Repeal It: ACA Even Less Effective as More States Mull Medicaid Opt-Out

Kate Hicks

7/3/2012 11:41:00 AM - Kate Hicks

For all the talk about the taxation issue associated with the ACA, it’s worth noting that a major storm’s a-brewin’ in the states over Medicaid expansion. In the five short days since the Supreme Court ruled that the feds couldn’t withhold existing Medicaid funding from states that opt not to expand, many governors have expressed ambivalence about opening the rolls.

As Katie mentioned yesterday, Rick Scott (Florida), Bobby Jindal (Louisiana), and Scott Walker (Wisconsin) have all flatly refused to expand their states’ programs. Terry Branstad (Iowa), Chris Christie (New Jersey), Phil Bryant (Mississippi), Nikki Haley (South Carolina), Mitch Daniels (Indiana), and Bob McDonnell (Virginia) have also expressed reticence, if not outright refusal, to take on the new program. Even Rick Snyder of Michigan won’t commit to expanding Medicaid, citing budgetary concerns.

Indeed, these same fiscal issues are the primary concern with expanding Medicaid, as states fear they’ll be roped into paying for a program that they just can’t afford. Although states would only ever have to chip in 10% of the program’s cost – and that not until 2017 – that’s still an astronomical sum of money. Florida, for example, believes it will cost taxpayers $1.9 billion to cover their share of the program. And in a time when economic recovery is still an uphill climb, governors are loathe to saddle their citizens with even higher state taxes.

Of course, Medicaid isn’t merely a fiscal matter; the program was intended to provide an option for low-income individuals to have health insurance. And if states opt out of expansion, then there’s a whole class of people who will remain without insurance:

The Supreme Court-mandated option to "opt out" of the Medicaid expansion, however, could potentially leave millions Americans uninsured. Currently, Medicaid is a joint federal-state program that provides health care to certain poor Americans, such as children and the elderly. In 2014, President Obama's health care law would open up Medicaid to anyone with an income under 138 percent of the federal poverty line -- so long as their states have agreed to the new plan.

The expansion of Medicaid, according to the Congressional Budget Office, was expected to make available health care coverage to 16 million new people. That accounts for half of the 31 million expected to get coverage from the Affordable Care Act.

That a state government would opt out of Medicaid expansion is less a reflection on its concern for the poor and uninsured, and more indicative of its concern for long-term viability. As Gov. Haley said, South Carolina wants to help the uninsured; it just doesn’t want to go bankrupt in the process.

Of course, that still means there are millions who will remain uninsured – and ameliorating that, after all, was the whole purpose of the Affordable Care Act.

Indeed, between finding that many small businesses and individuals will pay the tax rather than provide healthcare, and this Medicaid quandary, the ACA won’t so much accomplish its stated goal. Instead, many will remain uninsured and see their taxes rise, rendering them even worse off than before.

By allowing states to opt out of Medicaid, the Chief further undermined the ACA, and made the case for repeal even stronger. After all, if it fails to insure a meaningful number of Americans, then not only is it a bad, fiscally irresponsible policy; it's a failed one. To increase the insured at the expense of the taxpayer is wrong; but to have little effect on the number of insured while raising taxes on those who can't afford it is wrong and pointless.

Disaster is on the horizon if this law goes forward; for even if states do expand the Medicaid program, they’ll begin to see deleterious effects on their economies in a few years’ time. Repeal will be hard work, but it’s the only way to stop this absolute mess of a “reform,” and institute real, meaningful change in the healthcare sector.