• It will be hard for states to opt out of Medicaid Expansion

    I’m reading a lot of articles, and seeing lots of tweets, that detail a running total of governors threatening to opt out of the Medicaid expansion. First of all, those are threats. They are very different than actual action. It’s also in the best interests of states to take this position as a negotiating tactic. In the end, though, I think it will be very hard for states to opt out. Here are some of the reasons why:

    1. This is a pretty good deal for states. They’re getting most of the tab picked up by the feds.
    2. It’s one thing to turn down high speed rail. It’s another to tell your constituents that they can’t have insurance entirely paid for by the federal government in 2014.
    3. As more and more states take the money, those that don’t will be more easily marginalized.
    4. History. States threatened not to join Medicaid the first time as well. All did, eventually. Now the program is so American that threatening to remove it is “coercive”.
    5. There will be enormous pressure from doctors, hospitals,pharma, etc. who potentially will lose a lot of money in uncompensated care. They have pretty good lobbying groups.

    That last point is worth more than all the others combined. Look, I’m not saying that states don’t have effective arguments right now for opting out. I think they will eventually lose out to these arguments. That won’t stop the media from breathlessly covering the threats as reality from now until then. The “battle” will likely sell a lot of advertising.


    • Living in South Carolina, I’ve noticed most of the Republican governor’s talking about turning down the Medicaid expansion with the exception of Iowa, are part of the Old Confederacy. These are also the states ranking at the bottom in health status, above average rates of uninsured, low level of education and with low levels of median household income. We are racing to the bottom. Not a race I want to win but in a state where we always say, “thank God for Mississippi,” it’s comfortable. Once the insured get the fact that the quality of their health care is affected by the number of uninsured in their community they may object..
      Perhaps the uninsured need to more visible. Wear a visible “free rider” symbol. We might be more uncomfortable if we see we are denying our neighbor’s children health care.

    • Where’s the thumbs-up on this thing? I agree with every word that Aaron wrote.

    • I’m not so sure that all states will always find it that difficult to opt out of the ACA mandated Medicaid expansion for a couple of reasons.

      The first is that if doing so means subjecting themselves to a long term liabilies that they’ll have to contend with after 2020 when Federal matching drops to 90% – they may at least pause. Most states are facing significant fiscal challenges that have their genesis, at least in part, in long-term fiscal committments. 10% of a huge number is still a huge number – and if you are already overextended that may be a bridge too far.

      The other factor will be the extent to which the Medicaid rules allow states to change the way they administer Medicaid benefits. The Feds disallowing the use of co-pays in California’s Medicaid program*, coupled with worries about the fiscal liabilities that they will be assuming will likely at least give some states pause.

      Having said all of that – you’re probably right. They’ll probably take the money, for public-choice reasons if nothing else.**(a,b)

      (A)Politics (n). (1)The conduct of public affairs for private advantage. (2) A strife of interests masquerading as a contest of principles.

      ~Ambrose Bierce, “The Devil’s Dictionary.”

    • #5 is the only one that may sway the GOP governors. Just keeping people off Medicaid is a feature not a bug in their world.

    • The quantitative fiscal impact on states for the 2014-19 time frame, which is before Federal payments drops to 90% is in this table in the Economix Blog in the NYT.


      It shows that some states will actually come out ahead, and others will pay very little and get a huge return. The table shows both the cumulative dollar amount and percent of state 2011 GDP for both the state’s portion and the Federal portion. It is incredibly obvious that this is a huge benefit for states.

      For example, North Carolina would have to come up with slightly over $1 billion over the 6 year period, which is a lot of money. But the state would receive over $20 billion from the Federal government. Furthermore opting out does not save the $1 billion, as the people not covered would still have some of their health care paid for by the state and local governments and the health care system.

      For Republican Governors/Legislatures to turn this down is the height of fiscal and social irresponsibility.

    • Am i the only one who gets a liitle upset when folks start talking about “Federal reimbursement” as if it comes from some independant source…

      All funds that will be paid to th estates come from TAXPAYERS!

      These taxpayers live in STATES (or DC)…

      So the feds will take from state citizens dollars – thereby reducing those citizens income and then redistribute these dollars BACK TO THE STATES…

      Of course several thousand public employees will need to be hired and very well paid to facilitate this transfer (paid more and given better benefits than the average citizen of the states )

      Am i the only one who thinks this is stupid – and innefficient…

      I think in the end this whole thing comes crashing down because it cannot be afforded – tax payers do not have unlimited resources – and deficits will need to be dealt with someday

    • I made this same comment below when this issue was first raised, but as a resident of Minnesota I have lived through an actual real world experience with this issue.

      Minnesota was one of a handful of states that qualified to take the Medicaid expansion early. In 2010 ( an election year both for governor and for both houses of the state legislature,) the then Democratic legislature passed legislation accepting the offer to join the program, but Republican governor Tim Pawlenty (yes, him) chose to block the adoption of the standard. We then elected a Democratic governor and the Republicans took both houses of the legislature. The governor used his administrative power and the previous session law to enroll the state in the early expansion, but the legislature passed a bill to block it, which was then vetoed by the governor, allowing the program to go into effect.

