Tad DeHaven
Recommend this article

Richmond Times-Dispatch columnist A. Barton Hinkle recently made what should be a simple point to understand, but it’s unfortunately one that few people seem to appreciate. Writing about the supposed win-win situation whereby states expand Medicaid coverage and the federal government foots most of the bill, Hinkle reminds readers that the “free” federal money isn’t really free: 

In Virginia, officials estimate expanding Medicaid would cost the state $137.5 million over nine years, while the state would receive $23 billion from Washington.

Other states report similar figures. California expects to enroll up to 910,000 residents for a cost beginning at only $46 million a year, while collecting $44 billion in federal funds over a six-year period. An Illinois study estimates that state would spend about $2 billion on expanded Medicaid over the next decade, while reaping $22 billion in federal funds. According to Danielle Holohan, who is in charge of New York’s insurance exchange, Medicaid expansion “actually works out to be an enormous savings” for the Empire State. And so on.

This all sounds great—if you are a state official. But if you are a lowly taxpayer, it leaves out one rather significant point: Where is all that federal money coming from?

No great mystery: Most of that money would come from taxpayers who live in the very states that are looking forward to these supposed windfalls. According to the Kaiser Family Foundation, if every state signed up for Medicaid expansion, then the federal government would spend nearly $1 trillion over the next nine years—paid for by you.

So you don’t have to wait for Medicaid expansion to reap this sort of “windfall.” Just take 5 bucks out of your left pocket and put it in your right. As far as your right pocket is concerned, you’re 5 bucks richer. It’s free money!

Recommend this article

Tad DeHaven

Tad DeHaven is a budget analyst at the Cato Institute. Previously he was a deputy director of the Indiana Office of Management and Budget. DeHaven also worked as a budget policy advisor to Senators Jeff Sessions (R-AL) and Tom Coburn (R-OK).

TOWNHALL FINANCE DAILY

Get the best of Townhall Finance Daily delivered straight to your inbox

Follow Townhall Finance!