Medicaid expansion's new life

• But there's evidence that the political winds are changing in holdout states like North Carolina, Georgia, Wyoming, Alabama and Texas, as leaders court rural voters, assess new financial incentives and confront the bipartisan popularity of extending health care coverage.

Why it matters: Medicaid expansion, a key component of the Affordable Care Act, means increasing access to federal health insurance coverage for low-income residents, in exchange for a 10% state match of the federal spending.

• Experts say it expands access to care, lowers uninsured rates and improves health outcomes for low-income populations.
• More than 2 million Americans would gain coverage if the 12 states expand Medicaid, according to a 2021 estimate from the Kaiser Family Foundation.

The big picture: Some Republican states have already expanded Medicaid through executive authority or — in states where it’s legal to do so — citizen-led ballot initiatives.

• Referendums on the issue passed in Nebraska, Utah and Idaho in 2018 and Missouri and Oklahoma in 2020.
• Medicaid expansion is on this November's ballot in Republican-controlled South Dakota. (Voters there in June rejected a GOP proposal to make it harder to pass.)

Be smart: In most of the remaining non-expansion states, neither ballot initiatives nor executive authority are options, leaving the legislature with the authority to make the decision.

State of play: In Georgia, as first reported by Axios Atlanta, conversations about a path forward have been taking place behind the scenes in both parties. This follows the stunning support of full expansion legislation by North Carolina's top Republican this spring, first reported by Axios Raleigh.

• “If there is a person that has spoken out more against Medicaid expansion than I have, I’d like to meet that person," Republican Senate leader Phil Berger said at a May press conference after reversing his stance. "This is the right thing for us to do."
• Brian Robinson, former spokesman for the first Georgia governor to reject Medicaid expansion, argued in June it's time to make the change. Politically, it would "steal an issue" from Democrats, he told Axios Atlanta.
• Policy-wise, "this isn’t what we would do,” Robinson said of Medicaid’s much-criticized structure. "But Republicans can’t agree on what we would do. This is the policy and the law, and it’s not going away. It would bring home hundreds of millions from a program we’re paying into already."

What they’re saying: "​​There is real momentum on Medicaid expansion in these conservative states that have been holding out," said Melissa Burroughs of Families USA, a health care advocacy group working with partners in non-expansion states to push the policy.

• Burroughs told Axios there are Republicans championing or discussing expansion in every non-expansion state, but often "political dynamics and leadership" stand in the way.

Former Alabama Gov. Robert Bentley, who had refused to expand Medicaid himself, is now urging his fellow Republicans to pass it for the benefit of rural parts of the state.

• The bipartisan legislative movement on expansion this year has given advocates in Wyoming hope.
• In Texas, the state with the highest percentage of uninsured residents per capita, some Republicans have co-sponsored Medicaid expansion bills. That indicates "cracks" in Republican opposition, Luis Figueroa, legislative and policy director at progressive think tank Every Texan, told Axios Austin’s Nicole Cobler and Asher Price.
• Tennessee’s Republican lieutenant governor suggested possible openness to the policy last year, though there’s been no meaningful legislative movement.

Details: The winds are shifting for several reasons, experts told Axios.

• Money: The 2021 federal pandemic relief law sweetened the deal for non-expansion states, with a provision designed to offset states’ costs entirely for the first two years. Plus, Republicans’ initial fears that the federal government would pull its 90% matching funds haven’t come to pass.
• COVID-19: Under the federal state of a public health emergency, Medicaid access was automatically extended. But those temporary allowances could lift next year and millions could lose coverage, putting additional pressure on leaders.

• Politics: Medicaid expansion continues to be broadly popular, and the Republican campaign to "repeal and replace" the Affordable Care Act has failed in the courts and Congress — neutralizing what was once a key argument against expansion.
• Health care access: As hospitals across the country close, deepening the rural health care crisis, the benefit of getting more reimbursement from additional Medicaid recipients is difficult to ignore for rural hospital revenues — though the policy is not a silver bullet to end the crisis.

The intrigue: Democrats in these states, including gubernatorial candidates like Georgia’s Stacey Abrams and Texas’ Beto O’Rourke, continue to campaign heavily on Medicaid expansion — banking on polling showing the policy to be consistently popular among the public.

• “I think a lot of Republican members would like to extend Medicaid even more than they will say it,” Texas Democratic State Sen. Nathan Johnson, who has led the push for expansion there, told Axios Austin’s Cobler and Price.
• He said Republicans "are handcuffed by the ideological and political constraints. They will try to do some things to help people, but they need to get over the reflexive opposition to Medicaid expansion."

Yes, but: Proposals to expand Medicaid did not even get a committee hearing in Texas in 2021 — let alone a vote in either legislative chamber.

Between the lines: Even in non-expansion states, partial expansion proposals have gained traction.

• Kaiser Health News found that nine of the 12 states have sought or plan to seek an extension of postpartum Medicaid coverage, including for up to one year in North Carolina, Tennessee, South Carolina and Georgia.
• Some states, including South Carolina and Georgia, have pushed for partial Medicaid expansion through waivers with work requirements that the Biden administration has rejected. Georgia sued over the rejection, joining a national, ongoing legal fight over the constitutionality of work requirements.

What we’re watching: Even in holdout states showing signs of momentum, the issue remains politically fraught.

• North Carolina's most powerful politicians say the state’s negotiations this year were torpedoed by hospitals, though Democrats and Republicans alike are optimistic about its chances next session.
• In Georgia, while new conversations are happening, an exact legislative strategy isn’t yet clear, especially given the state's close November gubernatorial election.
• In Texas, Figueroa said, the governor and lieutenant governor remain the roadblocks because they "aren’t willing to budge."

Axios Nashville's Nate Rau contributed reporting.