Site menu:


March 2013 Policy Study, Number 13-3


Just Say NO – and Keep Saying NO – to Federal Health Care Exchanges and Medicaid Expansion


National Medicaid Expansion



The Medicaid program expansion and management is also an important part of the PPACA. Currently, enrollment is limited not only to those meeting financial requirements, but also “financially needy parents with children, children under 21, people with disabilities, elderly people (over 65), and pregnant women.”[31]


If agreed to by state governments, Medicaid expansion will extend government health care to all those who earn less than 138 percent of the federal poverty level (approximately $32,500 per year modified adjusted gross income for a family of four, irrespective of other qualifying criteria and asset or resource tests). As incentive to implement the program states will receive 100 percent federal funding for the first three years to support this expanded coverage, phasing to 90 percent federal funding in subsequent years.[32]


The Supreme Court ruled in 2012 that it was unconstitutional for the federal government to require this expansion, because of the financial liability it would force on the states and because HHS was threatening to stop funding current state programs.


Nevertheless, the expansion is proceeding and several Governors who were originally opposed to the program have now changed their minds.


A January 2012 report from the Centers for Medicare and Medicaid Services, Office of the Actuary shows that by 2020 over 50 percent of Americans will be receiving government paid health care. Of these, 25 percent will be on Medicare, 18 percent Medicaid, and 7 percent exchange subsidies.[33]


As of March 5, 2013, according to data compiled by the Heritage Foundation, 25 states (including Washington, D.C.) have agreed to expand Medicaid under Obamacare, 20 states (including Iowa) are not expanding, and 6 are undecided.[34]


Merrill Mathews, past president of the Health Economics Roundtable for the National Association for Business Economics, the largest trade association of business economists, is a health care expert.[35] He provides a list of the seven reasons states should not expand their Medicaid programs.[36]


They are:


1. Medicaid Is Bad Coverage. The number of doctors who take new Medicaid patients is small and growing smaller. This results in users going to the emergency room rather than a personal, family doctor, and prescriptions authorized are very limited.


2. The Exploding Medicaid Population. The number of people being covered is estimated to grow significantly based purely on the eligibility limits, including those who are disabled. This was a goal of the law, but nevertheless this increase in users will also stress a system with no more, or even fewer, providers.


3. The Woodwork and Crowd-Out Effects. Many of those eligible for Medicaid, who are currently not enrolled, will “come out of the woodwork” and join the program. Additionally, as employers drop coverage for their lower-paid workers or move people to part-time work, more will become eligible – the crowd-out effect.


4. The Cost to State Budgets. The current growth in state spending on Medicaid, of about 8 percent a year, is projected to increase rapidly – more than doubling by 2020. At the same time, overall economic growth remains at 1 to 2 percent. For many states, Medicaid is their largest budget item – even more than government education.


Though the federal government is supposed to fund 100 percent of this cost for three years, what happens afterwards? And whether from the state or the federal government – all this money comes from either workers’ paychecks, or borrowed and printed money.


5. Federal Controls. Federal control of this, and all health care, is expanded significantly. State governments and health care users will have few, if any, options for deciding their own health care needs. Yet state officials will be held responsible by their citizens for problems and increased costs.


6. Rampant Fraud. Fraud in the Medicaid program is well-documented and has proven hard to stop. This will continue.


7. Loss of State Sovereignty. This will result in yet more micromanagement of state government actions by the federal government. State and individual autonomy will continue to be reduced. Additionally, business owners will see increased control of their operating decisions by the federal government.



Click here for pdf copy of this Policy Study


All of our publications are available for sponsorship.  Sponsoring a publication is an excellent way for you to show your support of our efforts to defend liberty and define the proper role of government.  For more information, please contact Public Interest Institute at 319-385-3462 or e-mail us at