In trying to persuade states to expand Medicaid, Obamacare advocates are using enough scare tactics to fill a haunted house. From threatening to discontinue Gross Receipt taxes to forcing states to pay more hospital bills, the federal government’s created no shortage of Bogey men.
But the biggest scare tactic of all, right up there with those creepy masked chainsaw guys, is the claim that if Pennsylvania doesn’t expand Medicaid, residents’ tax dollars will go to fund Medicaid expansions in other states. But this is based on a misunderstanding of how Medicaid expansion works.
Under Obamacare, the federal government will cover the entire cost of a state’s Medicaid expansion for three years and then gradually reduce the match to 90 percent by 2020—though President Obama has already proposed reducing that matching rate, twice.
When a state opts-in it will not receive additional expansion dollars from opt-out states. New York, for example, will not get more money if Pennsylvania’s expansion waiver is denied.
Rather, when a state opts-out of Medicaid expansion, the entire cost of the Affordable Care Act shrinks. In contrast, when a state chooses to expand Medicaid, it increases future federal spending. Granted, that spending increase would be spread across all 50 states—but should Pennsylvania expand it will hit Pennsylvania residents with higher federal deficits and future taxes, now that’s scary.
All together, the 25 states, including Pennsylvania, that are not expanding at this time would save taxpayers about $481 billion over ten years in federal deficit spending. That’s five times the sequester cuts!
States should jump at the chance to force some fiscal responsibility on D.C.
Don’t be spooked by Obamacare myths, read our Medicaid Expansion Myths and Facts.