By Nic Horton, Jonathan Ingram and Josh Archambault— Mr. Horton is a Policy Impact Specialist, Mr. Ingram is Research Director, and Mr. Archambault a Senior Fellow at the Foundation for Government Accountability.
Over the last few weeks, various news reports have fueled speculation that Governor Mike Pence (R-Indiana) may be preparing to walk away from his Obamacare Medicaid expansion plan. This speculation was reignited over the weekend when Pence announced he would reject increased federal funding for the state’s pre-K program, citing the federal government’s “intrusion” as a key reason for his decision. Pence is demonstrating a prudent approach to pre-K funding, and this approach may very well tell us something about his next move on Obamacare expansion.
Negotiations over Indiana’s Obamacare expansion waiver between Pence and Obama have reportedly stalled. And Pence has made it clear to the Administration that he has no intention of relenting on any of his requests. As Pence and the Obama administration both hold their ground, refusing to blink in this game of Obamacare chicken, there’s really only one option left: Pence will have to walk away – and that may be exactly what he wants and plans to do.
Pence’s Has Already Watered Down His Obamacare Expansion Plan
Pence’s Obamacare expansion plan was bad policy from the start. It would create a new entitlement for able-bodied adults, discourage work, gut key provisions from the existing Healthy Indiana Plan and prioritize funding for able-bodied adults over the truly needy. Worse yet, Indiana’s own actuaries estimate that the Pence plan will cost $365 million more next year than traditional Medicaid expansion.
Pence has already caved to federal pressure and watered down the original Healthy Indiana Plan. He offered to completely eliminate HIP’s required contributions for more than three-quarters of the expansion population and greatly reduce contributions for the remainder. He offered to replace HIP’s limited benefit package with a robust Obamacare plan that is more generous than what even state employees receive. He offered to eliminate the provisions aimed at keeping individuals with private insurance from switching to taxpayer-funded Medicaid.
But even with all these concessions, the Obama administration has tried to water the proposal down further. This should come as no surprise: we predicted this exact scenario months ago, given how past negotiations with the federal government have gone.
Obamacare Negotiations Have Stalled; Gov. Pence “Increasingly Frustrated With The Lack of Flexibility”
Earlier this year, Pence promised to walk away from his Obamacare expansion plan if the federal government failed to grant all of his requests for “flexibility.” Hoping Gov. Pence would keep this promise, we outlined five key provisions to watch during the course of negotiations. Now it seems that those very provisions have become sticking points for the Obama administration.
Although those provisions serve mostly as window dressing for Pence’s Obamacare expansion plan, officials in the Obama administration claim that they “undermines what Medicaid represents,” which has caused negotiations to stall.
To his credit, Gov. Pence has pushed back on the federal government’s unbending stance, demanding these provisions be preserved. After a short meeting with President Obama, Pence reiterated that he would not agree to any Obamacare expansion that “removes or waters down the core principles” of his plan. It’s no wonder that he has grown “increasingly frustrated with the lack of flexibility.”
Pence’s Pivoting on Pre-K and Food Stamps Could Foreshadow His Next Obamacare Move
While nothing is certain, Gov. Pence’s recent actions on pre-K funding and food stamps could provide insight into his next steps on Obamacare expansion. Last week, Pence made a last-minute decision to reject $80 million in extra federal pre-K funding.
But that decision could have impacts far beyond a modest $80 million grant from the federal grant. Pence’s rhetoric rejecting pre-K funding highlights a philosophy that applies equally to Obamacare’s Medicaid expansion, laying a foundation for walking away.
It is important not to allow the lure of federal grant dollars to define our state’s mission and programs. More federal dollars do not necessarily equal success, especially when those dollars come with requirements and conditions that will not help — and may even hinder — running a successful program of our own making. – Gov. Mike Pence
Pence’s frustration in negotiations with the Obama administration are clearly starting to build. Although these comments were made about federal pre-K grants, it’s easy to see how this same philosophy could set the stage for Pence calling it quits on his Obamacare expansion plan, which would save taxpayers roughly $3 billion per year.
Gov. Pence’s recent actions on food stamp eligibility may provide another hint that Pence is slowly coming to his senses on Obamacare. He announced earlier this week that Indiana would reject a federal waiver to allow able-bodied childless adults to continue receiving food stamps without working.
These are the same childless adults who would become eligible for Medicaid under Pence’s Obamacare plan. Although these adults have no dependent children and no disabilities keeping them from meaningful employment, few work full-time jobs and nearly half of them don’t work at all. Creating new welfare entitlements for this class of able-bodied adults is sure to discourage work even further, as researchers at Texas A&M University, Georgetown University, the University of Illinois, Emory University, the University of Colorado and the Congressional Budget Office have found.
This decision could be yet another indication that Gov. Pence is returning to the conservative fold and finally getting serious about limiting government dependency in Indiana.
The Pence Dominoes
If Gov. Pence were to walk away from his Obamacare expansion plan, it could send shockwaves across the political establishment. Such a move would no doubt benefit him politically, but the decision is much bigger than Pence himself.
Backing away from his Obamacare expansion plan could initiate a domino effect against expansion in red states across the country. Pence himself has claimed that “several” states could follow his lead on Obamacare – states where Pence had been, up to now, working to promote his plan.
In Virginia, for example, Pence spoke with Republican Speaker Bill Howell to promote his “alternative” vision for Medicaid expansion. Thankfully Howell was unconvinced and Virginia recently rejected Medicaid expansion outright during a special session.
Pence has also been active in Utah, engaging in talks with Republican Governor Gary Herbert about bringing an Obamacare expansion to his state. It’s unknown how many other states Pence has been engaged in, but it’s possible there are more.
A Pence reversal on expansion would suck the air out of any expansion momentum in these states: not only will these Republican governors lose an ally in the Obamacare expansion fight, but they’ll also lose a blanket of political cover, provided in large part by Pence’s expansion push. In fact, if Pence changes course, Utah’s Gov. Herbert could be the last Republican domino standing – an unenviable position going into a tough re-election fight in 2016.
A Second Chance?
Conservatives and taxpayers across the country adored Congressman Mike Pence – the Mike Pence who railed against earmarks, an intrusive federal government and an exploding national debt. That congressman is the Mike Pence who Hoosiers elected as governor. Unfortunately, a different Mike Pence moved in to the governor’s mansion – a Pence who embraced Common Core, increased federal involvement in pre-K and actively sought to implement Obamacare’s Medicaid expansion.
Pence has continued to stoke the fire of a potential 2016 presidential run, campaigning in states that often decide the Republican primary. As it turns out, Republican voters in critical primary states have low opinions of ObamaCare’s Medicaid expansion and are clear in their opposition to candidates who support it.
Walking away from negotiations with Obama could help Pence rebuild his image after the brutal lashing he’s received for his liberal backsliding on Obamacare.
Shades of the former congressman have been making appearances lately, and that’s reason enough for taxpayers everywhere to be optimistic. A revived Mike Pence has the opportunity to spark a nationwide conservative resurgence against Obamacare, saving future taxpayers billions of dollars and preserving the Medicaid safety net for the truly needy. He should take it.
This article originally appeared at Forbes on October 22, 2014.