Should states jump on the Medicaid expansion bandwagon?

Carter C. Price and Christine Eibner have a new study in Health Affairs suggesting a definite “yes,” and I have seen this piece endorsed numerous times in the blogosphere and on Twitter.  I do understand that part of their argument is a normative one, given the desire to expand insurance coverage for the currently uninsured.  But they and their endorsers also seem to be making a state-level financial prudence argument, as if there were no possible reason for a state not to expand participation behind sheer ideological stubbornness.  On that matter I don’t think they have pondered the problem deeply enough and they fail an intellectual Turing test.

Let’s start with a simple observation, namely that a Republican may win the next Presidential election.  There is also quite a good chance that such a victory would be accompanied by a Republican Senate (and House), given the distribution of vulnerable seats.  That means a very real chance that the federal government will scale back its commitment to Medicaid expansion, for better or worse.  States don’t want to be left holding the bag, and governors know it is hard to take back benefits once granted.

I often interpret the Republicans as operating in a “they don’t really mean what they say” mode, but on Medicaid I think they basically do mean it and we already can see some of the demonstrated preference evidence.  Furthermore a new Republican President would face very real pressure to “repeal Obamacare,” yet we all know that the “three-legged stool” centered around the mandate is hard to undo selectively.  That ups the chance Medicaid will be the target and much of the rest will be relabeled (“repealed,” in the press release) but in some manner kept in place in its essentials.

Another possibility is that a Republican administration would somehow restructure the deal to, in some way, favor the holdout red states, relative to the deal already on the table.  (Why not reward your supporters?)  That increases the prospective return to being a holdout red state.

On top of all this, there is option value.  The chance to jump on the Medicaid expansion bandwagon won’t go away tomorrow.  Even if the cost-benefit ratio > 1, you still might want to play wait and see.  There is even a chance that in the meantime you are somehow offered a better deal yet.

Now if someone wants to argue that, given these considerations, Medicaid expansion still makes financial sense for a state, fine, I would be keen to read such an analysis.  But that is not what I am seeing.  The Price and Eibner piece doesn’t analyze these considerations or even bring up most of them.  Governors are not stupid, or their chiefs of staff are not stupid, and many governors are far less ideological than they let on.  They are politicians.  And they are politicians who understand that the federal government is not to be trusted and yes if you wish you really can blame that on the Republicans, or indeed on any prospective switch of power.  That is why we are not seeing more states do the Medicaid expansion.  In the meantime, the debate needs to catch up to the reality.