It's more or less a match contribution. My governor is one of the few that has not made a decision to expand Medicade. That expansion will cost money, but the Feds will then contribute back to put towards enrolling low-income but not less than 138% of the poverty level people into health exchanges, which is something that the states are required to do.
So no, it's not free money. It's a standard "Do X and we'll fund Y in your state."
Thanks for the clarification. If the ACA proponents were banking on shaming governors into doing something to have full rollout of their plan, then that's fairly shortsighted, IMO. It's a classic "Let's blame these people for screwing over poor people" when the governors in question had no say in the original law being passed.
Either put it in the bill and face the consequences (possible rejection) or leave it out and don't claim that governors are "refusing free money."
Is it truly "free money?" I am sure stipulations come with it.