Will States Eventually Opt In To Medicaid Expansion?

With several states’ governors already saying they will opt out of the Medicaid expansion intended to bring health care to millions of currently uninsured Americans, some are calling it the death knell for this portion of the Affordable Care Act. But others say that the federal subsidies will be too tempting, and that it’s just a matter of time until these states decide to take part in the program.

“Over time… most states will find it hard to resist the substantial subsidies for new enrollees,” writes Peter R. Orszag, vice chairman of global banking at Citigroup, in an opinion column for Bloomberg News. “After all, over the past few decades, states have gradually added optional benefits and expanded the number of beneficiaries beyond the bare minimum required by the federal government. And they have done so in response to much smaller subsidies than offered under the 2010 health-care-reform law.”

Orszag points out that, while states will ultimately be expected to cover 10% of the costs for the people covered by the expansion, the current federal subsidy for Medicaid is significantly lower — less than 60% on average. He also cites a Center on Budget and Policy Priorities report which shows that the expansion will only result in around a 3% increase in total Medicaid spending by the states.

The impact on any individual state depends on the current parameters it uses for determining Medicaid eligibility. So while Texas’ Medicaid bill would go up around 5%, states like Maine and Massachusetts, which already cover some of the people the expansion intends to help, could actually see a reduction in their Medicaid costs.

Orszag gives two reasons why he believes that states will eventually choose to invest the money in Medicaid expansion:

First and most important, they help their residents. Both common sense and hard evidence… indicates that access to Medicaid reduces people’s financial strain and improves their self-reported health (while also increasing their use of health-care services).

Second, state governments enjoy reductions in other costs, so that the net impact on their budgets is less than $600 per beneficiary… In 2008, state and local governments paid roughly 20 percent of the hospital costs for uninsured people, according to an Urban Institute study.

He points to the fact that, while fewer than two-thirds of costs covered by Medicaid are not currently mandated by the government, many states choose to provide them — and that’s with a mere 60% average federal subsidy.

“This suggests that states will find it hard to resist a match rate of 90 percent for very long,” writes Orszag.

Big Subsidies Will Push States to Expand Medicaid [Bloomberg]


Edit Your Comment

  1. JJFIII says:

    Quit presenting facts to these bone head governors. This is Obama’s law, and there is no way in hell they are going to let a black guy tell them what to do.

    • hexx says:

      Exactly. The also like to ignore the fact that Obamacare is virtually identical to Romneycare.

      • Loias supports harsher punishments against corporations says:

        Exactly – I just don’t get how Romney can say Universal Healthcare is the devil, when he enacted something close enough it in his own state. And even more amazing is that Republicans don’t seem to care about that in the slightest. It’s the most blatent display of hipocracy I’ve ever seen in politics, and that is saying quite a lot for politics.

        Proof in my mind Republicans in general just don’t care about facts.

        • hexx says:

          Not only are Obamacare and Romneycare virtually identical, the administration even used the same advisers that wrote Romneycare… Republicans are simply choosing to ignore the fact that Obamacare is largely based on a Republican bill that was proudly touted by Republican Governor Mitt Romney as one of his signature accomplishments and was signed and supported by then Republican State Senator (now U.S. Senator) Scott Brown.

          • Loias supports harsher punishments against corporations says:

            In additional – Republicans were at one point in favor of Universal Healthcare, and Bush Sr. supported it.

        • hexx says:

          In fairness, Romney will say anything to get elected.

        • Galium says:

          Mitt (Howdy Doody) Romney just does as he is told. I actually did not think the republicans could find someone as bad as Palin, but I guess I was wrong. At least Palin, even though what she said was stupid, could talk for herself.

        • hexx says:

          I especially love that Romney has vowed to “repeal” Obamacare if he becomes President. Too bad the President does NOT have the power to repeal/overturn (or write) laws. Only Congress has that power, and it is actually really hard to “repeal” a law regardless of how disliked it is — both the House and Senate must separately vote to repeal (by the way there is no process to repeal a law), then jointly must vote to do this. Senators are the “grown ups” in Washington and they understand that overturning/repealing a law has consequences and thus usually ignore this kind of childish behavior from the House.

          • wackydan says:

            Repeal is misused… A new bill or bills can be crafted to nullify or replace the ACA piece by piece… and is exactly what is going to happen over time in order to fix the thing anyway.

        • clarkis117 says:

          Republicans only care about what they hear on fuax (fox) news channel, or they fall back on balent ingnorance when it comes to facts.

        • arcticJKL says:

          Im not saying I agree, but the position is that a state can establish a mandated health care system but the federal government can not because it is not a power granted to the feds by the constitution.

