Why States Won’t Opt Out of Medicaid Expansion

I’m reading a lot of articles, and seeing lots of tweets, that detail a running total of governors threatening to opt out of the Medicaid expansion. First of all, those are threats. They are very different than actual action. It’s also in the best interests of states to take this position as a negotiating tactic. In the end, though, I think it will be very hard for states to opt out. Here are some of the reasons why:

  1. This is a pretty good deal for states. They’re getting most of the tab picked up by the feds.
  2. It’s one thing to turn down high speed rail. It’s another to tell your constituents that they can’t have insurance entirely paid for by the federal government in 2014.
  3. As more and more states take the money, those that don’t will be more easily marginalized.
  4. History. States threatened not to join Medicaid the first time as well. All did, eventually. Now the program is so American that threatening to remove it is “coercive”.
  5. There will be enormous pressure from doctors, hospitals,pharma, etc. who potentially will lose a lot of money in uncompensated care. They have pretty good lobbying groups.

That last point is worth more than all the others combined. Look, I’m not saying that states don’t have effective arguments right now for opting out. I think they will eventually lose out to these arguments. That won’t stop the media from breathlessly covering the threats as reality from now until then. The “battle” will likely sell a lot of advertising.

Aaron E. Carroll, MD, MS is an associate professor of Pediatrics and the associate director of Children’s Health Services Research at Indiana University School of Medicine, as well as the director of the Center for Health Policy and Professionalism Research. Carroll’s work has been featured in The New York Times, USA Today, The Los Angeles Times, Newsweek, and many other national publications. He blogs at The Incidental Economist, where this post was originally published.

5 replies »

  1. Agreed with the initial media/drama backlash against Medicad expansion, and the forceful lobbies in each state.

    But think there is also a real hatred of Obama and this approach to federal expansion that has a galvanizing effect. There is a growing divide in this country, both economically and socially, and I’m not sure how the eventual outcome will play out.

  2. John–

    You’re entirely right that most people are not interested in Medicaid.

    But controversy sells newspapers. A Governor standing up & shaking
    his fist at Washington sells newspapers.

  3. Aaron –

    Nice analysis. Saw you on CNN as well. You make great points.

    We’re getting ahead of the story line however – in the next phase the red states will complain loudly about Medicaid expansion until the election deadline, at which point most will accept the federal money (a few will stubbornly hold out) – given the realities of state politics they would be insane not too ..

    @Maggie – I think you may be overplaying the influence of the media here. Medicaid does not sell newspapers. Medicare does not sell newspapers. Sex does. Violence does.

    The media are chasing the bright shiny object

    / j

  4. Aaron– Yes, you’ve nailed it.

    As you say #5 if most important. And these lobbyists have far more power than the tea partyers.
    They have monyy– and the power to create jobs (particuarly hospitals).

    But this is, as you say, another story the media loves.Controversy sells
    newpapers, draws eyeballs … .