In a fairly surprising development, Arizona governor and staunch conservative Jan Brewer said yesterday that she thinks the state should expand its Medicaid program in line with the generous federal grant formula provided under the Affordable Care Act. This shouldn't be surprising, as the law is written to be extremely generous to conservative states with stingy Medicaid programs. Turning the federal dollars down would be an act of extreme economic foolishness, but most Republican governors and state legislators seem inclined to do it simply to demonstrate their anti-Obamacare zeal.
Brewer, by contrast, took the key anti-expansion talking point and wants to address the concern rather than using it as a pretext. As Jeffrey Young and John Celock explain, she's making sure the Arizona state budget is protected:
In announcing her decision to lawmakers in Phoenix, Brewer emphasized her continued concern that the federal government may cut back on its share of financing the Medicaid expansion and said she would put plans in place to protect the state's budget. Under Obamacare, the federal government will pay the full cost of covering newly eligible individuals from 2014 to 2016, and then will scale back funding to 90 percent by 2022.
"As I weighed this decision, I was troubled that a future president and Congress would reduce matching rates," Brewer said. "Together with my team, I have crafted a plan that addresses both of those concerns and safeguards Arizona."
Brewer's plan includes what she described as a "circuit breaker," which would automatically shrink the state's Medicaid program in the event that the federal government were to decrease funding.
That's a solid idea. Brewer is joined in support of expansion by her fellow southwestern Republican governors Susanna Martinez of New Mexico and Brian Sandoval of Nevada. But both Martinez and Sandoval have reputations as moderates—that's why neither of them is touted as the Great Hispanic Hope that Marco Rubio is—and govern blue-tinged states whereas Brewer is a solid conservative and Arizona is a solid red state. But as economic policy, this is a no-brainer. There's a lot of interest lately in the impact of federal spending on the D.C.-area economy, but the bulk of federal spending is on transfer programs—Social Security, Medicare, Medicaid, etc.—and goes out to wherever people live.
States with large uninsured populations will get a windfall from Medicaid expansion that will provide new clients for local health care providers, while increasing the disposable incomes of the formerly uninsured. Under the circumstances, it's remarkable that Brewer's decision is remarkable. And yet it is.