In reality, under Obamacare, the federal government only fully pays for the Medicaid expansion through 2016. After that point, states will have to start paying for a portion of the expansion, eventually covering 10 percent of its cost.
Though that doesn’t seem like a lot, it’s worth keeping in mind that Medicaid is already a major burden on state budgets. In fiscal 2013, before the implementation of Obamacare, nearly one-quarter of total state expenditures went to Medicaid — more than any other spending category, according to the National Association of State Budget Officers. Even if federal contributions to the program are removed from the picture, Medicaid still accounted for 16 percent of state spending, second only to K-12 education.
Even assuming that the federal government follows through on its future commitments – which is by no means certain given its long-term fiscal outlook – incremental growth in Medicaid spending will further strain state budgets.
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