Avik Roy: Governors’ Worst Nightmare: Obama Proposed Shifting Costs of Obamacare’s Medicaid Expansion to the States

Last week, I wrote about why states have asignificant fiscal incentive to drop out of Obamacare’s expansion of the Medicaid program. States fear, among other things, that the federal government will shift more of the program’s costs to the states over time, leaving states with an unsustainable spending commitment. It turns out that this fear isn’t merely theoretical. During the “supercommittee” deficit-reduction talks last year, President Obama proposed reducing federal funding for the Medicaid expansion by$100 billion over ten years, with states picking up the difference. No wonder governors from both parties are thinking twice about the program.

“It’s not free,” says Florida Gov. Rick Scott (R.). “You’re still paying it…they’re only going to cover [all of the Medicaid expansion] in the first three years. Then Florida taxpayers are going to be on the hook…Eventually we’ll be on the hook for 50, 45 percent of it. Look. Government health-care programs, everywhere in the world, do three things. They promise you the world, they say ‘Oh, we’re going to cover everything.’ Then what they do is, they run out of money, and they underpay hospitals and doctors, and guess what happens? [Doctors] don’t want to take care of you. There’s fewer of them.”

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