Trump Spurns Medicaid Proposal After Furious White House Debate

WASHINGTON — Hoping to head off a full expansion of Medicaid under the Affordable Care Act, some senior officials in the Trump administration and Republican governors have been pushing hard for a smaller expansion to satisfy a growing political demand in their states.

But President Donald Trump decided Friday to shut down the debate until after the midterm elections, administration officials said.

The debate has divided the Trump administration between top officials at the Department of Health and Human Services and hard-liners, mainly at the White House, more determined to snuff out the Affordable Care Act. And it gained steam as states press forward with Medicaid expansions that could leave more people with health coverage under the Affordable Care Act next year than when Trump took office.

This year, Virginia expanded Medicaid through the Affordable Care Act. Maine voters approved an expansion that is likely to begin after the current governor, Paul R. LePage, leaves office next year. And ballot measures in Utah, Idaho and Nebraska could expand Medicaid in deep red states.

Hoping to defuse that political pressure, Gov. Gary R. Herbert of Utah, a Republican, signed a bill in March that would give more than 70,000 people access to health insurance by partially expanding Medicaid to cover adults making up to 100 percent of the poverty level — if the federal government granted its permission, in the form of a waiver.

If not, opinion polls suggest that a majority of state residents will support a competing measure on the ballot in November that would fully expand Medicaid and could cover twice as many people.

“There is significant risk that Utah will vote to expand fully with a November ballot initiative,” warned a confidential memorandum written to help inform the White House decision.

“HHS believes allowing partial expansion would result in significant savings over the 10-year budget window compared to full Medicaid expansion by all,” the memo said.

More than 30 states have fully expanded Medicaid, providing coverage to millions of people with incomes up to 138 percent of the poverty level — up to about $16,750 a year for an individual.

Several states would like to expand Medicaid in a more limited way, capping eligibility at the poverty level, or $12,140 for an individual. In states that have not expanded Medicaid, eligibility varies. Parents with incomes over half the poverty level are often ineligible, and most adults without dependent children are ineligible, no matter how poor they are.

The push touched off intense debate inside the Trump administration.

Supporting the option were Alex M. Azar II, secretary of Health and Human Services; Seema Verma, administrator of the Centers for Medicare and Medicaid Services; and Andrew Bremberg, director of the Domestic Policy Council at the White House.

On the other side were Mick Mulvaney, director of the White House Office of Management and Budget; Treasury Secretary Steven Mnuchin; Kevin Hassett, chairman of the president’s Council of Economic Advisers; and Larry Kudlow, director of the National Economic Council.

Azar and Verma had been discussing the idea with the White House for several months, but were unable to convince Mulvaney and his allies, who shot down the proposal in two meetings at the end of last week, with the president’s blessing, administration officials said.

Paradoxically, Trump reached the same conclusion as President Barack Obama for a completely different reason. Obama refused to allow partial expansion of Medicaid because he wanted states to go for the full expansion envisioned in the Affordable Care Act.

Trump opposed any expansion of “Obamacare,” even a partial one.

Caitlin Oakley, a spokeswoman for the Department of Health and Human Services, said Monday: “We do not comment on internal deliberations or the particulars of any waiver requests. HHS has been working on waivers to help states have more flexibility and provide patients access to affordable health care.”

Under the proposal, the Trump administration would have offered more waivers to states so they could devise and run their own health programs with federal money that would otherwise be available under the Affordable Care Act.

Funds provided in this way “could function as a block grant to states,” the memo says. It likens the payments to a block grant proposed last year by Sens. Lindsey Graham of South Carolina and Bill Cassidy of Louisiana, both Republicans. Trump supported the Graham-Cassidy plan, in keeping with his promise to give states more control over health policy.

Democrats across the country see health care as a winning political issue and accuse the Trump administration of trying to tear down the Affordable Care Act without offering much of a replacement. Trump takes credit for saving Americans from “the disaster of Obamacare.”

If the federal government allowed states to partially expand Medicaid with enhanced federal funding, it could narrow disparities among states in the proportion of people who are uninsured. Some states that have yet to expand Medicaid would cover more of their residents. Equally important, some states that have fully expanded Medicaid could cut back coverage.

Arkansas, for example, expanded Medicaid to 138 percent of the poverty level in 2014. But it has requested federal permission to roll back coverage to 100 percent of the poverty level.

In March, the Trump administration approved Arkansas’ request for a Medicaid work requirement, but deferred a decision on the state’s request to scale back its Medicaid expansion.

Massachusetts, concerned about the cost of its expanded Medicaid program, also asked for permission to reduce eligibility for certain adults to 100 percent of the poverty level, saying it would be better for them to obtain subsidized commercial insurance. The Trump administration surveyed members of Congress and governors to see how they would react to a policy change permitting partial expansion of Medicaid.

Republican governors were generally supportive, but they said the change must not be seen as an expansion of the Affordable Care Act and should not be announced before the midterm elections.

Congressional Republican leaders, while supportive of the option, also cautioned against any high-profile public announcement before the midterm elections.

Administration officials predicted that some conservative members of Congress would oppose the policy change if they saw it as permitting an expansion of the 2010 health law.

The Supreme Court ruled in 2012 that the expansion of Medicaid was an option for states, not a requirement. In states that have not expanded Medicaid, many uninsured poor adults fall into a coverage gap: They make too much to qualify for Medicaid, but not enough to qualify for subsidies in the public insurance marketplace.

Matt D. Salo, executive director of the National Association of Medicaid Directors, which represents state officials, said many people could benefit from a partial expansion.

“This should be a no-brainer — a sensible, pragmatic, bipartisan way to help fill the coverage gap,” Salo said. If one state wins federal approval for a partial expansion, he said, “you’d see a lot more states” show interest.