Will The Supreme Court Decision Delay Or Hinder The Medicaid Expansion, Leaving Millions Of Poor People Without Coverage?: [W]hat happens if states choose not to expand Medicaid to meet the new guidelines?… As the law was originally written, the entire Medicaid package became an all-or-nothing deal: States that didn't want to meet the new, more expansive guidelines were free to do so. But choosing that option meant forgoing all federal Medicaid money. The Court on Thursday ruled that choice was "coercive."…
[S]tates choosing not to expand coverage give up only the money that would have gone to covering the new populations. Those states would remain eligible for the funds that they already get, to cover people who already qualify for Medicaid under the old guidelines. The practical effect is to change the trade-offs states face…. It takes no intellectual creativity to imagine a Rick Perry or a Rick Scott rejecting the new Medicaid money from Washington—and making a very big show of it.
But sending money back to Washington sounds a lot better than in theory than it works in practice…. For the Medicaid expansion, most states won't pay anything for the first few years. The federal government will pick up the entire cost. And while the federal contribution will decline after that, it will fall only a bit, so that most states are never responsible for more than one-tenth of the cost. That’s a sweetheart deal, particularly when you remember that Medicaid money goes straight into the pockets of local hospitals, doctors, and other health care providers…. [S]tate officials who refuse Medicaid funding are going to get an earful from hospital lobbyists, whose facilities will end up seeing many of these patients regardless of their insurance status. The Medicaid dollars are the hospitals’ best chance to recoup funding for charity care, particularly at a time when they are adjusting to payment reductions designed to push them into more efficiency….
An instructive example may be the history of Medicaid itself. It became law in 1965, as part of the same act that created Medicare. By 1972, every state but one had opted into the program…. The lone holdout was Arizona, which had some special circumstances: Much of its low-income population received coverage through the Indian Health Service. State officials resisted Medicaid for another ten years, but finally gave in (as I recall) because the local hospitals were losing so much money on charity care….
It's important to watch this issue closely and call out Medicaid opponents for what they are doing: Refusing a sweetheart deal that would help their poorest, most vulnerable residents get decent health care, just because they hate Washington…. Eventually, all the states will probably choose to participate in the Medicaid expansion, just as they did with the original Medicaid initiative. But it may take a little time, and a lot of pressure, for that to happen.