In Medicaid, a New Health-Care Fight -- S.C. worries that employers who already provide health benefits to low-wage workers could use any Medicaid expansion to drop insurance coverage and dump responsibility for their workers on the government.

 

From The Wall Street Journal:

Employers in several states are bracing for higher health-care costs as some governors, worried about the impact on state budgets from the federal overhaul, resist a planned Medicaid expansion.

Under the new law, lower-paid workers at companies such as the Nashville, Tenn.-based chain of Captain D's seafood restaurants could qualify for the national expansion of Medicaid set to begin in 2014. Having those employees on Medicaid, the health program for low-income people that is funded with federal and state dollars, would mean the workers get health insurance while the company pays nothing.

But the Supreme Court ruling on the health law last summer let states opt out of the law's Medicaid expansion. Captain D's operates mostly in Southern states that have signaled they will opt out, arguing that it is unfair to expose their already-strapped budgets to the federal government's overhaul of health care.

That means the company will have to spend thousands of dollars to insure each full-time worker who can't enroll in the program, or pay fines starting at $2,000 a person.

"If the state doesn't expand the Medicaid coverage then by default that population becomes the responsibility of their employer," said Michael Folks, Captain D's general counsel and a senior vice president.

That has paved the way for tough choices for states. If states don't expand the Medicaid programs, the cost of covering millions of uninsured full-time workers will fall to employers. But state lawmakers also worry their budgets can't absorb the costs of participating over the long term.

[I]n South Carolina, Republican Gov. Nikki Haley ruled out the expansion. Her health and human services director, Tony Keck, said he was worried employers who already provide health benefits to low-wage workers could use any Medicaid expansion to drop insurance coverage and dump responsibility for their workers on the government.

The health law included provisions for all states to extend their Medicaid programs to people whose income is as much as one-third greater than the federal poverty level, which would be up to $14,856 for a single person. That would have added 16 million Americans to the insurance program for the poor, including millions of full-time workers who make minimum wage or slightly higher, as part of the law's goal of covering most of the country's uninsured.

The federal government will pay the full costs of covering the new Medicaid enrollees from 2014 through 2016 and at least 90% in each subsequent year. Lawmakers opposed to the expansion say states can't afford the additional administrative expenses, let alone their long-term share of coverage costs. They also fear the federal government could scale back the amount it pays in the future.