Ohio vs. Pennsylvania: Which State Got Medicaid Expansion Right?

Reading the announcements that Governor Corbett (PA) rejects the ACA Medicaid expansion on the same day that Governors Snyder (MI) and Kasich (OH) decide to expand Medicaid, I thought today was as good a time as any to take another look at this controversial issue.  On July 7, 2012 I wrote a long blog post that predicted many Republican governors would eventually agree to the expansion.  My reading of the tealeaves was that it was just too good a deal to pass up.  (http://kentbottles.blogspot.com/2012/07/scotus-ppaca-medicaid-expansion.html)

When Governor Corbett said in his budget speech that he would not add 500,000 Pennsylvania residents to Medicaid “simultaneous boos and cheers broke out among legislators.” (http://www.philly.com/philly/news/politics/state/20130206_Corbett_rejects_expansion_of_Medicaid.html)   The boos came from those who believed the Henry J. Kaiser Family Foundation prediction that by 2022 such an expansion would cost the state $2.8 billion while bringing in $37.8 billion in federal dollars. (http://www.kff.org/medicaid/8384.cfm)   The cheers came from Republicans who were afraid that the state would have to raise taxes when federal subsidies declined in the future.  In my opinion, Governor Corbett is making a mistake.  I am not alone in that assessment; I found a comment on a blog dated February 5, 2013 where SteveH wrote:

“I heard Gail Wilensky speak yesterday and she thinks most GOP governors will end up taking the expansion.  It should be a no-brainer but some GOP governors probably meet that criteria and will turn it down.” (http://theincidentaleconomist.com/wordpress/the-medicaid-expansion-is-a-really-great-deal/)

Governor Kasich’s support of Medicaid expansion in Ohio brings to six the number of GOP governors who have signed onto the program.  Because of his background as a guest host for Bill O’Reilly, an investment banker, Chairman of the House Budget Committee, and a well-respected deficit hawk, Kasich’s decision is important.   Opponents of state Medicaid expansion certainly were stunned and attacked him:

“Whatever justification Kasich may give, the actual explanation for his embrace of the Medicaid expansion is political cowardice. Chastened by his failed attempt at public sector union reform and Obama’s victory in the state, Kasich is up for reelection next year.  And he’s afraid to stand up to the inevitable onslaught of attacks from Democrats who would charge that he was refusing to accept free money to bring health care to poor Ohioans.” (http://washingtonexaminer.com/kasichs-cave-on-obamacare-shows-how-hard-it-is-to-beat-big-government/article/2520529?custom_click=rss)

Many observers believe that Kasich’s defection from the opponents of expansion will make it harder for other GOP governors to maintain this conservative position:

“Anti-ObamaCare groups have lost the argument with a few other red-state governors, but Kasich isn't just any red-state governor. He's been known as the most aggressive spending hawk this side of Scott Walker and Mitch Daniels, and the winner of the ‘Legislative Entrepreneur Award’ from the tea-party-affiliated FreedomWorks.”  (http://www.politico.com/story/2013/02/john-kasich-obamacares-biggest-red-state-catch-87143_Page2.html)  

Democratic analysts certainly think that the Kasich move is a game changer:

“Thus Kasich brings us closer to the day when those opposing the Medicaid expansion in their own states—notably southern governors like Perry and Jindal and Bryant and Bentley and Deal and Haley who are deliberately creating huge arbitrary gaps in health care coverage—are forced to stop hiding behind fiscal myths and just come out and admit they don’t want their citizens to benefit from Obamacare, full stop.” (http://www.washingtonmonthly.com/political-animal-a/2013_02/kasich_gives_away_the_game042802.php)

Kasich came out in favor of expansion only after he assembled a coalition of Obamacare supporters and opponents who all agreed that it represented sound economic policy. An Ohio Health Policy Institute study extending to 2022 concluded that covering 684,000 citizens would require $609 million in state dollars and bring in $5 billion in federal funds.  As I predicted in my July 2012 blog post, hospitals and physicians wanted the Medicaid expansion.  The Ohio Hospital Association estimates that hospitals spend $2.5 billion a year on uncompensated care.  The strategy was to have the coalition concentrate on educating the business community and state legislators that the expansion made sense economically and was too good to pass up. (http://www.washingtonpost.com/blogs/wonkblog/wp/2013/02/06/exclusive-how-ohios-republican-governor-sold-the-state-on-expanding-medicaid/)

The best short article on the pro side is titled “Why Opposition to  Medicaid Expansion is Nuts.” (http://www.bloomberg.com/news/2013-02-05/why-opposition-to-medicaid-expansion-is-nuts.html)  The best long winded academic argument for expansion can be found here. (http://jhppl.dukejournals.org/content/early/2012/10/09/03616878-1898839.full.pdf)  The best long argument against expansion, which did not convince me, is here (http://jhppl.dukejournals.org/content/early/2012/10/09/03616878-1898848.full.pdf)

Upon rereading my July 2012 blog, I am glad that I got most of it right immediately after the surprise Supreme Court decision that created the controversy in the first place.