One of the few bright spots in the Supreme Court’s ruling on Obamacare was its 7–2 decision striking down the Obama administration’s attempt to blackmail states into going along with a massive and costly expansion of Medicaid. Barely a day later, Florida governor Rick Scott announced that his state would not expand Medicaid eligibility to 133 percent of the poverty level, which comes out to roughly $30,000 per year for a family of four, or allow single, childless men to participate in the program. Earlier, Scott had rejected another key component of Obamacare, refusing to establish a state insurance exchange. He had even returned grants and other funding that the previous governor had received to help implement the legislation.
Scott was quickly joined by at least six other GOP governors in rejecting the Medicaid expansion, including governors Branstad (Iowa), Brownback (Kansas), Haley (South Carolina), Heineman (Nebraska), Jindal (Louisiana), and, not surprisingly, Scott Walker (Wisconsin). At least seven other governors, including Bentley (Alabama), Bryant (Mississippi), Daniels (Indiana), Deal (Georgia), Fallin (Oklahoma), McDonnell (Virginia), Perry (Texas), and Jay Nixon (Missouri), a Democrat, had previously made statements suggesting that they were unlikely to expand their programs. Nevada had earlier passed regulations paving the way to participate in the expansion, but Governor Sandoval has since indicated he may reconsider.
In rejecting Obamacare’s Medicaid expansion, these governors will be saving their state taxpayers billions of dollars. Initially, the federal government would have provided additional funding to cover the expansion, but those additional funds would have been phased down, starting in 2017. Eventually state taxpayers would have had to pick up much of the extra cost. For example, over ten years, the Medicaid expansion would have cost taxpayers in states such as Florida, Kansas, and Texas more than $20 billion each, while in New Jersey, for example, the expansion could cost as much as $35 billion. (In fairness, a few states such as California do emerge as net winners under the expansion formula, but they are clearly the exception, and there are plenty of other reasons why they should resist participating.)
Michael D. Tanner is a senior fellow at the Cato Institute, heading research into a variety of domestic policies with particular emphasis on health care reform, welfare policy, and Social Security. His most recent white paper, "Bad Medicine: A Guide to the Real Costs and Consequences of the New Health Care Law," provides a detailed examination of the Patient Protection and Affordable Care Act (Obamacare) and what it means to taxpayers, workers, physicians, and patients.
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