      And this was Minnesota, not Texas, Florida, Arizona, Alabama, etc.

      My take away from this experience is that it is highly likely that doctrinaire conservatives will go ahead and block the program, obvious benefits be damned and low income people be damned. Posturing over principle trumps realism every time.

    • @David I think it’s the post 2019 impact that they are concerned about.

      If it was 100% matching forever they probably wouldn’t care. If you look at the budget projections for 2012 onwards – it’s not like the existing fiscal liabilities are projected to get any less onerous as the years go on, and that’s with *very* optimistic return projections for pension fund returns, etc….


    • @Jay B

      It may be post 2019 that Governors are concerned about, but even then the payoff to a state is nine federal dollars for each dollar that comes from the state. How exactly is that a bad fiscal structure for the states.

      But let’s be realistic here, the issue is not about state costs and taxes. It is about politics, about Conservative Republican Governors adopting policy based on ideology, not fiscal responsibility.

      As for the costs, it is not as though the state will save the money if they do not enroll in the program; the costs of providing minimal care for low income people will occur and will be borne by state and local governments or by individuals who will pay more for health insurance and health care. Furthermore it is highly likely that the costs will be higher without the Medicaid expansion as the cost of treating low income whose health has deteriorated to the point where they have to be treated is likely be very high.

      @ Lonely Libertarian

      As long as the Federal government is operating at a deficit much of the costs will be financed by borrowing, which until the Federal government runs a surplus will be simply rolled over. As for the burden on taxpayers, that burden could well be higher in the absence of the Medicaid expansion.

      To repeat, the costs to the non-recipients will exist, either in the form of higher taxes or higher health care costs. And to the extent that the Medicaid expansion allows for a more efficient health care delivery system, overall costs over the long run may well be much lower with the Medicaid expansion.

      That is why the expansion is neither stupid nor inefficient. There is much in the ACA that is inefficient, and Medicaid reimbursements are going to have to be raised which will mean the costs of the program will be even higher. But expanding Medicaid to more low income individuals is good health policy and good fiscal policy.

    • @ David R…

      I would love to see the evidence that suggests spending more on health care is actually a good thing…

      And much of what is mandated by the act is not [in my opinion] basic health care…

      • The question is not whether spending more on health care is a good thing. The question is whether having access to health care is a good thing.

        There is certainly a lot of room for discussion of how to cut both public and private health care spending in our extremely costly system, particularly by examining spending patterns and associated practice patterns.. However, preventing people from getting access to health care by making it financially impossible for them to have it is a very questionable way of making those cuts.

    • @ LonelyLibertarian

      Spending more on health is not a sufficient condition for better health care and lower long term costs, but it is a necessary one. As for evidence on whether or not expanding Medicaid is an effective tool I would direct you to this report in the New York Times


      where some very highly credentialed researchers did a study comparing those who received Medicaid in Oregon by winning a ‘Medicaid lottery” with those who did not. It is strong evidence that expanding Medicaid has better health care outcomes, but also concludes that those who received Medicaid also spent more on health care themselves.

      An interesting note is this comment from the article

      “In contrast, few of the uninsured saw doctors regularly, and none said that they had regular health examinations.

      Some sought care from free clinics or charity hospital programs. But they said it was difficult to know when and where such programs were available and sometimes how to use them. You might have to bring certain paperwork to prove your poverty, for instance. Child care could be a problem. You might show up on the wrong day.

      “You’ve got to be clearheaded” to find free care, said Cynthia Robbins, 57, who is unemployed and won insurance. When she was uninsured she neglected the effects of her diabetes — including problems with circulation in her feet that resulted in the amputation of a toe. “When you’re in the middle of a crisis, you’re not going to be filling out forms.”

      The uninsured described borrowing medication from family members and friends, taking it every other day, and asking doctors to diagnose multiple conditions and write multiple prescriptions on a single visit. The insured said they had largely abandoned such strategies.

      Nearly all of the uninsured also described how avoiding doctors to save money resulted in trips to the emergency room. (Unnecessary or preventable emergency room use costs some $38 billion a year, researchers estimate.)”

      Wow, $38 billion a year in unncessary or preventable emergency room use. Who exactly do you think is footing that bill?

      Here is a link to the NEBR publication of the paper.


      Finally, I would probably agree that much of what is mandated in the act is not basic health care and is in fact not particularly good public policy, but this set of Posts is really focused on the Medicaid expansion issue. I suggest everyone who is interested to read the paper and then see if that is evidence enough to support the ACA expansion of Medicaid eligibility.

    • Do we know if the Medicaid expansion is all or nothing or if states could choose to expand coverage to 110% of poverty, for example?