States opting out of Medicaid expansion could leave many uninsured

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Updated at 2:05 p.m. ET

(CBS News) Now that the Supreme Court has given the states more flexibility concerning what parts of the Affordable Care Act they must implement, more Republican governors are confirming they plan to "opt out" of a plan intended to give millions of poor Americans health coverage.

Florida Gov. Rick Scott on Sunday announced his state is opting out of an expansion of Medicaid, a joint federal-state health care program, now that the court will allow it to do so. Florida is also choosing not to build an "exchange," the state-based health insurance marketplace every state is expected to establish by 2014.

"Floridians are interested in jobs and economic growth, a quality education for their children, and keeping the cost of living low," Scott said in a statement. "Neither of these major provisions in ObamaCare will achieve those goals, and since Florida is legally allowed to opt out, that's the right decision for our citizens."

The office of South Carolina Gov. Nikki Haley told the Charleston Post and Courier that the Palmetto State is similarly opting out of both programs. And over the weekend, Govs. Scott Walker of Wisconsin and Bobby Jindal of Louisiana also said they're opting out.

Under the Affordable Care Act, states always had the choice to "opt out" of building an exchange. If they refuse to set up the health care marketplace, the Department of Health and Human Services will do it for them.

The Supreme Court-mandated option to "opt out" of the Medicaid expansion, however, could potentially leave millions Americans uninsured. Currently, Medicaid is a joint federal-state program that provides health care to certain poor Americans, such as children and the elderly. In 2014, President Obama's health care law would open up Medicaid to anyone with an income under 138 percent of the federal poverty line -- so long as their states have agreed to the new plan.

The expansion of Medicaid, according to the Congressional Budget Office, was expected to make available health care coverage to 16 million new people. That accounts for half of the 31 million expected to get coverage from the Affordable Care Act.

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Originally, states were required to implement this expansion or risk losing all of the federal funding they receive for Medicaid -- an option no state could afford. The Supreme Court ruled last week that the federal government couldn't force this significant change to an already-existing program on the states.

Some health care experts said it was unthinkable that state leaders would really opt out, since the vast majority of the cost is covered by the federal government -- taxes their citizens will pay, regardless of whether the state opts in or out. For the first two years, the federal government pays for 100 percent of the expansion. Starting in 2017, the states start chipping in, but they will never contribute more than 10 percent of the cost.

"A governor would be walking away from millions, in some cases billions of federal dollars," Tim Jost, a consumer advocate and professor of health law at Washington and Lee University, told CBSNews.com.

Furthermore, they'd be leaving a significant portion of their citizens without health care. Florida, according to the nonpartisan Kaiser Family Foundation, has the second-highest rate of uninsured Americans at 21 percent. The expansion of Medicaid in the state would have covered 951,622 people according to Kaiser.

Jost said he's not surprised that governors like Scott and Haley are saying they will opt out of the Medicaid expansion. However, he said, "I will be surprised if they do it."

The Health and Human Services Department is making the same prediction. An official from the department pointed out to CBSNews.com that history suggests the states will get on board: All but two states implemented Medicaid and the Children's Health Insurance Program (CHIP) within five years of enactment -- despite their less generous financial support than this new Medicaid eligibility expansion.

"Ultimately, we don't believe States will turn down a good deal to cover more of their residents and pay their hospitals and doctors for their care," the official said.

If a state does choose to opt out, its citizens with incomes above 100 percent of the poverty line will be eligible for tax credits from the federal government to get insurance, but people below that threshold will remain the state's responsibility.

In his release, Scott said Florida can't afford the expansion, which he says would eventually cost the state $1.9 billion. Furthermore, he notes the state gives assistance for families with incomes up to 133 percent of the poverty line and that the Florida KidCare program insures children.

In South Carolina, the Medicaid expansion was expected to cover 344,109 people, according to Kaiser. South Carolina Medicaid Director Tony Keck told the Post and Courier that, since nothing really changes until 2014, "We have time to talk about it."

However, he said Haley's administration wants "more people covered, but we want it paid for under a model that works, not the status quo."

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