Merrill Goozner has a provocative take on the controversy over Medicaid that has followed the Supreme Court's ruling that the federal government cannot coerce states into expanding their Medicaid programs. The matter of contention, up until now, was whether it is in states' interests to refuse to offer Medicaid coverage to people without insurance under 138 percent of the federal poverty level (the majority of which would be paid for by the federal government). In the case that states did forgo the Medicaid expansion, as a number of Republican governors have promised to do, the federal government would be expected to offer them subsidized insurance on the exchanges created by the law.
Goozner suggests that, as long as states are shunting Medicaid enrollees onto the feds, they should opt out of Medicaid altogether:
Since the states that want to opt out believe that adding another 16 million low-wage workers and their families to the rolls will eventually drive taxes higher, why not relieve them of the entire burden? The federal government would have to raise taxes, of course, but individuals and families would get tax relief at the state level.
Given the likelihood of a sweeping federal tax overhaul next year, a Medicaid switch could be built into the reform package. The federal government in collaboration with the states could replace regressive state sales taxes that are getting more difficult to collect because of Internet retail sales with a restructured and fairer federal income tax with far fewer tax expenditures and loopholes.
The federal government could then use the money to subsidize all people on Medicaid when they shop for health insurance plans just like anyone else who goes to the exchanges. “That is the vision – a single point of entry to the insurance system with a subsidy program for all those that need it,” said Sara Rosenbaum, a professor of health law and policy at George Washington University. “What if we completely federalized the non-disabled population under 65? Let them all get federal subsidies if they need it and be done with it.”
Goozner notes a few immediately identifiable problems with this proposal: it would cost a lot more than the current system does, it would conflict with the trend among state governments to cut Medicaid rolls, and it would run into opposition from Republicans, who have been trying to shift control of Medicaid back to the states over the past few years. Yet the very fact that many states are trying to shrink Medicaid at the same time the federal government is planning a massive expansion presents the possibility that having this tug-of-war resolved in favor of either the states or the feds would be helpful.
Post updated to correct Medicaid eligibility cutoff number.