Just Say 'No' to Obamacare Medicaid Expansion

Bad for the state budget, bad for the Constitution

Medicaid provides health care services for people who are below the poverty level and is paid for by a combination of state and federal tax dollars. A huge expansion of the program — increasing eligibility to those with incomes below 133 percent of the poverty level — was baked into Obamacare, but then made optional for states by last June’s Supreme Court ruling on the law. Since that ruling governors and legislatures have been wrestling with whether to go along with the expansion.

The New England Journal of Medicine reports that as of the end of 2012, some 13 state governors were known to oppose expanding the program in their states. Another 18 governors supported it, and 20 were undecided. Michigan. Gov. Rick Snyder falls into the undecided category.

NEJM listed the most common reasons cited by governors who opposed or were unsure about committing their states to the expansion:

  • The federal government will renege on funding
  • Concerns about the impact on state budget
  • States need more flexibility, freedom from federal oversight
  • States would have to raise taxes to pay for it
  • Uncertainty, need more information
  • Medicaid is a “broken program,” harms its beneficiaries
  • Entitlement programs create more dependency

Last July Michigan’s House Fiscal Agency published a memo suggesting this state would save money if it accepts the expansion, because we could redistribute some costs from state taxpayers to national taxpayers, including $175 million currently spent on mental health services. However, this conclusion depends on several highly dubious assumptions, the main one being that the feds will actually come through with the extra money promised as part of the expansion.

The first item on the list above shows that many governors are properly skeptical of this. Properly, because President Obama already signaled that the extra money may not be forthcoming. He did so in both his 2012 and 2013 budget recommendations, proposing a shift to a single Medicaid “blended rate” for each state. The details are complicated, but the center-left Center for Budget and Policy Priorities summed it up by saying the change “would reduce federal Medicaid expenditures by reducing the federal share of Medicaid and CHIP costs, shifting costs to states…”

The fact that the president’s last two budgets were declared “dead on arrival” does not undercut the fact that shifting more Medicaid expenses to the states is already in the administration’s playbook.

Gov. Snyder and Michigan’s Legislature should “just say no” to the Obamacare Medicaid expansion for a much larger reason than the state budget, however: As state officials they have a duty to push back against the law’s massive usurpation of the principles of federalism embodied in the U.S. Constitution. Resisting its heavy-handed scheme to commandeer state governments into becoming mere executors of federal policy is part of that.