As policymakers in a number of states debate whether to adopt health reform’s Medicaid expansion, opponents continue to claim that the federal government, in the name of deficit reduction, will inevitably renege on its commitment to fund nearly all of the cost and instead shift large costs to states. As Florida state senator Jeff Brandes put it recently, “Why in the world would we take the federal government’s . . . promise that they’ll pay for [the] Medicaid expansion when we know that they will be unable to keep that promise in the long run?”
The Obama Administration has repeatedly said that it will oppose any cost-shifts that would make states less likely to take up the Medicaid expansion. And, the President’s new budget reaffirms yet again that the federal government will pick up nearly all of the expansion’s costs: 100 percent for the first three years (2014-2016) and no less than 90 percent on a permanent basis.
Like last year’s budget, the President’s budget has no Medicaid proposals that produce federal savings by shifting costs to states. It instead proposes to achieve some Medicaid savings by lowering the program’s prescription drug costs.
Moreover, as we’ve pointed out, pressures to cut Medicaid and shift costs to states in order to reduce the federal deficit have dissipated. In fact, the only federal lawmakers now pushing to shift Medicaid costs to states are not health reform proponents but instead those who oppose health reform and who would convert Medicaid to a block grant or set a per capita cap on federal Medicaid funding.