No, Mr. President, expanding Medicaid isn’t a “no brainer”

Earlier this month, President Barack Obama visited Dallas, Texas to give a speech in front of supporters in which he tried to pressure Republican governors to expand Medicaid, a government program that covers people who make below 138% of the federal poverty line.

“We were just talking on the way over here that in addition to signing people up for the marketplaces so they can buy private insurance, part of the Affordable Care Act was expanding the number of working families who would qualify for Medicaid,” President Obama told supporters.

“Here in just the Dallas area, 133,000 people who don’t currently have health insurance would immediately get health insurance without even having to go through the website if the state of Texas decided to do it,” he said. “There’s over $500 million just for this county that would come in to help families get health insurance — has nothing to do with the website — if the state of Texas made this decision.”

“And your neighboring states have made that decision because they look at it and they say, this is a no-brainer, why would not — why would we not want to take advantage of this,” he added.

The fact that President Obama gave this speech in Texas, home to the country’s largest uninsured population, isn’t a coincidence. Seeking to capitalize on the state’s large Hispanic population, there is a big push by activist Democrats with help from the party to “turn Texas blue.” Part of this effort is to pressure Texas politicians, including Gov. Rick Perry, to accept Medicaid expansion, which is part of the Obamacare.

President Obama cited states like Arkansas and Oregon that have already expanded Medicaid, noting that they’ve reduced the number of uninsured residents by 14% and 10%, respectively. “There’s no reason why this state can’t do the same,” he said. “Across this state, you’ve got a million people — because this is a big state — a million people, citizens, who don’t have health insurance that could get health insurance right away if the state of Texas decided to take advantage of it.”

While states may be drawn to federal dollars to pay for an expansion of Medicaid, it’s not the “no brainer” that President Obama suggests, and it’s more than just opposition that’s driving them to stay away from expansion. For many states, it’s a budgetary issue.

The federal government does cover the cost of expansion from 2014 to 2016, but that funding begins to drop in subsequent years to 90% by 2020. States which decided to expand Medicaid will have to cover the shortfall.

Now, one may say, “Well, we’re talking about 10% cost to states.” That may not sound like a big deal, but to states, it means a lot of money. The Heritage Foundation estimated that Medicaid expansion would cost Texas $4 billion by 2022, including $1.2 billion in that fiscal year alone. For all states combined, expansion would cost $41 billion by 2022, according to the Congressional Budget Office.

That funding level may be set right now, but future a Congress could reduce it as part of some broad deal on deficit or entitlement reform. That could much a larger burden on states, much more significant than what they would presently face if they opted into Medicaid expansion.

Many states have had problems recovering after the most recent recession, and have been forced to trim their budgets — significantly, in some cases — and don’t necessarily have the means to cover the costs of Medicaid expansion. How are they to pay for this unfunded mandate? Sure, moving around spending priorities may be one way, but because of a still-struggling economy and budget shortfalls, there isn’t much they can shift.

The end result of expansion would likely be (surprise!) tax hikes, which is also an undesired outcome because it would further burden state taxpayers and reduce states’ competitiveness in attracting business.

One of the arguments for Medicaid expansion is that it expands access to care, leaving those covered by the program with better health outcomes than those who are uninsured. So it’s interesting that President Obama cited Oregon as an example of success in Medicaid expansion.

That state expanded the program back in 2008, very similar to Obamacare. But a study by the New England Journal of Medicine found that there was no difference in health outcomes between those who were covered by Medicaid expansion and those who remained uninsured. That finding came despite Oregon spending $1,172 more per Medicaid recipient. Other studies have shown similar, if not worse, results, including a higher cancer morality rate for Medicaid participants.

By most accounts, Medicaid is a broken program and, like other government healthcare programs, it cannot be sustained as it is currently structured. That’s a reality that President Obama has acknowledged on different occasions.

But rather than taking up the arduous task of reforming Medicaid, President Obama has expanded it and knocked proposals offered by Republicans that would slow the growth of the program and, quite possibly, deliver better health outcomes for those who need access.

No one denies that there are people in our society who need help and access to healthcare. But expanding an already broken program, then disingenuously applying political pressure to governors who see the very real fiscal downsides to doing so, isn’t the way to do it.


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