote.

Tavenner also said there is no deadline by which states need to make a decision about the Medicaid expansion. HHS has asked each state to decide by November whether it plans to set up an exchange. The healthcare law directs HHS to operate a federal exchange in every state that doesn’t establish its own.

“We expect that, as states study their options, they will recognize that this is a good deal,” Tavenner said in her letter. “Significant new federal funding will flow to their states. Their hospitals will get paid for what would otherwise be uncompensated care provided to uninsured patients. Their local economies will benefit and jobs will be created when their hospitals remain viable and their workers remain healthy.”

The RGA’s letter — addressed to President Obama — said the administration has not provided real flexibility on Medicaid, and the letter was laced with criticism of the fact that Congress passed the law in the first place.

“While we continue to believe the best option is to fully repeal and replace the [Patient Protection and Affordable Care Act], states now confront numerous deadlines and face major policy decisions in the wake of the Supreme Court decision,” the governors wrote. “Before making any final policy decisions, governors must carefully consider the short and long-term implications of an expanded entitlement program and the consequences of significantly increasing the size of government to manage these programs.”

Tavenner, without addressing many of the political gripes Republican governors laid out, said HHS is committed to working with states on the implementation effort and providing as much flexibility as possible.

“We hope that sates will not turn down the resources and flexibility offered in the Affordable Care Act, and will put aside old political battles to move forward with implementation,” she said. “We stand ready to help.”

— This post was updated at 5:24 p.m. Saturday, July 14, to correct an error in attribution. The letter to Republican governors came from Marilyn Tavenner.