Health Care Costs Crushing States– Is the Solution to Drop out of Medicaid?

The headline says it all.
“States’ Woes Spur Medicaid Drop-Out Talk”

An article in The New York Times today highlights the serious consideration by at least a dozen states to withdraw from the Medicaid program. Supporters are arguing for either a state financed Medicaid program to allow for maximum “flexibility in benefit and cost design” or a federal waiver for states to make some changes on their own. At first glance, leaving the Medicaid program would seem illogical given the federal match that would be left on the table. However estimates that have been conducted– both by think tanks and independent sources– highlight a budget busting tidal wave on its way if the status quo is followed.
Lanhee Chen has detailed the oncoming tsunami for state budgets.

Texas recently concluded that the Medicaid expansion may add more than 2 million people to the program and cost the state up to $27 billion in a single decade.

For Mississippi, Milliman [a national health care econometrics firm] estimates that between 206,000 and 415,000 people will be added to Medicaid, with a 10-year impact on the state budget of between $858 million and $1.66 billion. The seven-year cost of the Medicaid expansion in Indiana is estimated to be between $2.59 billion and $3.11 billion, with 388,000 to 522,000 people joining the state’s Medicaid rolls. Finally, Milliman estimates that Obamacare will result in nearly one of five Nebraskans being covered by Medicaid at a cost of $526 million to $766 million over the next decade.

Heritage Foundation scholar Ed Haislmaier “estimates that Texas would save $46.5 billion from 2014 to 2019…” with a competitive exchange. Haislmaier believes that 40 states could be better off financially if they followed suit.

Haislmaier and his colleague Brian Blase further estimate that the additional administrative cost of the Medicaid expansion under the federal overhaul will cost almost $12 billion by 2020.

Regardless if states do end up leaving Medicaid or not, these conversations should wake up Washington to the crushing cost of health care in most states, and may ultimately be decided in court. It is important to remember that the lawsuits over Obamacare  don’t just focus on the individual mandate, but also on the costly expansion of Medicaid.