Obamacare encourages states to expand significantly the number of their residents dependent on Medicaid, the joint state-federal program for low-income households. It significantly increases federal funding for expanding this dependency. However, the Supreme Court has declared that the states do not have to accept this expansion.
So, the Administration and its allies have been reduced to arguing that expanding Medicaid is sort of a profit center for states that do it. The President’s Council of Economic Advisers has enthused about how many jobs would be created if hold-out states just accepted the federal hand-out. (The Robert Wood Johnson Foundation has recently produced a report that beats a similar drum.)
And yet, despite federal “generosity”, Medicaid continues to devour state budgets. The reason is that they have little ability to control costs in Medicaid. For example, just in July, the federal government commanded state Medicaid programs to cover a full range of autism services under the “early and periodic screening, diagnostic and treatment services” (EPSDT) provision of Obamacare. This makes it likely that Medicaid will have to include Advance Behavioral Analysis (ABA), a labor-intensive therapy that includes positive reinforcement and other ways to cause patients to change behavior.
According to Matt Salo of the National Association of State Medicaid Directors, “The nexus of covering a lot of kids and a fairly unknown condition and treatment for that condition, combined with EPSDT, anytime you get that you get states a bit concerned because there’s very little way to control costs in that arena”.
States which sign up to expand Medicaid dependency under Obamacare are not just signing up for a boatload of federal cash. They are abdicating responsibility for and control of their biggest budget item.