State lawmakers and governors should think twice, recognize long-term effects before agreeing to Medicaid expansion

ALEXANDRIA, Va., April 25, 2013 /PRNewswire-USNewswire/ -- Bob Williams, State Budget Solutions

The Medicaid expansion debate taking place in Louisiana this week is one that will likely be repeated in many states in coming months. It is also a debate that will be a critical part of the 2016 campaign, as state governors—and potential presidential candidates—weigh in on the topic. But today, state legislators must ask themselves if it is wise to accept, and in turn, rely on even more federal money, not knowing for sure the money will be available, while growing the size of government at the same time.

The issue tests the willpower of states to avoid the lure of more federal funds for programs that have historically cost states far more than expected. The Supreme Court's ruling on ObamaCare gave each state a unique opportunity to make a true judgment on the merits of Medicaid expansion, rather than being forced to accept it for fear of losing already-promised Medicaid funds.

Being offered millions of dollars in the short term is certainly an enticing proposal. But governors and legislators need to recognize the long-term effects of Medicaid expansion will leave their states' taxpayers holding the bag.

We at State Budget Solutions are carefully tracking each state and we're keeping a close watch on the legislators and governors in the position to make the decisions that will affect millions of citizens.  Examples include:

• Louisiana Governor Bobby Jindal wrote on Monday that he opposes the expansion for several reasons, citing the costs to the state's taxpayers, unstable federal government funding, and major, unnecessary shift of citizens' private insurance to government-run insurance.
• Florida legislators in the House have proposed an alternative plan which would use state funds only to subsidize private insurance for low-income Floridians. Governor Rick Scott has reversed himself on the issue, now saying that he's willing to accept the expansion.
• Arkansas has taken a different route—it has accepted the money from the federal government meant for the Medicaid expansion, but will instead put it towards buying private insurance for low-income residents.
• New Mexico Governor Susana Martinez, while approving the expansion, still said, "If the federal government breaks its promise and begins to cut their reimbursement rate, we will be forced to scale back this expansion." But mere acknowledgement today will not be enough to sustain a faltering system in the years to come.
• Nebraska learned this week that federal funding can disappear at any point and that federal Medicaid funding in particular is uncertain when it discovered that the state's good economy meant a reduction in the percentage of federal matching funds, resulting in a loss of millions that the state had been expecting.

A 2013 State Budget Solutions report shows that all states already heavily rely on the federal government for state revenue, with amounts ranging from roughly one quarter to as high as 49 percent of states' general funds coming from Washington, DC.

The problem of states' reliance on federal funds is a nationwide, bipartisan problem. States should think twice and avoid programs that would put them closer to a serious fiscal crisis.

Bob Williams, President of State Budget Solutions, is a former Washington state legislator, gubernatorial candidate and auditor with the U.S. Government Accountability Office.

SOURCE State Budget Solutions

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