GOP governors reluctant to pay political price for rejecting Medicaid expansion

Two million more low income Texans would be covered by the Medicaid expansion prescribed by the Affordable Care Act, but Texas is refusing to participate joining Wisconsin, Florida and Louisiana. Anna Werner reports.

(CBS News) Now that they have a choice, thanks to the Supreme Court, many governors are saying no or delaying a decision when it comes to expanding Medicaid in their states. And while there is broad public support for the program, chances are they won't suffer political consequences as a result. In fact, it's the safest path for conservative governors under pressure from the right to reject new health law.

Twenty-five conservative leaders have written a letter urging all 50 governors to decline the Medicaid expansion and to not establish state-level health insurance markets or exchanges under the Affordable Care Act. The signatories of the letter include Al Cardenas, chairman of the American Conservative Union, Amy Kremer, chairman of the Tea Party Express, and conservative activist Phyllis Schafly. It is aimed particularly at Republican governors who have not committed to a position on the expansion, including New Jersey Gov. Chris Christie and Virginia Gov. Bob McDonnell.

Under the 2010 law, the federal government would foot the bill for extending coverage to an additional 17 million low-income people nationally through 2016, ratcheting its share down to 90 percent by the end of the decade. But with state finances already crunched, many governors are worried that absorbing even 10 percent of the cost will bust their budgets - and they wonder if the federal government, its own fiscal picture increasingly murky, will ultimately renege on its obligations and leave states in the lurch.

The Supreme Court unexpectedly gave governors an escape valve on the Medicaid expansion last month when it ruled they couldn't lose money for their existing Medicaid programs if they opted out of the expansion. A few of the highest-profile GOP executives, including Texas Gov. Rick Perry, Louisiana Gov. Bobby Jindal and Florida Gov. Rick Scott, have already come out against expansion with guns blazing, while a few Democrats have already committed to putting it in place. Most governors say they are in the midst of weighing the costs and benefits.

Governors who don't participate can tell voters that they were simply being responsible stewards of taxpayer dollars, and there are better ways to provide coverage than a federal program many conservatives oppose. "It is politically powerful to be fiscally responsible in this era," said Douglas Holtz-Eakin, former domestic policy adviser to GOP presidential nominee John McCain in 2008. "'We can't afford this' has more political potency than it has in the past."

The other side of the argument is the millions of needy people who will lose out on insurance they might have had at a seemingly meager cost to states, and the hospitals who now must care for them whether they can pay or not. In Texas, according to the Urban Institute, 2.5 million uninsured people would be eligible for coverage under the expansion. In Florida, it's 1.7 million.

"It's easy to say right now, no, no, no, Obamacare is an abomination and Medicaid is dysfunctional," said John Holahan, the director of the health policy center at the nonpartisan Urban Institute. "Long-term, it's an awful lot of money to give up and the hospitals need it and the managed health care plans need it." He added: "I think eventually they will figure out a way to say yes."

Political dynamics and polling suggest the politics of the Medicaid expansion will be a wash. The program is popular -- three-quarters of respondents in a CNN poll last year said they opposed reducing the deficit by cutting Medicaid. But a CNN poll last month found the public split on the Supreme Court move on Medicaid; 49 percent agreed with it, 44 percent disagreed and 6 percent had no opinion. In addition, studies have shown that low-income people turn out much less heavily in elections than people with higher incomes.

Colorado Gov. John Hickenlooper, a Democrat who attended the National Governors Association meeting last weekend in Williamsburg, Va., said his state is all for expanded Medicaid coverage, but it's also essential to find ways to curb costs and maximize outcomes. "This is from having been raised by a Depression-era mother, whether it's federal dollars or my dollars I don't want to waste dollars," he said. "If we just go out and cover (people) without controlling costs, I don't think we're doing the right thing."

Some GOP governors at the NGA meeting said they are hoping the whole law goes away with the election of Republican Mitt Romney, who has vowed to repeal it and give states waivers on day one. That could mean wholesale changes and no choice necessary on whether to participate in the Medicaid expansion.

"They entice you by saying no cost for the first three years and then it drops 10 percent...that's assuming that the federal government can afford it. We're already $3 trillion in debt now. Where's all this money going to be coming from?" said Utah Gov. Gary Herbert, a Republican. "I'm going to take a very thoughtful methodical wait-and-see attitude on the Medicaid expansion and I'm going to worry from now until November."

Fellow Republican Gov. Scott Walker of Wisconsin too said it would be foolish to make a commitment before then. "Our focus is on electing a president who's going to put the power back in the hands of the states and of the people, ultimately," he said. "We're not going to make any decisions on that until after the election."

Robert Blendon, a Harvard professor of health policy and political analysis, said the political consequences for governors, especially for those who have already committed to opting out or are leaning in that direction, hinge on what happens at the ballot box this fall.

"The critical point is if the president wins and holds one house, it's going to be clear to every political figure that this is going to be implemented," he said. "If Romney wins, it's not at all clear that this bill is going to be implemented, so you as a governor are not going to be in a terrible position. You say I knew all along this wasn't going to happen."

The real test will be in 2014, Blendon said, when many of the sitting governors are up for re-election and the health care law is actually in effect - or not.

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    Naureen Khan covers the 2012 presidential campaign for CBS News and National Journal.

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