As Nevada’s Sen. Harry Reid ushers a massive Medicaid expansion through the U.S. Senate, officials in his home state are weighing whether it would be feasible to opt out of the program entirely. Gov. Jim Gibbons this week directed officials at the state Department of Health and Human Services to draft legislation in advance of a special legislative session during which the governor may seek to end Nevada’s participation in the federal program.
Senator Reid’s health-care bill would extend Medicaid eligibility to individuals living at up to 133 percent of the federal poverty line — adding 15 million people to Medicaid by 2019, according to the Congressional Budget Office. The reason Reid has included such a large Medicaid expansion as part of his “reform” package is that Medicaid is, in part, funded by the states, allowing him to off-load the costs of a federal policy initiative onto state governments. This new unfunded federal mandate could cost the states $32.2 billion between 2014 and 2019 and would be forced on them at a time when many state governments are already in the red.
Ironically, Senator Reid’s Medicaid expansion would most heavily penalize his home state. According to a Heritage Foundation analysis, it would result in an 82.1 percent expansion in the number of Medicaid-eligible individuals in Nevada. Gibbons estimates that an expansion of only 60 percent would cost the state $636 million by 2019. However, the Heritage Foundation estimates the state could save $3.79 billion over the same time period by opting out of the Medicaid program while maintaining the same level of state spending on long-term care. If all states followed suit, together they could save $652 billion by 2019.
Opting out of Medicaid could kick some of the coverage costs back to Congress, since low-income individuals would be eligible for federal subsidies to purchase private insurance policies on the new exchanges the reform bills would establish. Not only would low-income individuals continue to receive medical treatment, but their access to treatment would likely improve by moving into the exchanges, which — though far from ideal — would still be better than the dysfunctional Medicaid program.
Gibbons’ actions may soon resonate in other state capitals as policymakers nationwide bridle at Congress’s dictating how limited state resources should be allocated. Harry Reid’s increasingly makeshift proposals are giving states every incentive to throw in the towel on Medicaid.
– Geoffrey Lawrence is a fiscal policy analyst at the Nevada Policy Research Institute. For more visit npri.org.