Branstad Declines to Expand Medicaid, Unveils Healthy Iowa Plan

Branstad Declines to Expand Medicaid, Unveils Healthy Iowa Plan
March 20, 2013

Loren Heal

Loren Heal (loren.heal@gmail.com) is a research programmer at the University of Illinois at Urbana-... (read full bio)

Iowa Gov. Terry Branstad has declined to expand his state’s Medicaid program, saying he doesn’t trust the federal government to follow through on its promises to fund the program in the future, and that he believes Iowans will have better health outcomes with an alternative plan.

“The Healthy Iowa Plan is a modern health plan that will pay providers to care for their whole population and based on the quality of care they deliver, while rewarding positive health outcomes,” said Branstad. “Under our Healthy Iowa Plan, more Iowans will be served by the private insurance market, with access to affordable plans available through health benefits exchanges.”

Branstad said the new Healthy Iowa Plan will use Accountable Care Organizations, similar to HMOs, to provide care to approximately 89,000 non-disabled Iowa adults with incomes up to 100 percent of the Federal Poverty Level (FPL).

Rejecting Medicaid Expansion

Don Racheter, chief operating officer of the Public Interest Institute, said the governor rejected the Medicaid expansion in part because “he believes that it’s going to cost Iowa taxpayers money in the long run.”

“[Branstad] has two principal concerns. One is that when you expand the program, the feds don’t cover everybody. They only cover newly eligibles. But if somebody was eligible previously and didn’t apply, but now decides to apply, the state is stuck with higher costs. And secondly, at some point the feds probably won’t come through with what they’ve promised, because they don’t have any money,” Racheter said.

Distrust of Feds

Iowa Department of Public Health Director Marianette Miller-Meeks notes the “Maintenance of Effort” requirement in Obama’s law has prevented Iowa and other states from being able to institute reforms to their Medicaid program.

“Iowa's Medicaid program was expanded in 2008. When the ACA was enacted and put in place, the law forced us to maintain the program at the level it was,” Miller-Meeks said. “Medicaid and education are the big cost drivers for our state, as for most states.”

Miller-Meeks says Branstad’s approach is designed to address rising costs in the program.

“The governor is concerned that with the size of the federal deficit and the amount of the federal debt, and our experience with Medicaid eligibility changes in the past, the cost to the state of Iowa could be quite significant,” Miller-Meeks said. “The federal government has changed the rules before. So while the federal government is picking up most of the cost of expansion for first few years, we cannot trust that situation would continue after we have committed to expansion of the program.”

Loren Heal

Loren Heal (loren.heal@gmail.com) is a research programmer at the University of Illinois at Urbana-... (read full bio)