Fiscal idiocy: What states refusing Medicaid will cost their citizens

One ever-popular piece of political theater is for governors to go to Washington to demand a fair return on the money their citizens pay to the federal government.

You know the drill: Governor calculates that his or her state receives only 80 or 90 cents back on every dollar the people pay, throws conniption, takes junket to DC, accompanied by TV cameras. When he was governor of California, Arnold Schwarzenegger made this a big part of his fiscal reform program.

Sherry Glied and Stephanie Ma of the Commonwealth Fund have done the math to show how this calculation is affected by the refusal of 25 states to expand Medicaid under the Affordable Care Act. (Thanks to Brad DeLong at the Washington Center for Equitable Growth for the tip.) The bottom line is that as a pure fiscal and budgetary matter, refusing the Medicaid expansion is insane. The cost is $57 billion a year.

The Act provides for federal funding to expand the state-federal healthcare program to residents earning up to 138% of the federal poverty level. The federal share will be 100% of the expansion cost through 2016, and stay at 90% or above through 2020.

The Supreme Court made the Medicaid expansion optional, and 25 states have turned down the deal. This is entirely the handiwork of Republican governors or legislatures determined to take a dramatic stand against Obamacare. Of the 25 refusenik states, six have governors who support the expansion over the legislature’s objection; four are Democrats, including the governor-elect of Virginia, and two are Republicans.

It’s already been established that the failure to expand Medicaid will deprive 5 million residents in those states of the improved access to health coverage provided by the Affordable Care Act. Glied and Ma show how the forsworn Medicaid funds will hit those states’ budgets. In every case, they show, the Medicaid expansion would provide more federal funding than the federal highway program, which is one of richest federal handouts to states. In one case -- North Carolina -- the Medicaid funds would outstrip even defense procurement, which is the Big Kahuna of federal aid.

Put together, the 25 states are turning down $57 billion annually. As the Commonwealth Fund points out, their citizens are paying for the program anyway -- but by refusing to accept the funds, these states are sending their own residents’ tax money to other states. The net loss, the authors calculate, is more than $40 billion a year. The refusal may turn a couple of states, including Texas, from net gainers in federal funds to net payers. Brilliant.

As Glied and Ma write, “Even states that do not value the health and health system benefits of expanding Medicaid may value the expansion as a source of funds that benefits the state economy.” That’s a charitable way of putting it. Have these governors and legislatures told the voters how much their ideological stand is costing in cold cash?