While states will have a significant incentive to control the cost of Medicaid, it is also true that individuals and businesses who purchase through the exchange will place a lot of political pressure on governors and other state elected officials to hold down healthcare costs for all payers. In fact, the cost of healthcare will become a major issue in business location decisions. This is a positive development given that all healthcare is delivered locally and the healthcare marketplace differs substantially by state.
This is new territory. The nation has been notoriously bad at restraining healthcare costs. Having the states innovate and experiment with alternative approaches makes sense. For example, Pennsylvania's Hershey Company cut its expenses by 50 percent when it started to steer workers toward hospitals with the highest publicly reported quality ratings. The public reports have pushed hospitals to pay attention to avoidable infections. By simply getting rid of preventable infections, Pennsylvania estimates its hospitals could lower expenses by nearly $1 billion.
Serious resistance will increase through the election, but with the right flexibility states will find ways to cover most Americans. They can even do one better and finally tame a costly beast no one (particularly those who crafted the law) has had the courage to face.