Despite being passed without Republican support, Republican governors across the country are now falling for the president's health care scheme.
The latest sales pitch comes from a recent report issued by the president’s Council of Economic Advisors. It aims to persuade 24 states that have not expanded Medicaid as part of Obamacare of the program’s supposed benefits to the uninsured and to states’ economies.
Under Obamacare, states may choose to expand Medicaid eligibility to residents falling below 138 percent of the federal poverty level. The federal government pays anywhere between $0.50 to $0.73 for every dollar the state pays in Medicaid spending. For the newly eligible individuals, the federal government would pick up almost the entire tab.
Leonor Cervantes (L) and other protesters gather in the office of Florida State Rep. Manny Diaz as they protest his stance against the expansion of healthcare coverage on September 20, 2013 in Miami, Florida. Credit: Getty Images
Most recently, Gov. Pat McCrory (R-N.C.) expressed interest in Medicaid expansion. If his state moves forward, he would join the eight Republican governors who couldn't resist the lure of “free” federal money.
But governors and state legislators should be far more wary of those peddling the merits of Medicaid.
On the surface, this is an opportunity state lawmakers don’t want to miss. But in states such as Arkansas, which has already busted through its Medicaid cost estimates, financial realities suggest that Medicaid expansion could force state taxpayers to write a blank check.
There are three important things that taxpayers need to know about Medicaid expansion. Unfortunately, you probably won't be hearing these facts from the media and politicians.
1. The federal government could change the payment rules on states. The administration already attempted to cut the federal share of Medicaid dollars, and now it might consider a reduction in the administrative payments going to some states.
In 2011, the president’s budget included a “blended” Medicaid match rate for states which would have reduced the federal government’s share paid to states by about $100 billion over 10 years. More recently, former Health and Human Services Secretary Kathleen Sebelius proposed to withhold some federal Medicaid dollars to states that are facing Medicaid application backlogs.
Never mind that much of the blame for some states’ Medicaid backlogs has been the result of the botched healthcare.gov website. Federal bureaucrats have already demonstrated that they are willing to go back on that payment agreement. There is no reason to believe that they won't do it again, especially when faced with increased budgetary pressures.
This photo of part of the HealthCare.gov website is photographed in Washington, in this Nov. 29, 2013 file photo. (AP Photo/Jon Elswick, File)
2. Once a state expands Medicaid coverage under Obamacare, the state could be responsible for covering these above-poverty-level, able-bodied adults indefinitely. The HHS secretary has full discretion to deny a state from rolling back expansion population Medicaid coverage, even if the federal government breaks its funding promise to the state.
3. The Medicaid expansion’s funding formula is immoral and prioritizes able-bodied adults above the neediest patients. A new study by the Foundation for Accountability's Director of Research Jonathan Ingram reveals that services for vulnerable Medicaid patients are "a much easier target for slashed services and spending cuts than the Obamacare expansion population."
If a state sought to rein in Medicaid spending, it would need to cut, on average, $2.32 in Medicaid spending on the traditional Medicaid population to save $1 of state spending. Because the federal government is picking up most of the Medicaid spending through 2020 for the expansion population, a state would need to cut up to $10 in Medicaid spending to save $1 in state spending.
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In other words, services for the most vulnerable Medicaid populations will be first in line for budget cuts. Childless, able-bodied adults will be last.
States and their taxpayers should turn away from the Medicaid carnival barkers. The federal government has shown that it feels free to change the program funding levels, leaving the state to foot the bill. So how can state leaders truly protect their taxpayers from a federal backtracking on Medicaid expansion funding?
Federal and state lawmakers should seek block grants that would allow states more control over how the program operates, and provide more opportunities to improve patient care while protecting taxpayer dollars.
Taxpayers, and the lawmakers who supposedly represent them, should understand that the Medicaid expansion sales pitch is too good to be true. This purchase does not come with a money-back guarantee. In fact, the costs will ultimately be far more than what is being advertised.
Naomi Lopez Bauman is the director of health policy at the Illinois Policy Institute (www.illinoispolicy.org). You can follow her on Twitter at @LopezBauman.
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