As Republican Governor John Kasich bravely goes rogue in Ohio, Don Taylor runs the numbers on the Medicaid expansion:
By choosing not to expand Medicaid, the poorer, mostly politically “red” states are redistributing money toward the richer, mostly politically “blue” ones (there are exceptions; red Kentucky is both expanding Medicaid and has one of the best functioning State exchanges). Further, those States that are expanding Medicaid have also tended to set up state-based insurance exchanges, which are currently operating much better than the federal one, meaning that income based subsidies associated with the purchase of private health insurance may flow less freely to poorer states, at least in the short term. And there is a court case that could stop the flow of such subsidies to states not operating their own exchange all together. I have not tried to estimate the magnitude of these sources of redistribution from poor to rich states under different scenarios because things are so fluid, but the Medicaid numbers outlined are potentially just the start.
The bottom line is that if the current State Medicaid expansion decisions persist, the unintended story of the ACA will turn out to be the redistribution of money from poorer States, to richer ones, an outcome imposed by the poorer states, upon themselves.
Drum thinks the red states are going to have to come around eventually:
No matter how, um, passionate the tea partiers are about Obamacare, at some point it’s going to be clear that it’s here to stay. Maybe that’s a year from now, maybe it’s two. And when that finally happens, the scorched-earth opposition is going to deflate and all those red states are going to start taking another look at all the money they’ve given up. It may take a while, but I suspect that within a few years virtually every state will finally decide that there’s not much point in continuing to hold out. One by one, they’ll all belly up to the bar and sign up.
Reihan reluctantly agrees:
Rejecting the Medicaid expansion may well be the right policy, as Avik Roy and Grace-Marie Turner have argued. A number of states, including Arkansas and Wisconsin, have sought to use the insurance exchanges as an alternative to the Medicaid expansion, and the case for doing so seems fairly strong.
But the political cost of rejecting the Medicaid expansion will prove very high, for advocates will, as [Michael Greve anticipates], argue that rejection represents a senseless “loss” of federal dollars. Given that taxpayers in states that reject the expansion won’t get back the federal taxes they pay to finance the expansion, states will forgo a tangible (if flawed) benefit in exchange for the intangible satisfaction of possibly helping to unravel a deeply problematic law. This might seem like a decent trade while the future of Obamacare is in doubt. It won’t seem quite as attractive if the law proves durable.
Trende sizes up the politics of the court case Taylor mentions:
Here’s where the proponents of the suit may be too clever by half. It’s assumed that, if the courts block the subsidies for people on the federal exchange, Republicans will dig in, the government will have to declare hardship exemptions from the mandate for those who can’t afford insurance without subsidies, and that the framework will collapse.
But a different approach is at least as plausible: This is an election year, and Democrats will likely mount a full-bore assault on state legislators, governors, and congressmen in states without exchanges. The arguments would almost write themselves: Why won’t you let people in our state have the same benefits that people get in New York? Why won’t you set up a marketplace where our citizens could get insurance for one-tenth the price? I’m not sure such a campaign would be as unsuccessful as a lot of Republicans imagine.
The Dish 