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Medicaid: A Bargain, Not a Burden

Anthony Wright is executive director of Health Access California, the statewide health care consumer advocacy coalition. He blogs daily at the Health Access Weblog and is a regular contributor to the Treatment.

Former Massachusetts Governor Mitt Romney is not the only Republican Governor trying to rewrite history, distancing himself from the new federal health reform law that mirrors the proposal he once championed for his own state. California Governor Arnold Schwarzenegger is doing it, too.

To be fair, Schwarzenegger has tempered his remarks, highlighting positive elements of the health reform, and has stated a commitment to implement the new reforms. But he and others in his Administration have also complained about the cost to the state, saying it would cost California $2 to 3 billion more, largely in Medicaid expenses, than the state-based reform he supported but that ultimately failed to pass two years ago.

Key California members of Congress responded, saying that any new cost the state will incur needs to be weighed against the more than $100 billion in benefits the state will receive. But the Governor also just misstates the comparison. His California health reform proposal may have been better in some respects, but two years ago Governor Schwarzenegger would have jumped at the financing arrangement the new federal law offers.

Back then, Governor Schwarzenegger’s proposal was to expand Medicaid to all people at less than 133 percent of the federal poverty level. Since Medicaid is a joint federal-state program, he was asking federal permission to extend California’s standard financing arrangement, in which the feds and California covered an equal share, to more people (mostly adults without children at home, sometimes called the “medically indigent”).

Under the new federal law, Medicaid eligibility will expand to 133 percent of the federal poverty level (except for undocumented immigrants). In other words, it's the same expansion Schwarzenegger proposed before. But for the first three years, from 2014 to 2016, the federal government will actually pick up all of the costs of the newly-eligible population. After that, states will have to contribute some money. But the federal government will still be contributing 90 percent of the cost of newly-eligible.

That’s not a burden. That’s a bargain. 

Some may say that even the modest state contribution is too much when states are already struggling to balance budgets. But remember: The states don't have to provide those funds for many years, by which time they should be out of the present economic crisis.

This argument also ignores the fact of where the responsibility for providing safety-net medical care to the “medically indigent” currently rests. Health reform should be properly seen as the federal government providing significant help in areas previously borne solely by county and state governments.

In practice, the states will recognize the deal and take it. The State Child Health Insurance Program was created over ten years ago and voluntarily offered states the option to cover children just above the poverty level, with the federal government providing a two-to-one match. Some states expanded coverage more than others, but all took up the offer in one way or another. The health reform offers a nine-to-one match--that is, an even better deal.

To be clear, Schwarzenegger and other state elected leaders are absolutely right about the need for more federal help right now, given the budget crises affecting so many states and possible cuts to vital health programs that will follow. But that's something the federal government can and should address through other legislation, such as extending the enhanced Medicaid matching dollars that was in the stimulus act.