| May 1, 2013

Oklahoma policymakers fed up with federal spending 'finally have a chance to do something about it'

“As the battle over Medicaid expansion rages in the states,” Christina Corieri writes today in The Wall Street Journal, “supporters of expansion have dusted off an age-old favorite in making the case for taking federal dollars. They say: If our state doesn't take the money, those dollars will go to some other state instead.

Happily, in this instance that is not true. When a state declines to expand Medicaid coverage to more people, no other state will receive its share of funds and federal spending declines. Based on figures from the Congressional Budget Office and analysis by the Kaiser Family Foundation, Washington was expected to spend roughly $950 billion expanding Medicaid between 2014 and 2022. Each state that declines to expand Medicaid relieves strain on the overall federal budget for this entitlement.

State governments generally don't have much of an impact on the federal budget. But there was a gift for fiscally conservative state lawmakers tucked into last summer's U.S. Supreme Court decision on the Affordable Care Act. In National Federation of Independent Business v. Sebelius, the court ruled that Congress cannot coerce states into expanding Medicaid by threatening to withhold federal dollars for a state's existing program. This ruling effectively gave state policy makers the unique opportunity to veto hundreds of billions of dollars in new federal spending.

Supporters of Medicaid expansion also say that one state opting out won't make a difference — that the amount of forgone money is a mere drop in the fiscal bucket. But states joining together to say no to Medicaid expansion will make a significant dent in the federal budget, and many already have.

Using figures compiled by Kaiser and our own research at the state level, the Goldwater Institute estimates that the federal tab for Medicaid expansion has been reduced by more than $424 billion in new federal spending over the next eight years thanks to the 18 states that have already opted out [Oklahoma’s portion is $9,147,000,000]. If the 12 still-undecided states also decide to opt out, there will be an additional $185 billion in savings.

The more than $609 billion in total savings from these 30 states would represent over 50% of the expected federal spending on the Medicaid expansion. A drop in the bucket? That's more than seven times the $85 billion in 2013 sequester cuts and more than half the projected federal deficit for this fiscal year.

In short, Corieri says, “state policy makers fed up with federal spending finally have a chance to do something about it.”

Moreover, as OCPA has long pointed out, chasing federal dollars also spurs higher state spending. “In addition to protecting the federal budget,” Corieri explains how “states that decline to expand their Medicaid coverage will protect their own budgets as well.” I encourage you to read her article here.

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