A few days ago 26 states argued before the Supreme Court that the health law’s dramatic extension of Medicaid coverage constitutes unconstitutional federal coercion. “Congress easily could have designed an act that encouraged rather than forced states to expand their Medicaid programs,” their brief submitted to the Court argues. “By making a conscious decision to deprive states of any choice in the matter, Congress has effectively forced this court’s hand.”
Since virtually all these states are headed by Republican Governors, we can consider this the Republican Party position.
What form does this coercion take? According to the states, it is the unprecedented federal generosity that allows them to achieve the required expansion at virtually no cost. They believe the federal government is making them an offer they can’t refuse, which rises to the level of an unconstitutional invasion of state prerogatives.
A little background may be in order. Medicare guarantees health care to those over 65. It is funded from payroll taxes. Enacted at the same time as Medicare, Medicaid is aimed at lower income households. It is funded out of general revenues. State participation is voluntary but if states offer minimum levels of coverage, the federal government will pay the majority of the costs. Currently the average federal share is 57 percent but it can be much higher for specific states.
The Affordable Care Act (ACA) requires participating states to extend Medicaid eligibility to all households with incomes up to 133 percent of the federal poverty level (in 2012 about $15,000 for an individual and $30,000 for a family of four). In return for their doing this the federal government will pick up 100 percent of the costs of Medicaid for new entrants for the first three years. Then states will pick up a tiny share of the cost, gradually growing to 10 percent by 2020, and remaining there.
I have a question for these 26 mostly Republican Governors. Whom do you think you are representing? It’s hard to believe it’s the citizens of your states.
Consider the impact of the law on Alabama, one of the signatories to the Supreme Court brief. Medicaid in Alabama is a $6 billion-a-year program. The federal government covers more than $4 billion of that. Under the new law, the number of Alabamans covered by Medicaid, currently about 1 million of its 5 million residents, would rise by 500,000. That may increase Medicaid spending between 2014 and 2019 by $470 million but federal expenditures in Alabama would increase by $10.3 billion. For every additional dollar Alabama will spend on health care for new Medicaid enrollees out of its general budget, federal spending in the state on health care will increase by more than $20.
Alabama will receive a $1.5 billion a year injection of new money. In economic impact this is equivalent to an automobile plant opening with 20,000 new jobs. Half a million Alabamans will gain health insurance, reducing their and their families’ pain and anxiety. What’s not to like?
Actually the deal is even better. Because the new law will dramatically reduce the number of uninsured, states will save billions in uncompensated spending on hospitalization, mental health care and other medical services. According to Urban Institute researchers John Holahan and Irene Headen states’ savings from no longer having to finance as much uncompensated care may fully offset the increase in state Medicaid costs required by the new law.
Indeed, one analysis of the financial impact on states nationwide finds that under a worst-case scenario, states will realize net budgetary savings between 2014 and 2019 of $40.6 billion. In a best-case scenario these gains soar to $131.9 billion.
So when the Republican Governors of Alabama and 25 other states and by extension the Republican Party argue that the federal program is unconstitutional, I seriously doubt anyone can say they are doing so on the basis of any rational cost-benefit analysis. So they must be standing on principle. But what exactly is the principle? Is it that states do not want to provide health care for millions of their citizens? Is it that that they do but they don’t want the federal government to pay for it? Is it that they do but they don’t want to be forced to do so?
None of these principles seem the kind that a political party would want to embrace during an election year. The first is simply mean spirited. The second is laughable. The third sounds a lot like a five year old having a temper tantrum, “You can’t make me!”
The states’ complaint about federal coercion in the form of unprecedented generosity received relatively little media attention. That’s unfortunate. As the state and federal election campaigns swing into high gear it would be illuminating to hear these 26 Governors and the Republican Party justify to their constituents their vigorous opposition to expanding health care to million of their residents and significantly boosting their economies at virtually no cost to state budgets.