Pro/con: Should states accept federal funds to expand Medicaid?

Talk about it

States are already struggling to pay their Medicaid bills. Why put taxpayers on the hook to pay even more?

Medicaid is the single biggest item in state budgets today. It consumes, on average, 23 percent of state dollars spent, pinching funds for other high-priority functions such as education, transportation and emergency services.

Yet expanding Medicaid was a central tenet of the Patient Protection and Affordable Care Act. It required states to open their program to all individuals earning less than 138 percent of the federal poverty level. The goal was to reduce the number of uninsured — by dumping 17 million Americans onto the Medicaid rolls.

Such a huge expansion wouldn’t come cheap, and cash-strapped states grumbled that they couldn’t possibly afford it. So the architects of Obamacare decided to take a carrot-and-stick approach to get the states to play ball.

The carrot: We, the feds, will pick up 100 percent of your expansion costs for three years, and lesser percentages thereafter. The stick: If you don’t expand your program, we’ll cut off all your federal Medicaid funds.

States are already having difficulty finding enough physicians willing to accept Medicaid patients, largely because of the program’s low reimbursement rates. Expanding patient rolls by a third will exacerbate this problem.

Here too, Obamacare tries to hoodwink the states. The states are required to increase pay to Medicare levels for primary care physicians. The federal government picks up the tab, but only temporarily.

In 2015, states will either have to find the money to replace the federal dollars or let primary care payments drop back down again. And if a state decides to keep the primary care doctor rates up, guess what? Without doubt a flood of non-primary care doctors and other health care providers will argue — wait, what about us?

Medicaid is a troubled program than can’t be sustained in its current form, much less on the grander scale envisioned by Obamacare advocates. What’s needed is not expansion, but reform — a complete makeover of the program that gives the working poor access to private health insurance like the vast majority of Americans enjoy today and restores Medicaid to a true safety net to meet the needs of the most vulnerable in society.

Nina Owcharenko is director of the Center for Health Policy Studies at the Heritage Foundation.

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