If States Are Against Health Reform, Why Haven’t They All Left Medicaid?

GrahamOn Sunday, Sen. Lindsey Graham (R-SC) suggested that the Republican effort to repeal health care reform will dominate the 2010 midterm elections, state government and “every statehouse in the nation“:

SEN. GRAHAM: It is good to repeal the cuts in Medicare and to repeal the, the massive tax increases and replace it with opportunities to buy insurance in the private sector without cutting Medicare and raising taxes and using budget–Ponzi schemes like the Class Act. Yes, there’s a way to do that. And 16 million people are dumped into Medicaid. My state is going to get killed by having to serve more Medicaid people; it’s going to hurt state budgets. Finally, this fight won’t wind up being just in Washington; it’s going to spread to every statehouse in the nation, and we’re going to have referendums on this bill through every statehouse in the nation. Can the states afford what Washington did to them?

This kind of rhetoric receives a lot more attention that it deserves, although I’m sure that after the media’s hyper focus on the political process and blow by blow coverage of the repeal theatrics, it’s become difficult to remember why repealing health care reform would be such a bad idea.

So let’s start with the Medicaid expansion complaint. Yes, the federal legislation requires states to expand their Medicaid programs to 133% of the federal poverty line. But states have four years to open up their programs and the federal government will fully fund the expansion for two years. Thereafter, the federal government contribute will decrease every year until 2020, at which point the federal government will fund 90% of the expansion. States will have to pay more to provide the newly eligible population with coverage, but they’re not hung out to dry. To the contrary, they’re saving dollars by insuring Americans that would otherwise end up in emergency rooms and receive far more expensive uncompensated treatment.

Remember, Medicaid is a voluntary program. States do not have to participate at all. (Arizona didn’t join Medicaid until 1982.) The fact that all 50 states do, however, suggests that the allure of federal dollars and the need to alleviate employers and the state form the pressures of shouldering the burden of health care costs — is substantial.

In fact, as one reads through the new law, it’s difficult to see how pulling out of a program that provides state residents with affordability credits and new insurance protections is politically viable. Sure, sates will have to contribute to financing health reform, but on the whole, reform does far more good than harm. Here is Families USA’s very helpful set of reports for how the new health care law will help residents in all 50 states.