    • McRib wants to know if you've been saved by the Holy Clown says:

      In my best drunken mountain man voice (aka blazing saddles):

      “Thrs a nhrghr in the whrt hrs!”

    • wackydan says:

      I guess I’m a racist for not voting for Obama then… Your logic is pretty horrible.

      • chargernj says:

        no, your not a racist, you just don’t mind making common cause with them

        • wackydan says:

          Wow… There are people that are racist that won’t vote for Obama… I’m not a racist but won’t vote for Obama but that makes me racist by voting against him because racists also vote against him.

          You are incredibly ignorant.

          • chargernj says:

            Obviously, you didn’t read my post, yet I’m the ignorant one here?

            I said YOU are NOT a racist.

            That being said, racist won’t vote for Obama either and their are certain politicians who know that and will campaign to get that racist vote.

            So while you aren’t a racist, some (mostly conservative) politicians are racist.

            It’s called the “Southern Strategy” and it’s still happening…

            So in closing, if you vote for politicians who pander to racist you are helping to advance the racist cause even if you yourself are not a racist.

    • Draw2much says:

      I suspect it’s more because he’s a “dirty liberal” than because he’s black.

      Maybe that’s just optimism speaking though…

  2. JJFIII says:

    If those governors cared so much about costs, why not refuse federal dollars for roads. Luckily, the voters will boot these morons out of office when they see other states getting FEDERAL DOLLARS while they do not. They will still pay the taxes, just not get any of the benefits.

    • StarKillerX says:

      Because anyone who believes the federal subsidy will stay at 90% for long is either stoned or brain damaged and when it drops down the the level of regular medicaid coverage the states will be stuck and forced to either raise taxes to cover the new expenses or drop the added coverage, if they are even allowed to at that point, and of course either way they will be ripped to shreads over it.

      Basically this is just how the stimulus spending to hire teachers worked, and the Gov.s of a few states tried to warn people and were torn apart by the left for trying to refuse the money and then everything he said would happen did, the federal funds for the teachers dried up and politicians at the state level either had to raise taxes or lay off teachers, or a combination of both, and of course they were demonized for this as well and of course we Obama got off scott free from the scam.

      • JJFIII says:

        Obama SAID it was a stimulus. If you do not understand that it is TEMPORARY, then your state is run by fools. The worst part of the stimulus was it was too small and was a full ONE THIRD tax cuts. The reason the stimulus was not as effective as it could have been was due to the fact that tax cuts do not bring prosperity when the marginal rates are at the current level.
        One president in recent times has balanced a budget. One of the FIRST things he did was raise taxes. I would also point out that Ronald Reagan raised taxes multiple times, and he is considered the father of modern conservatism. Obama is closer to Ronald Reagan than Rick Perry and the current batch of right wing douche bags running the republican party.

        • incident_man says:

          I wouldn’t exactly hold Ronald Reagan up as a pillar of fiscal responsibility. One of the ways he “balanced” the budget was to change the way Social Security was paid. Before Reagan, SS recipients were paid much like people get their paychecks: for the month past, e.g. their August 3rd check was for the month of July.

          By the stroke of a pen, Reagan changed SS payments so that they were paid for the month AHEAD, e.g. August 3rd check would be for the month of August. Therefore, there was a month in there somewhere, by government accounting tricks, that there were no Social Security benefits paid at all. His method there was just a type of hucksterism, no “fiscal genious” involved anywhere.

          Another way he “balanced the budget” was to redefine who was considered “unemployed.” Before Reagan, anyone who worked less than 40 hours per week, or was unemployed longer than 66 weeks (long-term unemployed) could qualify for benefits if they met the criteria and could be classified as “unemployed” in labour department statistics. Again, by the stroke of Reagan’s pen, he re-defined what “unemployed” actually means and who actually was “unemployed,” thereby also changing the criteria needed to qualify for benefits and the way the labour department reported unemployment statistics. Also, another example of “creative” government accounting and hucksterism.

          Reagan wasn’t any better or worse than any other President in recent history, he was just more popular with the people. A large part of the popularity being that we, as a country, had just emerged from the Carter years and were eager to pin our hopes on someone…..anyone…..else.

          • incident_man says:

            Besides, Reagan didn’t balance the budget, either.

            Fiscal year 1981: federal spending $678 billion ($1219 billion, adjusted for inflation), national debt $994 billion ($1787 billion adjusted for inflation).

            Fiscal year 1989: federal spending $1144 billion ($1499 billion, adjusted for inflation), national debt $2867 billion ($3757 billion, adjusted for inflation).

            source: http://en.wikipedia.org/wiki/History_of_the_United_States_public_debt

      • Galium says:

        Because anyone who believes the federal subsidy will stay at 90% for long is either stoned or brain damaged and when it drops down the the level of regular medicaid coverage the states will be stuck and forced to either raise taxes to cover the new expenses or drop the added coverage….

