Research & Commentary: Obamacare ‘Holdout Governors’ Need Opportunity, Not Punishment

Published April 16, 2024

As pressure builds on the 10 remaining “holdout” states that have not expanded Medicaid under the Affordable Care Act ( also known as Obamacare), Mississippi Gov. Tate Reeves isn’t just holding his ground, he’s challenging Republicans in his own party to reject what he calls “Obamacare Medicaid expansion.”

Mississippi Republicans, who control both the House and Senate, support different versions of Medicaid expansion and could have the necessary votes to override a Reeves veto for expansion, a centerpiece of Obamacare.

Reeves and the nine other governors who represent states that have not expanded Medicaid under Obamacare offer the best opportunity for America to deliver better health care at a lower price, which was exactly what Obamacare was supposed to achieve in the first place.

Supporters of Medicaid expansion argue that low-income people are effectively shut out of the health care system with little hope of finding coverage. They also claim that the cost of health care for these poor Americans is subsidized by hospitals in the form of uncompensated care, charity care, and bad debt. Mississippi House Speaker Jason White contends that “finding affordable access to health care is not only compassionate, but it is a smart investment in our workforce.”

Expansion critics argue that the federal dollars that come with expanding Medicaid also come at a cost. In expansion states, private health insurance costs have skyrocketed as newly Medicaid-eligible folks jettisoned their private coverage.

According to a study from the Kaiser Family Foundation, per-enrollee spending by private insurers grew by 61.6 percent from 2008 to 2022, while overall spending on all health care services nearly doubled over that period, rising from $2.49 trillion to $4.46 trillion.

In 2016, President Obama speculated that uninsured people overutilized emergency department (ED) care because they are “relying on the emergency room, but the emergency room is the most expensive place to get care.” Obamacare proponents alleged that emergency room use for routine care would substantially decline when Medicaid expansion went into effect, however, the opposite has happened.

A 2021 American Journal of Emergency Medicine study found that Medicaid expansion in New York saw increased emergency department use across all demographics and concluded, “Our results suggest that efforts to expand health insurance coverage only will be unlikely to reverse the increase in ED use.”  That same year, an Annals of Emergency Medicine study found, “that total ED use per 1,000 population increased by 2.5 visits more in Medicaid expansion states than in nonexpansion states after 2014, concluding ‘the expansion also increased use of the ED, consistent with polls of emergency physicians.’”

Health care costs have gone up, not down, after 40 states expanded Medicaid under Obamacare. Emergency rooms are providing more care, not less. But what about the quality of care?

Minnesota was one of the first states to expand Medicaid coverage despite having one of the highest rates of insurance coverage in the country. Minnesota had a state-administered, premium-supported plan called the Minnesota Comprehensive Health Association (MCHA) for people with pre-existing conditions and an innovative hospital-based program that focused on preventative, coordinated care for uninsured childless adults. Despite the successes of both plans, they were quickly scrapped and replaced with expanded Medicaid.

Medicaid is by its very nature a one-size-fits-all program. Although states provide about half the cost of Medicaid, they lose their ability to opt out of the single benefit set and coverage and can no longer offer patient-specific care that is most needed. When states agree to expand Medicaid, the money comes with strings, cables, and handcuffs.

In Minnesota’s case, this meant the financial incentive to prevent frequent hospital readmissions disappeared. Those who frequently use the ED for routine care have a higher rate of chronic disease, substance use, and mental illness, with 5 percent of the population accounting for up to 28 percent of all ED visits. Minnesota’s successful intervention plan to focus on preventative care and chronic disease management was no longer legal under Obamacare’s Medicaid expansion regulations once those patients were enrolled in Medicaid.

Non-expansion states should work together and look for more innovative ways to improve value in health care delivery. A 2021 study by The Heritage Foundation concluded that, “The initial data from states that implemented Section 1332 waiver programs show that permitting states to apply alternative approaches allowed them to reduce premiums, expand coverage options, and do a better job of focusing available resources on helping high-cost patients.”

Gov. Reeves was successful in his attempts to get a better deal in reimbursing Medicaid costs for Mississippi hospitals. His work with the Biden administration has yielded $700 million in additional funds for Mississippi hospitals, without expanding Medicaid.

States that resisted Medicaid expansion should no longer have their taxpayers and hospitals unfairly punished for not jumping on the bandwagon. Time has shown that the original promises of Medicaid expansion have not been kept. Rather than allowing the federal government to treat these states unfairly, they should be allowed to experiment and collaborate to offer better care at a lower cost.

The following documents provide additional information:

Obamacare Has Doubled the Cost of Individual Health Insurance

Edmund Haislmaier and Abigail Slagle of the Heritage Foundation review the Obamacare costs

The effect of expanded insurance coverage under the Affordable Care Act on emergency department utilization in New York

The American Journal of Family Medicine looks at ED use after Medicaid expansion

Effect of the Affordable Care Act Medicaid Expansion on Emergency Department Visits: Evidence from State-Level Emergency Department Databases

The Annals of Emergency Medicine reviews ED utilization and Medicaid expansion

State Innovation: The Key to Affordable Health Care Coverage Choices

Doug Badger and Edmund Haislmaier of The Heritage Foundation look at state health care innovation

Status of State Medicaid Expansion Decisions: Interactive Map

The Kaiser Family Foundation’s Medicaid Expansion Breakdown by State

Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this and other topics, visit the The Heartland Institute’s website,

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