In early December, the secretary of the Health and Human Services Department, Kathleen Sibelius, sent a letter to state governors warning them that their states would not receive federal funding to cover the costs of expanded Medicaid coverage unless they expanded the program fully under the terms of the healthcare law.
The letter comes as the federal government is trying to persuade states to choose to expand Medicaid under the provisions of the Patient Protection and Affordable Care Act. The original mandate requiring state expansion was ruled unconstitutional by the Supreme Court, and as the 2014 deadline for the Medicaid expansion approaches, states are having to decide whether they will expand the joint federal and state health insurance program or not.
Under the terms of the healthcare law the federal government will cover the costs of the Medicaid expansion for the first several years. After that time each state will have to pay for a small portion of those costs, though that portion will be no more than 10% by 2020.
The letter states that the federal government will not compensate states for expansion costs unless they expanded the program fully under the terms of law. This means they will have to allow anyone earning up to 133% of the federal poverty limit to receive Medicaid coverage beginning in 2014. States failing to meet that requirement will not see additional federal dollars.