U.S. Health and Human Services Secretary Kathleen Sebelius, a former governor of Kansas, made clear last week that the Obama administration will work with governors who are reluctant to expand Medicaid eligibility in their states.

Governor Terry Branstad signed on to one of the lawsuits challenging the 2010 Affordable Care and Patient Protection Act, better known as the health care reform law. Although the U.S. Supreme Court upheld that law’s constitutionality in June, a majority of justices ruled that the federal government cannot withhold Medicaid funding from states that decline to expand eligibility. Soon after, Branstad confirmed that he opposes expanding Medicaid in Iowa.

“Here’s the problem, the federal government has done this again and again: ‘Buy into our program and we’re going to do all these things for you’ and then it doesn’t happen and then the taxpayers of the state get stuck with it,” he said. […]

His spokesman, Tim Albrecht, said the estimated cost of adding 150,000 to the program is $800 million per year. He reiterated the governor’s fears about the federal government’s commitments to pay most of that cost. “Federal funding is not guaranteed. They cannot obligate a future Congress to spending,” he wrote in an e-mail. “Gov. Branstad believes that eventually, most or all of the $800 million will be obligated by Iowa taxpayers. The state cannot afford this. Additionally, 40 cents of every federal dollar is borrowed money. The governor does not believe we should be adding to that debt through a massive expansion of federal bureaucracy.”

During a September 14 visit to Des Moines to support Barack Obama’s re-election campaign event, Sebeliusspoke to Tony Leys of the Des Moines Register. She indirectly addressed Branstad’s worries about the cost of covering more citizens through Medicaid.

In a brief interview at the Obama campaign’s Iowa headquarters, Sebelius said today that states could try the expansion without committing to it forever. “States can do a variety of things. We’ve said a state can come in, and if they decide it’s too big a financial burden … they can leave again.”

Sebelius said she hoped that residents of Iowa and other states would closely consider the plan, under which the federal government would pay 100 percent of the expansion’s cost in the first three years, then at least 90 percent of it in the future. […]

Sebelius said her department is not demanding a quick answer from the states. “There is no timetable. We’re not giving a date certain that you have to be in or out,” she said.

Sebelius is far from my favorite Obama cabinet official, but she showed strong conflict resolution tactics there. Instead of belittling the governors who oppose the Medicaid expansion (“they’d be crazy to reject this money”) or questioning their motives (“they’d deny basic health coverage to hundreds of thousands of people to score political points”), Sebelius validated concerns expressed by Branstad and others. She offered the governor an “out” in case federal funding in future years does not live up to the level outlined in the 2010 law.

The Branstad administration’s reaction left some wiggle room for the governor.

When asked for response, Branstad spokesman Tim Albrecht said that the governor believes the key to controlling medical costs is for people to take care of their health by improving their diets and exercise.

“The governor has not come to a final decision on the Medicaid expansion, and continues to take a thoughtful approach in studying the issue,” Albrecht said in an email. “That said, the governor knows the federal government cannot live up to the financial obligation that Obamacare forces on taxpayers. In the unlikely event the government actually came through with their promise to fund this new mandate, 40 cents of every dollar would be borrowed money to do it. The country cannot afford to continue spending money at this level and must get our fiscal house in order nationally, just as we’ve done in Iowa.”

I’m encouraged to hear that Branstad is still “studying the issue,” because in July his mind seemed to be made up against expanding Medicaid. Perhaps he has been hearing from people representing the Iowa Hospital Association, which is strongly lobbying for broader Medicaid eligibility. Branstad doesn’t worry about getting our “fiscal house in order nationally” when seeking federal funding for farm subsidies or flood relief or military facilities in Iowa. I hope he will become convinced that providing Medicaid coverage for about 150,000 uninsured people is an equally wise use of national resources.

A second term for Obama is no sure thing, but even if Mitt Romney wins the presidential election, Republicans are unlikely to have enough U.S. senators to repeal the 2010 law entirely. So at least some states will expand Medicaid eligibility to people earning no more than 133 percent of poverty-level income. I haven’t seen any specific statement from Romney about this issue, but I assume a Romney administration would give states flexibility to back out of the deal, along the lines Sebelius described.

Share any relevant thoughts in this thread.