States Assess Obamacare’s High Medicaid Pricetag

Published May 4, 2012

In advance of the Supreme Court’s April hearings on the constitutionality of President Obama’s health care law, the Republican Governors Association released a new survey of estimates from state administrators highlighting the exorbitant cost of implementing the law, particularly the expansion of Medicaid mandated to all states.

“President Obama’s federal health care takeover was enacted by Democrats in Congress over the objection of governors and with little regard for the costs to the states,” said RGA Chairman Bob McDonnell in a statement. “The federal health care law shifts billions of dollars in unfunded, long-term costs to state governments while restricting the ability of governors to craft Medicaid solutions for the citizens of their states.”

Policy analysts from four Republican-governed states point out Medicaid is already the largest line item for most states, and the program’s rolls will swell with more than 16 million new participants under Obama’s law.

Florida: $1.5 Billion in 2014

According to Florida’s Agency for Health Care Administration, ObamaCare’s Medicaid expansion will force Florida to spend an additional $1.5 billion and force an additional 1.8 million Floridians to enroll in Medicaid in 2014, with further increases in out-years.

Tarren Bragdon, chief executive officer of the Foundation for Government Accountability in Naples, Florida, says as bad as ObamaCare will be for patients, he’s even more concerned about the new law bankrupting Florida, which is already struggling with its own budget crisis.

“ObamaCare is not about health care, it’s about health consignment of an unprecedented level that gives Washington too much control over the country’s health care system,” said Bragdon.

Texas: $27 Billion by 2022

Medicaid accounts for a quarter of the state budget in Texas. Administrators estimate Obama’s law will increase Medicaid enrollment in Texas by nearly 2 million people and cost the state $27 billion over 10 years.

Devon Herrick, a senior fellow with the National Center for Policy Analysis in Dallas, Texas, says when the PPACA is fully implemented, nearly 20 million additional people may qualify for Medicaid nationwide—2 million more in Texas alone.

“Medicaid pays physician fees that are about 40 percent lower than private insurers. Many newly enrolled individuals will face problems finding a doctor willing to treat them for the low physician fees Medicaid pays. It could cost Texas billions to boost Medicaid fees enough to ensure enough doctors are willing to treat all the additional Medicaid enrollees,” explained Herrick.

Arizona: $550 Million by 2015

The mandatory Medicaid expansions are expected to cost Arizona more than $550 million in the next three fiscal years. Once fully implemented in the latter half of this decade, PPACA is anticipated to increase Arizona’s annual Medicaid obligations by almost $500 million per year.

Byron Schlomach, director of the Center for Economic Prosperity at the Goldwater Institute, says 2014 will be a very tough year fiscally for Arizona.

“First, a temporary 1 cent sales tax will expire. It represents nearly $1 billion in revenue. Second, that’s the year the PPACA begins to kick in on the Medicaid expansion. Medicaid and public education alone constitute about 82 percent of the budget. Throw in higher education, and the rest of state government is run on 8 percent of the general fund budget,” said Schlomach.

According to Schlomach, Arizona will receive a lower matching rate than other states because of reductions in coverage the state instituted during the economic downturn.

“Arizona can’t afford the federal law. This state was one of only half a dozen that covered all of the adult population up to 100 percent of poverty under Medicaid. The state had to reduce that coverage in order to survive the recession. Once the PPACA fully kicks in, this state will be extremely hard-pressed to fund longstanding, basic government services at the state level. Local government will see its role expanded, taxes will likely rise, and this state’s economy will be severely impacted in a very negative way,” said Schlomach

Idaho: $228 Million by 2020

Idaho estimates between 150,000 and 200,000 new eligibles could be added to the Medicaid caseload when new expansion rules are implemented under Obama’s law, translating to a 40 percent increase in participation compared to Idaho’s current caseloads. The overall Medicaid benefit cost is conservatively estimated to be $228 million in state funds by 2020.

Wayne Hoffman, executive director of the Idaho Freedom Foundation, says the federal healthcare law has sped up Idaho’s day of reckoning over entitlement spending.

“Simply put, Idaho cannot afford the system even without the added weight of ObamaCare. Medicaid spending is drawing money away from K-12 education, higher education, highway and bridge infrastructure, and public safety. Idaho either gets control over the problem, or it has to continue to draw resources away from other government services and programs. The only other option is to raise taxes,” said Hoffman.

“The nation is on a spending collision course that no one wants to talk about, especially state legislators who have become quite used to the federal government’s ongoing largess,” Hoffman said. “We cannot continue spending our grandchildren’s money, and ObamaCare has helped amplify the problem. If the Medicaid expansion under the health care reforms survives, it will no doubt shape the decisions that follow in the 2013 legislative session and beyond.”