Why are some states so miserly? Because they have every incentive to trim the rolls. Insuring someone through Medicaid costs around $7,000 per year, and in 2008, the country spent $340 billion on the program. Only about half of that money came from the federal government, with the rest draining from state coffers. (The exact proportion varies from state to state.) Because they're responsible for up to half the costs, states are given wide latitude to make their own Medicaid policies. That means places like Massachusetts and Pennsylvania are very inclusive and manage to sign up about 80 percent of eligible people for free health care, while cash-strapped states like Arizona—where an actual death panel just decided to deny organ transplants to Medicaid patients—have far more restrictive policies and enroll only half of those who are entitled to free health insurance.
It's clear why states might have worked against enrollment in the past, but according to the new law, the federal government will cover almost all the costs of people who are newly eligible for Medicaid. The states won't be on the hook for the millions of names that might soon be entered in the books, yet they're fighting the expansion of Medicaid benefits nevertheless. (Fourteen have sued to stop it.) So why are some state governments hell-bent on denying free care to needy people when it will hardly cost them a thing?
The answer lies in a little discussed provision of the law that aims to simplify enrollment into Medicaid. The law's architects realized that giving away insurance wouldn't be enough; they also wanted to force states to deal with the people who were already eligible for free care but had been squeezed out of the system. According to the new rules, you may soon be allowed to sign up for Medicaid via the Web, without any of those repeated in-person interviews. (Some states might start enrolling people into Medicaid automatically, just like how Medicare kicks in when people start collecting Social Security checks.) That's a problem for states with low enrollment rates now. The federal government may be ready to pay for all the newly eligible people on Medicaid, but the states must cough up half the costs for all the previously eligible people who are added to the rolls under the simplified system.
Imagine what might happen in Florida. Once the welcome mat of new regulations gets rolled out, 2 million previously eligible but uninsured people could sign up for free coverage. (That would bring the state's enrollment rates in line with, say, Pennsylvania.) Because those enrollees would get only a partial federal subsidy, Florida may be forced to chip in billions of dollars for the program. That liability terrifies state legislators already coping with drastic budget shortfalls. (Of course, these changes could have been avoided if they'd taken their obligations to the poor more seriously in the past.)
Without an explicit guarantee that more of these costs will be borne by the federal government, many states will fight tooth-and-nail against Medicaid expansion. They'll drag their feet on good-faith efforts to increase enrollment. When the dust settles, it's entirely possible that millions of Americans will remain uninsured. And then we'll talk about another round of health care reforms.
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