        I could never understand this argument. Instead of paying for the (whatever) service on the federal level you pay it on the state level. You are still paying for the service. The question is if the service is needed or not, not which level of government you pay it to. Politicians are just worried about getting re-elected; in this case the governors, when they have to raise taxes to pay for it in the future. To them it is self-interest, not what is best for the common good.

  3. bnceo says:

    In all my years of reading budgets and spending from the government or any think tank, these numbers are not and will not be accurate. Government has no idea how to save money or go under budget on anything. Seriously, when is the last time government actually saved money AND provided great service. They don’t know how and give no indication they can.

    • incident_man says:

      Might as well give the government a chance vis a vis healthcare. As anyone with an objective view can plainly see, the private sector has screwed healthcare up to the point that everyone needs private health insurance to be able to afford to see a doctor. Those who don’t have insurance and can’t pay out of pocket go to the emergency room, and the taxpayers end up paying for them anyway…..at a much-inflated cost. The government couldn’t do any worse, IMHO.

      Case in point: My former doctor used to charge $120 for a simple office visit (the amount he billed my insurance). At that point, it still would have been within my reach to pay out of pocket, albeit a little painful. As soon as he joined the local “physician’s association,” he started charging $250 per visit…..FOR THE SAME LEVEL OF CARE!!!!

      My new doctor charges $130, with no difference in care from the old one. The only difference I can see is that my new doctor doesn’t have a brand-new shiny computer in every examining room.

    • kathygnome says:

      “when is the last time government actually saved money AND provided great service”

      Medicare. Medicare Advantage was the privately administered version and it provided the same service at higher cost.

      • Bsamm09 says:

        Since medicare premiums are collected by the IRS are you factoring in the costs required to go after everyone who owes SE tax and businesses who fail to remit payroll taxes?

        Private companies have to staff people to collect premiums, send bills for premiums etc. These employees must be paid, supplies/equipment/buildings/utilities etc. must be provided in order to accomplish this.

        What is the difference monetarily? I don’t know. Until then it is not an apples to apples comparison.

        • Bsamm09 says:

          Also, costs to administer the filing of 940s and 941s and collection of these monies too since that is how the IRS gets the medicare money.

        • DFManno says:

          These costs would be minimal. Businesses have to file payroll tax returns to remit withheld income tax anyway. And taxpayers who aren’t paying their SE/FICA taxes aren’t likely to be paying their other taxes, so enforcement would be needed anyway.

  4. There's room to move as a fry cook says:

    Perry is all posturing. Despite his public protests against Obama – Texas was the biggest recipient of stimulus funds and they were used to plug holes the state budget.

  5. hexx says:

    Politics is a game. It makes good politics for a Republican Governor to come out before an election and say they will not except the Medicaid Expansion for their state. But there’s a high probability their state will in fact accept the expansion after the election is over, probably as a rider on another bill.

  6. Galium says:

    Governors have their own paid for by the citizens medical program so why should they give a rats a$$ about anyone who does not contribute to their election campaign. I have always been curious how some of these politicians can take an oath of office to serve the people and not choke on the words.

  7. Shorebreak says:

    Texas Gov. Rick Perry would rather throw one-third of his state’s residents under the bus of the uninsured just out of his spite for President Obama. He has no concern that his decision will cost Texas $72 billion either.

    “Rick Perry is calling Medicaid a “failure” as he defends his decision to oppose any expansion of the program as part of the national health-care overhaul. Perry told Fox News Monday that adding uninsured Texans to Medicaid — as proposed by the overhaul recently upheld by the Supreme Court — “is not unlike adding a thousand people to the Titanic.” He says Texas won’t participate in the expansion or create a health care exchange required by the law. He says he doesn’t want to be part of “socializing health care” in Texas as part of a bill he considers unconstitutional.”


    Pistol packing Perry is still fighting the Civil War and he will be damned if some black man sitting the White House in Washington D.C. is going to decide any policy for Texas to follow.

    • wackydan says:

      Calling people racists when there is no evidence to suggest they are is somewhat… Lame. You lose any credibility in your arguments. Period.

    • Draw2much says:

      Yeah, but his base isn’t going to like it if he really does oppose the expanison. At least if that sampling of a conversation I heard at work yesterday is any example……

  8. cowboyesfan says:

    Bring out you dead!

  9. Tim says:

    I agree with Orszag, but keep in mind that he was Obama’s budget director up until the middle of 2010.

  10. DFManno says:

    Orszag is making the fatal mistake of assuming that Republicans can be rational.

  11. soj4life says:

    The states are going to expand medicaid when they start to get sued by hospitals that are losing money from the uninsured.