They say everything is bigger in Texas, but they may soon have to make an exception for Medicaid. In recent months, we’ve see state officials in Oklahoma and Nevada broach a radical idea: What if some states were to drop out of Medicaid entirely? Now Texas, which has one of the highest enrollment Medicaid programs in the country, has become the latest state to float the possibility of pulling out of its part of the joint federal-state program:

Far-right conservatives are offering that possibility in impassioned news conferences. Moderate Republicans are studying it behind closed doors. And the party’s advisers on health care policy say it is being discussed more seriously than ever, though they admit it may be as much a huge in-your-face to Washington as anything else.

“With Obamacare mandates coming down, we have a situation where we cannot reduce benefits or change eligibility” to cut costs, said State Representative Warren Chisum, Republican of Pampa, the veteran conservative lawmaker who recently entered the race for speaker of the House. “This system is bankrupting our state,” he said. “We need to get out of it. And with the budget shortfall we’re anticipating, we may have to act this year.”

The Heritage Foundation, a conservative research organization, estimates Texas could save $60 billion from 2013 to 2019 by opting out of Medicaid and the Children’s Health Insurance Program, dropping coverage for acute care but continuing to finance long-term care services. The Texas Health and Human Services Commission, which has 3.6 million children, people with disabilities and impoverished Texans enrolled in Medicaid and CHIP, will release its own study on the effect of ending the state’s participation in the federal match program at some point between now and January.

I still don’t think this is a likely outcome, and there are a number of potential unintended consequences. Ideally, I would like to see a reform along the lines that John Hood proposed in National Affairs recently, in which the system is restructured to function more like welfare (post-reform). But if even a single state left the program, it would certainly represent a significant upset in one of the largest and most expensive entitlement programs in the U.S. And that could set the stage for badly needed reform.

More on Medicaid here and here.