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Why GOP Governors Should Love Medicaid

Republicans governors have spent a lot of time lately beating up on Medicaid--threatening to drop out of the program altogether or, at the very least, lobbying for more flexibility over how to manage the program within their states. Harold Pollack, writing for TNR, wonders whether they’ve thought through the implications for politics as well as policy: 

Consider what would happen if Texas governor Rick Perry, who has mused about dropping Medicaid entirely, could do what he wanted. Talking about dropping Medicaid might attract attention for Perry’s new book. Actually doing so would be ludicrous, both as policy and politics. Most Texas Medicaid dollars go to the elderly and the disabled. Millions of middle-class Americans—in Texas and everyplace else—rely on Medicaid to protect them if they or a loved one requires costly medical services or long-term care. Few politicians would risk damaging services to these groups.
Medicaid’s rules and procedures are also encoded in the DNA of every state’s medical and social service systems. Withdrawing from the program would be an administrative nightmare that would likely deeply anger patients, not to mention the well-organized network of providers who provide Medicaid-funded services.
Moreover, the federal government picks up more than 60 percent of Texas’s Medicaid tab. I doubt Texas would turn down more than $15 billion annually from the federal government, just as I doubt it will forego additional federal funds which finance virtually the entire cost of expanded Medicaid under ACA. (Recent analysis indicates that Texas will also receive billions of dollars in new subsidies for individuals and for state services under the new health reform law.)

As Harold makes clear, states really do have a fiscal problem right now and Medicaid really is a flawed program. It doesn’t foster particularly good management of chronic disease. It also doesn’t pay providers particularly well. But simply giving the governors more flexibility won't solve that problem. You can read the rest of Harold's article to see why.

P.S. On a somewhat related note, a new-ish argument against Medicaid has popped up, via Avik Roy of Forbes and National Review. He suggests that people on Medicaid would be better off if they had no insurance at all. The primary basis for his argument is a University of Virginia study based on surgical outcomes. But, as Harold and Austin Frakt point out, the study doesn't adequately adjust for the fact that the uninsured are, on the whole, more healthy than people on Medicaid. When you make that adjustment, as countless other peer-reviewed studies have, Medicaid generally shows clear benefits--not just for health but also for financial security. And while Roy dismisses that entire line of research, I think Harold and Austin are, by far, more persuasive.