Texas Rejects Medicaid Expansion

The ACA sought to expand Medicaid to people 133% above the poverty line though a carrot and stick approach. The stick threatened to kick  non complying states out of Medicaid by eliminating the current federal contributions—even to maintain existing coverage. Those clearly punitive threats were declared unconstitutional by the Supremes. Much good for federalism can come of that—and not just in healthcare.

But the Obamacare Medicaid expansion carrot remains, e.g., full federal subsidies for the first few years to help states who expand the program pay the extra freight.  But what happens when the subsidies decrease after a few years to 90%, and who knows after that?  States will be stuck with the excess bill, along with a much higher Medicaid load.  I also suspect fewer doctors will take Medicaid patients, since compensation levels are decreasing as the number of covered recipients increases.

That is why Texas, among other states, is refusing the Trojan horse.  From the Washington Times story:

Texas Gov. Rick Perry said Monday his state won’t expand Medicaid or set up an insurance exchange, joining a growing number of Republican governors who are rejecting two key parts of President Obama’s health care law. “I will not be party to socializing health care and bankrupting my state in direct contradiction to our Constitution and our founding principles of limited government,” Mr. Perry said. He joins more than half-dozen GOP governors who have already said they won’t increase the size of their Medicaid programs to cover Americans up to 133 percent of the poverty level, after the Supreme Court upheld most of the law last month but said states could opt out of the Medicaid expansion.

Obamacare’s Medicaid expansion is supposed to create a new floor of state coverage, and in the process, move the entire country closer to single payer—the ultimate goal.  States are now free to decide for themselves whether the payments they receive from the Feds to expand Medicaid are worth the price they will ultimately pay.

We could also see a “voting with their feet” phenomenon set in, in which the poor move to states that eat the carrots, and the productive move to states that don’t to escape the tax, borrow, and spend consequences of Obamacare.