Side Effects: Obamacare Encourages States to Drop Medicaid

Kathryn Nix / November 09, 2010

Because of Obamacare, states are considering dropping out of Medicaid, the federal-state health program for the poor, rather than deal with the additional fiscal strain resulting from the health law.

One of the main drivers behind health care reform was to reduce the nation’s number of uninsured.  Under the new law, this will be partially achieved by adding 18 million Americans to the Medicaid program.

This expansion will strain already hurting state budgets.  By expanding a program for which states share the cost, the federal government is able to hide the true cost of the expansion while draining state coffers, at the expense of other state spending priorities.

This cost shift strategy to the states is pushing some states to consider dropping Medicaid altogether. The New York Times reports that Texas is already considering this route. Texas Rep. Warren Chisum (R-District 88) said the state will be restricted in how it can otherwise cut costs. “With Obamacare mandates coming down, we have a situation where we cannot reduce benefits or change eligibility,” he said in the article. “This system is bankrupting our state.” (more…)