Forget Medicaid Expansion. Congress Is Pushing a Medicaid Takeover.

Forget Medicaid expansion. Congress is pushing a Medicaid takeover.

That’s the unspoken reality of Democrats’ $3.5 trillion spending bill, a major part of which concerns the federal low-income health care program. While the bill is being sold as a means of providing coverage to millions more people, it would fundamentally change a big part of Medicaid from a state-run model to a purely federal operation. Such a shift would leave the already struggling program even less able to meet the medical needs of vulnerable Americans.

The impetus behind this transformation is simple. President Biden and congressional Democrats dislike that 12 states have refused to expand Medicaid under Obamacare. From Texas to Florida to South Dakota, governors and state legislators have held out for the better part of a decade. Years of pressure have failed to convince these states to give in, so the president and Congress have decided to force it on them anyway.

Their state opposition is grounded in common sense. Costly Medicaid expansion crowds out state spending on education, infrastructure, and other key priorities, making it harder for officials to meet the needs of their citizens. Expansion also shifts people from higher-quality private insurance to a lower-grade, government-run plan, leaving them with worse access to care and health outcomes. Finally, Medicaid expansion opens the program to a new class of able-bodied adults, who Medicaid was never meant to cover. That makes it harder for states to help the truly needy, which is the entire point of Medicaid.

Democrats ignore these realities in the $3.5 trillion spending bill, making no attempt to reform Medicaid’s well-known challenges. Instead, they want to create a new federally run Medicaid program that bypasses the 12 hold-out states and nationalizes Obamacare’s Medicaid expansion. Currently, Medicaid is operated by state governments, though it is mostly paid for by federal taxpayers. The new program would be 100 percent controlled by Washington, D.C. – and that’s a problem.

The 38 states that have already expanded Medicaid would want to ditch the old expansion in favor of the new one. They’re currently paying 10 percent of expansion’s total costs and as much as 50 percent of Medicaid’s administrative costs, but under a federally run program, D.C. could cover all of the latter and potentially all of the former. States could shift hundreds of millions or even billions of dollars to federal taxpayers, depending on the state. While any legislation is likely to bar states from dropping Medicaid expansion, some experts believe such a provision would be unenforceable. In fewer than four years, all 50 states and D.C. could offload their expansion populations to the federal government.

But they wouldn’t just be sticking federal taxpayers with the bill. They’d be sticking federal regulators with the bureaucratic details – everything from cost to access to the requirements that Medicaid recipients must meet. The program is already known to force one-size-fits-all mandates on states, and the last thing it needs is more of the same. Medicaid’s struggles would only grow worse, because federal officials are uniquely unsuited to address the health care needs of such a diverse country.

Congressional Democrats should ask if they really want to empower the federal government instead of protecting their states. Does Senator Sinema, who has previously opposed federal policies affecting Arizona’s Medicaid program, really want to give D.C. more control over her state? Does Senator Joe Manchin really want to make it harder for West Virginia to do things like its current Medicaid experiment to treat substance abuse disorder?

Federally run Medicaid is the last thing the ailing program needs. Instead, Congress should look for ways to give states more freedom and flexibility, the better to serve their most vulnerable citizens. Medicaid expansion has already made that mission harder to fulfill. A Medicaid takeover would make it all but impossible.

Jonathan Ingram is vice president of policy and research at the Foundation for Government Accountability.