Obamacare

Could Health Care Reform Cause States to Drop Out of Medicaid?

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Judging by this new report from the Heritage Foundation, it would certainly give states an incentive to do so (or at least to threaten to do so).

The details are somewhat complex, but the short version is that various provisions in health care reform legislation would impose substantial new Medicaid costs on states. Given that Medicaid, which provides assistance with health care expenses for the very poor, is technically a voluntary program, according to the report's authors, the potential "savings to state budgets are so enormous that failure to leave Medicaid might be viewed as irresponsible on the part of elected state officials."

The idea that the bill's Medicaid expansions might prove trouble is hardly surprising. State governors have already complained loudly about how reform legislation would increase Medicaid burdens in their states, with Tennessee's Democratic Governor Phil Bredesen telling the Washington Post that, though he supports the idea of reform legislation, "nobody's going to put their state into bankruptcy… for it." Bredesen's sentiment isn't that surprising considering Tennessee's recent experience with the budget-busting TennCare, a state-run health care program that aimed for universal coverage but eventually had to drop 170,000 people from its rolls after the state faced bankruptcy.

I certainly think it's possible that state governments could float the possibility of dropping out of Medicaid as a threat to get the federal government to restructure the program in such a way that doesn't put such a large burden on state governments. (Indeed, rumbles from state governments appear to have already caused Senate Majority Leader Harry Reid to modify the Senate's bill in order to be more accommodating to state-level budgetary concerns.) But I'm at least a little skeptical that any would actually follow through and make the drastic move of leaving the program.

No matter what, though, these sorts of reports pile on the evidence to what we already knew: Large-scale reorganizations of our health care system like what we're seeing proposed now are likely to result in all sorts of potentially troublesome unintended consequences.

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  1. Large-scale reorganizations of our health care system like what we’re seeing proposed now are likely to result in all sorts of potentially troublesome unintended consequences.

    Like we said, the bills are not perfect.

  2. ALl I know is its about time for the US to start taking care of its own and stop wasting endless BILLIONS in countries it has no business in.

    Jess
    http://www.web-anonymity.de.tc

  3. Wrong question, as states won’t be *allowed* to drop out or opt out.

    Not with this bunch of statists (currently) in power.

    Cue Tony or Chad in 5… 4… 3…

  4. Two thoughts:

    (1) Attempting to force states to participate in Medicare would set off a Constitutional crisis. No idea who would win.

    (2) States won’t drop out, because for every dollar they spend, they get nearly three federal dollars. I can’t see any state, including Texas, just cutting off all health care welfare. As long as they’re doing it, they will want that sweet, sweet federal moolah.

    1. Agreed on point 2. I think we’d see a similar situation to states technically being allowed to set their own drinking age but the federal government blackmailing, bullying, and extorting them into some policy that is outside the law, through use of federal tax dollars. Maybe if enough states got together on this, but it would still be pretty hard to break that federal dependence.

  5. RC Dean,

    I think you’re right that the federal matching is a major potential factor, and that’s one of the reasons I suspect states wouldn’t actually follow through. On the other hand, the point of the Heritage analysis is that states could stand to close huge budget gaps if they chose to drop out; given that most states can’t engage in endless deficit spending (like the federal government), it may be something they look at as a possibility, or at least use as a threat to get concessions out of Congress.

  6. Or you could always elect a first class whore to chisle out a few hundred billion of extra medicaid aid with some creative fence sitting.

  7. Given that Medicaid, which provides assistance with health care expenses for the very poor, is technically a voluntary program,

    Sort of like the income tax is “voluntary?”

  8. I certainly hope my state opts out of Medicaid because of this. Hell, now that I know this, I’m going to write to my state legislators and ask them to opt out anyway — I have no desire to be forced to pay (involuntarily, and not through charity) for anyone’s medical care, no matter how poor they are. I didn’t sign up to be my brother’s keeper.

  9. Just curious: Is there such thing as internationally-available high-deductible medical insurance that guarantees that you can go get high-quality treatment in, say, a private hospital in Hong Kong if you develop some major medical condition?

  10. Its time to change our policy for other countries. The govt has wasted millions of dollars in the war and wasting in aid.
    That’s why we faced many problems in our economy.

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