Reject Medicaid Expansion; Cut the Federal Budget

| May 5 2013
John Walker

Jan Brewer is not the only Republican governor stuck in a struggle with state legislators over expansion of Medicaid.

Governors in Florida, Ohio, and Michigan are battling with legislators after they turned the tables on conservatives and decided to accept federal funds for Medicaid expansion under Obamacare.

Medicaid is the bane of existence for governors and legislators alike that annually face lean budgets.

Funding for Medicaid can consume as much is 25 to 30 percent of a state’s budget. This presents a daunting challenge as state leaders. Every year they grapple with the dilemma of providing healthcare to citizens living below the poverty line while struggling to meet funding demands for other essential state programs such as education and transportation.

As the Medicaid expansion debate continues nationwide, proponents have trotted out a favorite old argument – – if we do not accept the money, the funds will go to another state.

Christina Corieri of the Goldwater Institute destroys this argument with an interesting twist: When a state declines funds for Medicare expansion, the money does not go to another state. It goes back into the federal treasury, thus reducing the annual deficit and overall national debt.

Using figures from the Congressional Budget Office and the Kaiser Family Foundation, Corieri says that Washington is expected to spend roughly $650 billion for Medicaid expansion between 2014 and 2022. States that decline the funds cut federal spending.

The option to accept or decline Medicaid expansion funds was part of the Supreme Court decision last year that upheld Obamacare. Because Medicaid is a federal-state program, Congress could not force states to take the money, the Court said.

Corieri says new federal spending for Medicaid already has been reduced by more than $424 billion over the next eight years because 18 states have rejected expansion funds. She estimates that the savings could be increased by another $185 billion if the funds are rejected by the 12 states that remain undecided.

Corieri says that in addition to reducing the federal budget, states that reject expanded Medicaid funding protect their own budgets.

Arizona is a case in point. Corieri says cost projections for Medicaid expansion in Arizona from 2001 to 2011 were off by 400 percent each year.

Then there is the problem of Washington promising to pay 90 percent of Medicaid costs after the three-year commitment to pay 100 percent. The federal-state landscape is littered with the aftermath of federal promises of money that dried up and left states holding the bag.

States all across the nation should shape their own programs to provide adequate Medicaid funding. Such funding is an essential state responsibility. Nevertheless, the temptation to grab expansion funds under
Obamacare is a prescription for fiscal chaos down the road.

State legislators who reject the funds not only take full responsibility for their state budgets, they will say no to more federal spending that is breaking the bank.

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