Is Medicaid Expansion Good for the States? >
Medicaid Expansion Would Lead to Unsustainable Growth
State can't afford the expenses of additional Medicaid enrollees
July 24, 2012
Although the Medicaid expansion and the high initial federal subsidies might seem like too good of a deal to pass up, the eventual high cost of putting this provision in effect, and the innumerable strings attached, would lead to unsustainable growth in Medicaid spending in the coming years, and leave states much worse off.
It is true that at first the federal government will pick up nearly 100 percent of the cost for new enrollees made eligible by the expansion, but within the decade these federal subsidies are reduced to 90 percent, leaving state taxpayers on the hook for 10 percent of the cost—and 10 percent of a very large cost is still a very large cost. Moreover, this assumes that the federal government can be counted on not to further reduce its share of payments in the future. Given the enormous debt facing the federal government, promises of future funding are far from written in stone.
[See a collection of political cartoons on healthcare.]
In addition, there are less visible costs tied to this expansion that make it a far less appealing deal than it would appear at first glance. For example, people who were eligible for Medicaid before the Affordable Care Act, but not enrolled, would be drawn to enroll as they try to comply with the individual mandate, something experts refer to as "the woodwork effect." States would not receive the increased federal match rate for those previously eligible enrollees. The costs of these new enrollees will be covered under the traditional match rate, meaning that states will be liable for as much as 30-45 percent of the increased costs.
As a result, the Medicaid expansion would cost states such as New York as much as $52 billion over 10 years. Taxpayers in states as diverse as Florida and Kansas could be hit with $20 billion in new taxes by 2022.
Fortunately states have a choice about whether to accept this costly new burden. They should pass.
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- Other Arguments
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#1234103
No — States can't afford the financial burden of expanding Medicaid
RICK SCOTT, Republican Governor of Florida
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#29780
No — Medicaid expansion would harm the poorest, not help them, as states take the fall
GRACE-MARIE TURNER, President of the Galen Institute
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#44772
Yes — Hospitals will struggle to care for patients without Medicaid expansion
MAGGIE MAHAR, Author of 'Money-Driven Medicine: The Real Reason Health Care Costs So Much'
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#55496
Yes — Expanding Medicaid allows low-income people to move into the workforce
SCOTT RANDOLPH, Democratic Florida State Representative
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#6112166
Yes — Expanding Medicaid is a moral imperative and fiscal imperative
ETHAN ROME, Executive Director of Health Care for America Now
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#7133257
Yes — States can increase Medicaid without significant revenue increases
RICK MAYES, Associate Professor of Public Policy at the University of Richmond
