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Some States Now Want to Abandon Medicaid -- and With It, Healthcare Reform

GOP lawmakers in Texas have proposed ending the state's involvement in Medicaid, and they're not alone. The ascendancy of such ideas reflects both conservative politics and the desperation of states with big budget deficits; if the states really go there, it wouldn't just impact millions of people who depend on the program -- it could also cripple healthcare reform.

While it's unclear whether any states will actually exit Medicaid, the suggestion that they might reinforces my argument that it's time for the federal government to take over Medicaid. While there would be anguished howls about states' rights, especially on the right, this move would accomplish two goals at once: it would make states' Medicaid spending predictable, and it would ensure that there would be a uniform national standard for Medicaid eligibility and benefits.

What Republican legislators in Texas suggested is that the state give up federal matching funds, which now cover 60 percent of its Medicaid budget, and then decide how much healthcare to give the poor. Which is to say, almost nothing. Even with the federal Medicaid contribution, unemployed parents in Texas qualify for the program only if their income is below 12 percent of the federal poverty level, or $2,640 a year, and working parents qualify only if they earn less than 26 percent of the poverty amount, or $5,720 a year. Despite this niggardly healthcare dole, the legislators say the state is going broke because of Medicaid.

Texas is not alone in this respect. Battered by the recession, many states are staring at huge budget deficits, and one of the politically easiest and most costly programs to cut is Medicaid. (Medicaid is always vulnerable during economic downturns, because the number of people who need it swells just as state tax receipts take a hit.) Among the dozen states said to be considering dropping all or part of Medicaid are Alabama, Mississippi, Washington, and Wyoming.

While the federal reform legislation will greatly expand Medicaid in 2014, Uncle Sam is supposed to cover all of the extra expense in the first five years, and most of it after that. Still, Republican state lawmakers across the country are predicting that the result will be to heap more debt on the states.

On the other hand, pulling out of Medicaid could also have some undesirable consequences in Texas and other states. First, a big sum of federal money will no longer be coming into those states. Second, people in the states that pull out will still be paying federal taxes, so they'll be subsidizing Medicaid in other states while bearing the full burden of the uninsured who come to their ERs and hospitals. In some cases, states without Medicaid will have to increase their subsidies for charity care to prevent hospitals from going under. And the impact on healthcare jobs would also be severe if Medicaid were replaced by no aid.

The GOP brain trust has floated the idea that perhaps if Medicaid disappeared, the poor could get insurance through the state health insurance exchanges that most Republicans oppose. But to buy private coverage for all those former Medicaid recipients, the federal government would either have to raise taxes or borrow more money -- which Republicans in Congress would certainly block.

So as usual, desperate officials are proposing desperate measures without really thinking them through. Instead of reflexively saying, "Let's kill Medicaid -- the poor don't deserve it, anyway," they should be discussing how the federal and state governments together can make sure that everyone has access to care. But that would require too much effort for Republican savants who'd rather just show that government doesn't work.

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