Nina Owcharenko: Expanding Medicaid: If money wasn’t a big factor, why did the bill include threats?

WASHINGTON — States are already struggling to pay their Medicaid bills. Why put taxpayers on the hook to pay even more?

Medicaid is the single biggest item in state budgets today. It consumes, on average, 23 percent of state dollars spent, pinching funds for other high-priority functions such as education, transportation and emergency services.

Yet expanding Medicaid was a central tenet of the Patient Protection and Affordable Care Act. It required states to open their program to all individuals earning less than 138 percent of the federal poverty level. The goal was to reduce the number of uninsured — by dumping 17 million Americans onto the Medicaid rolls.

Such a huge expansion wouldnt come cheap, and cash-strapped states grumbled that they couldnt possibly afford it. So the architects of Obamacare decided to take a carrot-and-stick approach to get the states to play ball.

The carrot: We, the feds, will pick up 100 percent of your expansion costs for three years, and lesser percentages thereafter. The stick: If you dont expand your program, well cut off all your federal Medicaid funds.

The fact that the authors of Obamacare felt the need to threaten states with total defunding tells you that they knew many states would resist expanding their programs — even with 100 percent federal funding.

Why? For starters, many state officials are leery of federal promises to pay program costs in perpetuity.

Such skepticism is warranted. Washington has rung up a $16 trillion debt and is running more than $1 trillion in the red annually, even without any of the costs associated with the health-care law.

Where will it get the money to make good on this promise? And will future administrations honor this promise, no matter what? State officials also worry about how such a massive expansion of their Medicaid programs will affect the quality of care available to their poorest citizens.

States are already having difficulty finding enough physicians willing to accept Medicaid patients, largely because of the programs low reimbursement rates. Expanding patient rolls by a third will only exacerbate this problem.

Here, too, Obamacare tries to hoodwink the states. The states are required to increase pay to Medicare levels for primary care physicians. The federal government picks up the tab, but only temporarily.

In 2015, states will either have to find the money to replace the federal dollars or let primary care payments drop back down again. And if a state decides to keep the primary care doctor rates up, guess what? Without doubt a flood of non-primary care doctors and other health care providers will argue — wait, what about us?

To persuade doctors to start accepting Medicaid patients or increase their already swollen caseloads, states will have to sweeten the pot considerably. And states unable to sweeten the pot sufficiently will see wait lists get longer, as quality of care declines.

“If a deal sounds too good to be true, it probably is. That adage certainly applies to Obamacares promise of free expansion of Medicaid for the states. Thankfully, the Supreme Court struck down the laws stick, ruling that threatening to yank all federal funding to states that refused to expand their programs was unconstitutional.

Now, states dont have to walk the plank on Medicaid expansion.

Medicaid is a troubled program than cant be sustained in its current form, much less on the grander scale envisioned by Obamacare. Whats needed is not expansion, but reform — a makeover of the program that gives the working poor access to private health insurance, like the majority of Americans enjoy today, and restores Medicaid to a safety net to meet the needs of the most vulnerable.

Nina Owcharenko is director of the Center for Health Policy Studies at The Heritage Foundation.