Kasich Goes Rogue on Medicaid

AP Images/Tony Dejak

When news broke Monday that Ohio would be the 25th state to expand Medicaid, there were plenty of cheers on the left. After months of negotiations with lawmakers that repeatedly broke down, Republican Governor John Kasich, who has made the expansion a centerpiece of his agenda, decided to take a new tack. With the legislature out of session, Kasich, through his Medicaid director, requested a waiver from the federal government to expand the existing Medicaid program without the assembly’s approval. It was an unusual move. He got permission to spend the money from a small body, called the Controlling Board, composed of three lawmakers from the House and Senate, respectively, as well as a governor appointee. The board normally moves money between programs to adjust for shifts in spending throughout the year. This time, it approved $2.5 billion in federal funds to open up health care for nearly 300,000 Ohioans.

Kasich has been one of the leading Republican voices pushing for Medicaid expansion. The Affordable Care Act was written with a plan for expanding coverage to more poor adults. The federal government will cover 100 percent of the cost of the expansion for the next three years, with a guarantee that the states will never pay more than 10 percent of the cost for the program’s growth. Residents who make too much to qualify for Medicaid would get subsidies to help pay the costs of health care. But last summer, the Supreme Court ruled that Medicaid expansion was optional for states, leaving a gaping hole in the policy. Of the 25 states that have expanded Medicaid, only eight (including Ohio) have Republican governors. Several of these governors, like Arizona’s Jan Brewer and Michigan’s Rick Snyder, faced tremendous criticism from their own party. Florida’s Rick Scott and Kasich were the two most visible gubernatorial advocates of the expansion who failed to get their legislatures on board.

None of these governors are known for being moderates, and almost all have benefited from Tea Party support. Brewer passed the infamous “papers, please” law; Scott has taken the far-right conservative line on every issue from welfare to voting rights. Kasich himself advocated anti-union laws and recently signed one of the nation’s strictest abortion bans. On Medicaid expansion, they’re willing to back the moderate policy, which gives states billions in funds and expands the health-care system to scores of poor people.

The news from Ohio not only marked a major victory for moderate Republican policy; it also showcased how moderate policies are often politically savvy for GOP candidates. Kasich, who is running for re-election in what’s expected to be a tight 2014 race, will likely benefit from the maneuver; polls in the state consistently showed widespread support for Medicaid expansion. Furthermore, a number of conservative-aligned health-care businesses cheered that the significant costs for treating uncovered patients will very likely go down. Earlier this month, a survey from the Kaiser Commission on Medicaid and the Uninsured and Health Management Associations showed that those states expanding Medicaid expect expenditures to grow less than those that did not.

For now, the bigger question of whether governors should be able to bypass their legislatures to achieve a popular and broadly supported initiative is on the back burner. Most advocates, even those on the left who have not always been happy with Kasich, seemed glad to give the governor credit for finding a way to get the measure through. “I don’t think anything would have happened through the legislature,” says Wendy Patton, the fiscal project director for Ohio Policy Matters, a state-based progressive think tank that advocated for expansion. “We applaud an alternative strategy.”

But even Patton acknowledges that Kasich’s method was far from ideal. “I would personally have preferred to see a bolder strategy like the one taken by Jan Brewer,” she says, referring to the Arizona governor’s successful strategy of vetoing any bill she received until the legislature expanded Medicaid.

The Ohio expansion isn’t a sure thing yet though. A lawsuit has already been filed on behalf of six Republican House members arguing that the Controlling Board did not have the authority to approve the federal funds because the decision violated the intent of the legislature.

Immediately after the Controlling Board decision, The Wall Street Journal published a withering editorial arguing, “Governor John Kasich is so fervent a believer that he is even abusing his executive power to join the Affordable Care Act's Medicaid expansion.” A campaign to expand Medicaid through ballot initiative is continuing, in case the current expansion gets knocked down by the courts.

Kasich’s decision does indeed seem at direct odds with the legislature’s actions. The budget he received from the legislature included a provision that Medicaid would not be expanded to include the new groups. Kasich had to use his line-item veto to knock it out. For the most part, there seems to be some genuine question about the Controlling Board’s authority. Several law professors, including one former solicitor general for Ohio, declined to comment on the case saying they just weren’t sure what to make of it. According to the history of the board on its own website, “the Board has been viewed as a convenient way to exercise legislative oversight of executive actions.”

This time, of course, the board went the other way, helping the governor go around a recalcitrant legislature. Composed of four Republican legislators and two Democrats, the board passed the measure 5-2. The provision could not have passed without Republican support.

Since the Monday vote, the Kasich administration has been on the defensive about its maneuver. The Ohio Office of Health Transformation, created by Kasich in 2011 to work on reforming health care, now includes a full webpage dedicated to information on the expansion, including a link to a PDF file entitled “Ohio’s authority to extend Medicaid coverage” which offers a bullet-pointed account of why the governor was within his rights to go through the Controlling Board. The state requested the expansion using a waiver called a “State Plan Amendment”, and Ohio law gives the Medicaid director the ability to seek such an amendment without an act of the legislature.

“It’s in one of those gray areas,” says state Senator Bill Coley, one of the two Republicans on the Controlling Board who voted against the provision. Coley shares many of the same concerns as his Republican colleagues who opposed the measure—that it might become prohibitively expensive, that there are better ways to reform the system.

Coley hopes the lawsuit succeeds and expansion gets struck down. But the moderate Republican approach is having an effect in Ohio, a sharp contrast to the environment in Washington these days, where the GOP is still debating new ways to kill Obamacare, Coley is philosophical about the situation. “If the lawsuit fails and this becomes the law I’m going to spend the next seven and a half years in the legislature proving myself wrong and working hard to make sure this plan works for all of Ohio,” says Coley.  “My concerns are still there but that doesn’t mean I’m not going to work doubly hard to make this a success for all Ohioans.”

Kasich’s method for expanding Medicaid was the only way to get the policy through the door—and in having done so, he may wind up converting those within his own party.

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