Why Colorado has a Huge Fiscal Incentive to Opt Out of Obamacare’s Medicaid Expansion – Forbes | Patient Power Now

Why Colorado has a Huge Fiscal Incentive to Opt Out of Obamacare’s Medicaid Expansion – Forbes | Patient Power Now

Why Colorado has a Huge Fiscal Incentive to Opt Out of Obamacare’s Medicaid Expansion – Forbes

Posted on July 31, 2012 by Brian Schwartz

At Forbes.com, Avick Roy writes:

Don’t governors have every incentive to fleece the taxpayers of other states? It turns out, however, that this logic is flawed, and that the Medicaid expansion will cause state budgets to explode. Here’s why. …
For the first three years of the expansion, federal taxpayers will pick up the full cost of the expansion. This 100 percent funding rate will phase down to 95 percent in 2017, 94 percent in 2018, 93 percent in 2019, and 90 percent in 2020.
Many states are rightly worried that, given federal budget pressures, Washington won’t continue to cover 90 percent of the costs after 2020. But because the new Medicaid enrollees will now be dependent on the government, states won’t be politically or legally able to roll back their programs, leaving state taxpayers with the bill. The Wall Street Journal aptly compares this to “a subprime loan with a teaser rate and balloon payment.” …
[The] “woodwork” population, that was already eligible for Medicaid but not enrolled, won’t get the Obamacare 90-100 percent funding rate. Their expenses will be covered under the traditional FMAP percentage, meaning that states will be on the hook for 43 percent of the costs. …
These woodworkers will find it much easier to sign up for Medicaid under the program’s new rules.