When news broke last week of a tax compromise skewed toward business, I wondered why Senate Democrats would agree to pass that bill without progress toward Medicaid expansion, one of their top priorities. Governor Terry Branstad was saying legislators should adjourn after approving a budget, education reform and the tax deal, returning later this year for a special session on health insurance coverage for low-income Iowans. In my opinion, Democrats would be insane to give Republicans what they want on taxes now, hoping for Medicaid expansion later.

Today several signs point toward a possible deal on Medicaid coverage before the end of the legislative session.

Senate Democrats have made several concessions in the hope of bringing Republicans around on Medicaid expansion. On May 14, Rod Boshart reported on Republican efforts to push Medicaid negotiations off until later this year. Fortunately, one of the Senate Democratic negotiators quickly rejected the idea.

“We have a lot of work to do to iron out the differences between the House and the Senate and between my office and the Senate on that issue,” Branstad said during his monthly WHO-AM radio call-in show Tuesday evening. […]

“I think it may just take a little longer,” Branstad told his call-in audience. “Certainly I think we can agree to bring them back once we get that worked out. It doesn’t make a lot of sense for them to hang around until we have the issue resolved. It is a complicated issue.”

Legislative Republicans expressed a desire to move ahead with the state budget, education reform and property tax relief resolutions in the waning days of the regular 2013 session, but looking to a special session as a way to buy more time to negotiate a compromise arrangement. […]

“It’s more important that we arrive at the right answer than we arrive at a quick answer,” said House Speaker Kraig Paulsen, R-Hiawatha. “We’re going to work on trying to finish things up, but it’s more important that we’ve got it right. […]

“As far as I’m concerned, there won’t be a special session,” said Sen. Jack Hatch, D-Des Moines. “All of our work will be done here now, it has to be completed.

“We see daylight between the Republicans and the governor’s plan. His financing is unacceptable to Republicans and to local governments and to local mental health agencies and providers,” he added. “To think we can come back into special session and have an agreement is pretty unrealistic and pretty naïve.”

Today, Branstad sounded more willing to make a deal. O.Kay Henderson posted the audio and highlights from his regular weekly press conference.

“…We’re going to continue to talk to both House and Senate members about this and…it’s just like the other things we’ve been working on. If we’re going to get something resolved, nobody’s going to get their way totally.”

About 52 percent of the cost of Branstad’s “Healthy Iowa Plan” would be covered by state government and 48 percent by the federal government. Democrats counter that by expanding Medicaid to cover more uninsured Iowans, the federal government will cover 100 percent of that cost for the first three years and then 90 percent after that.

“That is one of the things that we’re willing to consider, provided there’s assurance that if the federal dollars are reduced, the Iowa taxpayers don’t get stuck,” Branstad says.

Anyone who has followed this issue closely will recall that Senate Democrats agreed two months ago to provide such assurances to Branstad and GOP lawmakers. From Senate President Pam Jochum’s comments on March 14:

Following the lead of other Republican governors in other states, we have offered to re-evaluate Iowa’s participation in Medicaid expansion if the federal government does not keep its promise.

In other words if it would renege on its commitment of paying 100 percent of the cost for the next three years and then of course it’s on a sliding scale that by 2020 it’s 90 percent participation by the federal government and 10 percent participation by the state government.

The language we suggested would protect Iowa taxpayers from any risk, and it would address the Governor’s concerns.

In short, if the federal government’s sky falls, WE will be off the hook as a state.

I want to mention, and we should all remember, that the federal government has never, never failed to meet its obligations to Medicaid in nearly its 50 years of existence.

Today Branstad repeated his desire to “make sure we protect the taxpayers of Iowa against the uncertainty of the federal government.” He indicated that only federal officials can provide the guarantees he’s looking for.

Republican State Representative Dave Heaton, who expressed major concerns before voting to pass Branstad’s Healthy Iowa Plan in the Iowa House, was among those sounding more optimistic today.

Branstad indicated he was “willing to consider” trying to merge the competing plans as long as Iowa taxpayers were protected in the process and certain “ownership” provisions were required of health-care recipients to help improve outcomes and hold down costs.

Rep. Dave Heaton, R-Mount Pleasant, said Branstad’s assurances signaled progress to him. Sen. Jack Hatch, D-Mount Pleasant, said he saw positive signs that the governor, Senate Democrats and House Republicans were “all now generally on the same page,” a development that could accelerate prospects for compromise.

“I don’t think we’re that far off now that we’re moving,” Hatch said. “We’ve kind of shed some of the old skin, and I think there are some real opportunities for us now.”

Both Heaton and Hatch serve on the conference committee working toward a compromise.

Here’s hoping U.S. Health and Human Services Secretary Kathleen Sebelius can give Branstad a way to save face quickly. Medicaid expansion could make a huge difference for more than 100,000 Iowans, perhaps as many as 150,000 people. A bad deal on taxes might be a price worth paying if Branstad comes around on Medicaid.

What do you think, Bleeding Heartland readers?

UPDATE: According to the governor, the Branstad administration is “moving forward with the paperwork required by the federal government for the creation of the Healthy Iowa Plan” while legislators work toward a compromise. I doubt Iowa would receive a waiver for a plan that covers fewer people at greater cost. In March, Senator Tom Harkin predicted that the U.S. Department of Health and Human Services would reject Branstad’s approach.