Medicaid already consumes a quarter of state budgets, on average. In some states it’s either the single largest budget item, or second only to education. Even if states decline to expand Medicaid, other provisions of Obamacare, including the requirement to purchase insurance or face a penalty, will swell Medicaid rolls. The program’s expenses have also soared in the past few years. State Medicaid outlays jumped 20 percent in the last fiscal year on top of a 23 percent increase in the year before that, according to a report from the bipartisan National Governors’ Association. Expanding Medicaid further will put even greater pressure on states already struggling with future deficits and looming pension shortfalls. Whether it’s at the federal or state level, it’s ultimately taxpayers who will wind up paying.
Some of the increase in Medicaid costs at the state level will be offset by decreases in expenses currently created by uncompensated care to the uninsured, as the Kaiser study points out. This is, at best, a short-term offset. The Kaiser study also expects savings from participation in the state exchanges contemplated in the Obamacare legislation that might never materialize. So far, 18 states have categorically declined to create exchanges, and many more have indicated their reluctance to proceed.