The Corner

Maine Governor Vetoes Medicaid Expansion

Many states around the country are still in the process of deciding whether they will expand Medicaid or not. For instance, Florida, Utah, and Virginia have signaled their interest in a full Medicaid expansion, but governors in Pennsylvania, Tennessee, Indiana, and Missouri are exploring different approaches using waivers or so-called private-option type plans modeled after Arkansas’s recent expansion. Neither options are good ideas but that may not dissuade some governors from going ahead with them.

Thankfully, not everyone is falling for the alleged Medicaid-expansion free lunch promised by the Obama administration. After a long drawn-out fight, Maine governor Gov. Paul LePage just vetoed another bill that would expand Medicaid coverage to roughly 70,000 residents and privatize the program through managed care. The Democrat-controlled legislature wasn’t able to overturn the governor’s veto last year, and it isn’t clear that they will be more successful this time around, according to the Boston Globe.

Citing the “disastrous impact on Maine’s budget” and calling the proposed savings through the expansion and managed care “mirages,” the governor renewed its staunch opposition to the expansion. These are sound arguments. In a timely book published by Mercatus Center, The Economics of Medicaid, my colleague Chuck Blahous makes the case that contrary to what was announced, the expansion of Medicaid will likely turn out to be a very expensive move.

I have summarized his arguments in the Washington Examiner this morning. here they are:

First, from the get-go, states that expand will have to foot the bill for the administrative costs of covering those adults, as well as other costs related to other parts of the expansion.

Second, this almost-free lunch on paper will likely turn out to be very burdensome for the states. As Blahous explains, throughout the last decade, Medicaid has progressively become one of the biggest programs in most states’ budgets, and it’s still growing. Although each new beneficiary added under the expansion won’t cost nearly as much to the states, it will still add to the cost of an already unsustainable situation.

In addition, states can’t be sure the federal government will stick to shouldering the extra costs of the Medicaid expansion in the future [Between 2014 and 2016, federal government would pay for 100 percent of the expansion. That share would drop to at least 90 percent thereafter]. The federal government is facing serious fiscal problems of its own, and it is very possible that future fiscal constraints at the federal level will leave the states footing the bill for the expansion.

But, of course, there are many other reasons to resist the expansion of Medicaid, most of them laid out by the other authors in the book. For one thing, Medicaid is actually a bad deal for the recipients themselves. Study after study has shown that the program often provides second-class care. Poor access and poor health outcomes are often the fate that awaits Medicaid beneficiaries — including greater reliance on emergency rooms and higher mortality rates.

Other health-care specialists like the Manhattan Institute’s Avik Roy and Bloomberg View’s Megan McArdle have written extensively about the Oregon study — the Rolls Royce of Medicaid studies. For instance you can find all the information you need on the study’s findings here, here, here; and here, here, here and here.

In this context, and in light of all this information, state legislators should ask themselves whether they should follow the steps of Governor LePage. Is the expansion really worth the future cost to taxpayers in their states and is it really fair to throw more low-income Americans into costly substandard health care?

Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University.

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