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Closing Obamacare’s biggest hole poses a dilemma for Democrats

Eliminating the Medicaid loophole would fulfill President Joe Biden’s promise to extend coverage to the 2.2 million low-income adults in the 12 states where Republican officials opposed the program for nearly a decade. It would also provide a campaign achievement for Democratic lawmakers from those holdout states – like Raphael Warnock of Georgia, who is driving leading efforts to close the Medicaid gap in the Senate, taking control of both chambers in the midterm elections and Gaining health care over the next year remains a major issue for voters.

The costly effort competes with other democratic health priorities competing for a position in infrastructure law, including expanding Medicare’s benefits and increasing funding for people who purchase coverage in the ACA’s health insurance markets.

The debate over how best to spend limited funds on health care could force Democrats to decide whether to use their control of Washington to shore up the ACA or make a game for swing voters, by covering Medicare through dental, visual and hearing aids. Closing the Medicaid coverage gap is high among Democratic supporters, although Independents and Republicans said in a recent survey by the Kaiser Family Foundation that expanding Medicare benefits is a higher priority.

“I am very aware that poor people are the first to be squeezed out of budget problems,” said Lloyd Doggett, Texas MP, whose home state has the highest uninsured rate in the country. “I’m really pushing to say, at least do something for people who have been left out for more than a decade and have nothing to show for the Affordable Care Act. But it’s a challenging sale. “

Nonetheless, the momentum to fill the coverage gap has increased in recent weeks after key Democratic leaders embraced the effort. Congressional staff are still grappling with sensitive policy issues of how coverage can be extended to poor adults in the Medicaid expansion holdout states, but a clear preferred policy has not emerged given concerns about possible downside. Some approaches could take years, cost more than executives want to spend, or inadvertently penalize states that have already expanded Medicaid.

Proponents and Democratic lawmakers from the Medicaid enlargement states say this month marks the first critical deadline for the effort as Congressional budget drafters seek to set the parameters for infrastructure legislation that the party can lead through a reconciliation without Republican votes. While this budget decision doesn’t provide the details of which health policy will make the final cut, it could be a first indication of whether lawmakers are working with enough money to fill a Medicaid loophole.

The House of Representatives largely leads policy-making efforts, sources said. Options considered include:

– Providing free private coverage for low-income adults through Obamacare’s insurance marketplaces. Financial support to the marketplaces has been cut off from people earning below the poverty line, about $ 13,000 for an individual, because the writers of Obamacare expected it to be covered by Medicaid’s expansion. However, a 2012 Supreme Court ruling made the expansion optional for the states, creating the coverage gap that the Democrats are trying to fill.

– Instruct the Department of Health and Human Services to establish a new Medicaid-like program for people who would otherwise be covered by Medicaid’s expansion into the Holdout States. Warnock, whose election helped secure control of Senate Democrats and face voters again next year, plans to enact legislation as early as next week that would support this approach and greatly increase financial incentives for bulky states to expand Medicaid , according to a received bill from POLITIK.

– A hybrid model that a senior Democratic adviser said could address concerns about either approach. People could quickly get free coverage in the marketplaces until federal officials can create a new program that is likely to offer better benefits.

A White House spokesman did not comment on whether Biden is pushing lawmakers to address expanding Medicaid in the human infrastructure package, which is expected to include investments in childcare, education and tackling climate change. The spokesman referred POLITICO to a new tweet by domestic affairs chief Susan Rice, who said Biden was “ready to work with Congress this year to close the funding gap.”

Biden’s budget called for the creation of a state health insurance option to cover people in the Medicaid expansion gap, but the White House has not publicly considered the approaches Congress is considering. Policy makers see complications with every idea.

Relying on Obamacare markets, for example, could give the new entrants tighter benefits than they would get from Medicaid. It could also require the government to provide costly subsidies to private insurers to cover out-of-pocket healthcare costs that Medicaid would normally cover. However, creating a new federal program would take time.

Those drafting the legislation are trying to make sure they aren’t inadvertently rewarding states that have denied enlargement or inciting enlargement states to drop coverage so that the federal government pays the entire bill.

“As you give more incentives and benefits to irresponsible states, some of the responsible states will say, ‘So do I,’ which increases the cost,” Doggett said. “How do you justify banning states from a federal Medicaid program?”

Matthew Fiedler, a USC-Brookings Schaeffer Initiative for Health Policy Fellow, whose research focuses on the Medicaid coverage gap, and other experts said they weren’t concerned about states dropping Medicaid expansion as the federal government was 90 percent the cost. Still, Medicaid experts believe that policymakers need to strike the right “carrot and stick” ratio to deter states from opting out.

Whichever approach the legislature takes, must submit to the Senate MP, who interprets whether the policy meets strict rules of reconciliation. However, lawmakers and outside experts are optimistic that any policy would survive, as changes in Obamacare markets and Medicaid’s expansion were previously driven by the accelerated budget process.

Efforts have recently received a huge boost from the powerful Congressional Black Caucus, Congressional Hispanic Caucus, and Congressional Asian Pacific American Caucus – as well as House Jim Clyburn’s Majority Whip. The groups argue that closing the coverage gap would be “one of the most important steps” in reducing gross racial inequality in the American health system.

It would also give the Red State Democrats a tangible gain for their constituents.

“By this time next year, when you run for re-election next year, you will be able to run as Medicaid expands,” Clyburn recently told lawmakers at the Alabama Statehouse. “I think we [can] get this done – I know I’ll get rid of hell to do it. “

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