Proof that State Governments Don’t Care About their Residents?

28 Jun

George Washington University professor Leighton Ku has an article in the latest issue of Health Affairs that takes a look at the expansion of Medicaid that is scheduled to roll out under the new health reform law. The paradigm shift that has occurred, Ku notes, is that we have finally moved away from the notion–at least in the health policy world–of the “deserving” versus the “undeserving” poor. You see, it used to be that to qualify for Medicaid coverage, you not only had to be low income, but you also had to belong to one of a defined number of eligibility groups, like children or pregnant women. If you didn’t belong to one of these “deserving” groups, you didn’t qualify for Medicaid no matter how poor you were.

The health reform law changes that. When it is fully implemented, Medicaid will no longer require categorical eligibility, but will truly become a program for the country’s poorest citizens. Our nation’s health insurance safety net will finally catch all low-income people, rather than having large holes shaped to let childless adults and parents fall through untouched. That’s a great thing.

What’s not a great thing is that governmental opposition to health reform comes from states whose residents would stand to benefit from it the most. Ku puts it this way:

“Another problem is opposition to the federal legislation by some states’ political leaders. As of mid-May 2010, twenty-one states have engaged in lawsuits to block the new law as being unconstitutional. Paradoxically, the opposition in these states appears to run contrary to the economic and health insurance interests of their residents. On average, 39 percent of the Medicaid-eligible adults in the twenty-one “opposing states” were uninsured, compared to 26 percent in the rest of the nation. Because opposing states have relatively more eligible-but-uninsured adults, their residents have much more to gain from the Medicaid expansions, and these states would draw down far more federal funding.”

Why would states not want what is clearly best for their residents? Because they worry about what it means for the state budget. You see, unlike the federal government which can run a deficit, states are required to balance their budgets annually, and entitlement programs like Medicaid are a perennial thorn in their side. But the Medicaid expansion is financed almost entirely by the federal government, so what are the states so worried about? Well, as Ku explains, it seems that many states are worried that currently eligible, but non-enrolled individuals will suddenly decide to enroll because of the high visibility of the health reform efforts. Such individuals would not fall under the federally-funded expansion, and the states are guarding their checkbooks. Now, I suppose that one could argue that a state maintaining its budget is a move to protect its residents, but the question then becomes, at what cost?

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Posted by on June 28, 2010 in Uncategorized


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