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In Michigan, a Defeat for the Tea Party—and Victory for Common Sense

Obamacare took a big step forward on Tuesday night, when the Michigan Senate approved an expansion of the state’s Medicaid program. The state House is likely to back the same measure, as early as next week. And while the program requires a special federal waiver, the Obama Administration is likely to grant it. Assuming all of that happens, Michigan will become the twenty-fifth state to expand Medicaid as part of the Affordable Care Act. As a result, a few hundred thousand residents are likely to get insurance—and the state will get a much-appreciated infusion of federal funds, while putting up a much smaller share of state money.

For the advocates of making health insurance available to all Americans, it’s a huge victory. But the victory did not come easy—or without some last-minute drama.

Tuesday’s vote was the product of a long, sustained campaign by Democrats, moderate Republicans, progressive organizers and business leaders. For months, they have made the case for expansion—citing the likely financial and health benefits for Michigan’s uninsured citizens, and the expected boost to Michigan’s economy. The federal government is picking up most of the expansion’s costs, they have argued, and hospitals need the revenue to make up for money they lost on charity care and declining reimbursement from other sources.

Among those assessing the statistical impact were Marianne Udow-Phillips, director at the Center for Healthcare Research and Transformation and a lecturer at the University of Michigan School of Public Health. As she told me on Wednesday,

if you look at all the facts—the fact that the majority of physicians in the state are ready to serve this population; the positive impact on the state budget, on the state's economy at large, on hospitals, on businesses, on all those who are currently insured (by reducing cost shifting) - not to mention the half a million people who will directly benefit by getting health insurance coverage in a program that has the highest satisfaction of any insurance coverage type in the state  – you have to draw the conclusion that the Medicaid expansion is the right thing to do for the state.  

Governor Rick Snyder and the state Chamber of Commerce have been among the strongest proponents of expansion. The state's health care industry, naturally, has lobbied furiously. But Tea Party Republicans and their allies have been dead set againt it, arguing that Medicaid is a wasteful, expensive program that subsidizes the indolent—and that the size of the federal subsidies masked the true impact on the state, which would actually be negative.

Writing this week in the Detroit Free Press, Joseph G. Lehman and Clifford W. Taylor from the Mackinac Center for Public Policy warned that

The state’s main incentive to expand Medicaid is a federal promise to transfer to Michigan $2 billion (increasing to $3 billion) annually for three years if we add 320,000 Michiganders earning up to 138 percent of the poverty level to Medicaid rolls.

After three years our federal subsidy would shrink by $300 million per year, meaning either Michigan taxes increase by that much or lawmakers kick 320,000 people off Medicaid, which seems unlikely.

Expansion supporters have responded that, even after the reduction, the federal government would still be picking up 90 percent of the new cost. They have also tried to accommodate concerns about Medicaid efficiency, by, among other things, proposing that some Medicaid recipients pay a portion of their own costs. The compromises changed a few votes, and in June the state House approved its version of the expansion. But the Senate in June surprised everybody, including the governor, by rejecting the measure. One likely reason: Tea Party groups, and their financial backers, were threatening to support primary challenges to Republicans who voted yes.

The expansion’s supporters spent the remainder of the summer making their case, rallying the public, and lobbying individual members. As of Tuesday morning, they were confident they had 19 senators willing to vote yes. That would produce a tie in the 38-member chamber, with the lieutenant governor prepared to vote yes and break the tie. But when the Senate first voted in early afternoon, only 18 said yes. The chamber quickly voted to reconsider and, after a feverish few hours of lobbying and meeting, tried one more time. This time, the bill passed 20 to 18.

Progressives aren’t thrilled about some of the compromises, particularly those asking Medicaid recipients to pay a larger share of their costs. (Sarah Kliff has more of the details if you want them.) And it’s not out of the question that the federal government will raise objections, because the federal Medicaid law limits the ability of states to change the program. But given political resistance to any expansion, supporters are mostly elated at Tuesday’s outcome. “It’s not perfect, but it’s going to help nearly half a million Michiganders,” Amy Lynn Smith wrote at Electablog, a progressive website based in Michigan.

Michigan’s decision is an important milestone in the effort to make Medicaid available to all low-income Americans—an endeavor that has proven far more difficult that most experts anticipated. Last summer, when the Supreme Court made it easier for states to reject Obamacare’s planned expansion of Medicaid, many of us assumed the vast majority of states would participate anyway. The need for coverage was too great, and the allure of federal money too tempting, for even most Republicans to reject. Quite obviously we were wrong. Conservatives serving either as governor or state legislators have successfully blocked expansion across a wide swath of the country, including the huge states of Florida and Texas, where a few million people would be eligible.

But the Medicaid expansion has gotten support from several other Republican governors, including Jan Brewer in Arizona (where the expansion is already going forward) as well as Rick Scott in Florida and John Kasich in Ohio. Florida looks hopeless, at least for the time being, given the grip extreme conservatives have over the legislature. Ohio is another story: The politics there look a lot like the politics in Michigan. The same goes for Pennsylvania, although that state’s Republican governor, Tom Corbett, doesn’t yet support expansion.

Obamacare's Medicaid component, in other words, is moving ahead. But progress is taking place in fits and starts, with frequent setbacks, thanks mostly to political opposition that’s strongest in the most conservative parts of the country. 

Yeah, you should get used to that pattern.

Jonathan Cohn is a senior editor at the New Republic. Follow him on twitter @CitizenCohn

Note: This item has been updated and corrected. (I originally referred to the governor of Pennsylvania as "Pat" Corbett.)