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Medicaid is an expensive program that provides very poor quality care, yet health care providers and employers continue to push states to expand the program as authorized by the Affordable Care Act. The allure of federal dollars has proven difficult for most states to resist.

The Issue

Contrary to expansion supporters’ depiction of the new federal funds as “free money,” Medicaid expansion is expensive, creating new costs the federal government may not cover indefinitely into the future, leaving state taxpayers on the hook for the new liabilities. Accepting federal funds to expand Medicaid rolls will impose new costs on states and, ultimately, state taxpayers.

Unlike spending by the national government on defense, education, and transportation, Medicaid spending is not subject to annual appropriations. The amount spent on the program depends on the number of people who enroll in it, not any congressional action. The program represents a significant amount of the nation’s deficit spending.

Solutions to consider include Florida’s pilot program, which provides Medicaid recipients with a range of health insurance plans and premiums from which to choose, dramatically improving health care competition and consumer choice. Another option would be for the national government to block-grant Medicaid funds, giving states more flexibility in how they run the program and manage its costs. States

Our Stance

Instead of expanding a flawed program that is costly, delivers subpar health care, and shifts more power to the federal government, state lawmakers should focus instead on reforming their fiscally unsustainable programs in ways that offer better care to enrollees and lower costs for taxpayers.