Rick Perry Rejects Medicaid Expansion, Health Exchanges

Texas Governor Rick Perry has rejected two prominent elements of President Obama's health care overhaul, joining an exodus of Republican-led states that are using a Supreme Court decision upholding the law to opt out of some key features.

While the Supreme Court's 5-4 decision validated the Affordable Care Act's requirement that all Americans obtain health insurance, the ruling also undercut the Obama administration's attempt to expand Medicaid. The court said that the federal government cannot force states to make more people eligible for Medicaid, as the law seeks to do, by threatening to withhold existing Medicaid dollars.

As a result, a growing number of Republican governors are refusing the Medicaid expansion, citing what they call unsustainable costs (the federal government will pay for the additional Medicaid recipients for the first few years, and will cover more than 90 percent after that). Florida, Louisana and Wisconsin have also said they will opt out.

Perry wrote in a letter to Secretary of Health and Human Services Kathleen Sebelius that he had deciced to stand proudly with the growing chorus of governors who were pushing back against the Obama administration's power grab.

Through its proposed expansion of Medicaid, the [ Patient Protection and Affordable Care Act] would simply enlarge a broken system that is already financially unsustainable, Perry wrote.

The health care law also requires every state to set up a health insurance marketplace in which consumers can shop for private insurance plans that are governed by a common set of standards. Perry said Texas would not implement an insurance exchange. Many Republican-led states have resisted creating the exchanges, awaiting first the Supreme Court's decision and now the outcome of the presidential election.

The requirement that insurance plans offered on the markets adhere to certain standards essentially treats the states like subcontractors through which the federal government can control the insurance markets and pursue federal priorities rather than those of the individual states, Perry wrote.

By defying both the Medicaid expansion and the insurance exchange, Perry is gutting some of the Affordable Care Act's most important mechanisms for extending insurance to all Americans. Lower-income Americans who are not poor enough to qualify for Medicaid would receive government subsidies to help them purchase private plans on the insurance exchanges.

A quarter of Texas residents are uninsured, the highest rate in the nation. The national rate is 16 percent.