Unsurprising surprise: Arizona Tea Party Governor goes for Medicaid expansion

Arizona Governor Jan Brewer made what The Hill and others are calling a “surprising move” by deciding to accept the expansion of Medicaid as authorized by the Affordable Care Act. Observers are surprised because Brewer and several of her counterparts have vowed to resist ObamaCare and reject Medicaid expansion.

But it’s really not all that surprising that Brewer is facing up to reality. Not accepting the Medicaid expansion means turning down free money from the feds and having to find other ways to pay for the care of those who lack insurance. Hospitals and physicians prefer Medicaid patients to indigent patients, while employers and health plans don’t like to foot the bill for the uninsured through cost-shifting. The strongest argument against taking the Medicaid expansion is that the federal government might stop being as generous with its subsidies at some point in the future. But that’s a foolish reason to say no to money today. After all, if the money stops coming in states can just throw people off of Medicaid.

I interviewed Avalere Health CEO Dan Mendelson right after the Supreme Court issued its decision that upheld the ACA but limited the power of the federal government to compel states to expand Medicaid. His predictions are starting to come true now. Here’s what he said in response to my question about whether states would opt for expansion:

I think in reality most states, or I would even venture a guess that all states will be compelled to take the expansion, because remember that the federal government pays for the entire expansion until 2017 and then thereafter the subsidy rate is around 90%, so you’d really have to be a rogue state to refuse that.

Or put slightly differently, if you’re the governor of the state, how are you going to stand up in front of your electorate and say, ‘I’m not going to cover people near poverty because I’m worried about the out-year liability that we might incur, and therefore I’m going to turn down the federal government’s largesse.’ I think it would be very difficult for a state to do that.

Well put, Dan.

January 15, 2013

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