In the midst of the flurry of attention in the press and blogosphere given to the commerce clause vs. penalty/tax controversy in the SCOTUS decision on Obamacare, I began to wonder whether it was possible that the Medicaid part of the ruling, which was given relatively scant scrutiny in comparison, would turn out to be a sort of sleeper cell that could ultimately doom the whole Obamacare endeavor.
It turns out that might be the case, according to Michael D. Tanner of the Cato Institute:
So what will state legislators do now?
If they agree to expand their Medicaid programs anyway, they’ll be choosing to pile new costs on their state budgets and new taxes on their constituents.
And if a state doesn’t expand its Medicaid program, most of those who would’ve been eligible for Medicaid will now become eligible for subsidies through ObamaCare’s health-insurance exchanges. And those subsidies are paid in full by the feds…
Of course, if states do shift those costs back to the feds, that will cause the federal cost of ObamaCare to skyrocket. If every state were to refuse to expand its Medicaid program, the feds would save roughly $130 billion in their share of Medicaid costs in 2014, but would have to pay $230 billion more in new exchange-based subsidies — for a net added cost of $100 billion. And that’s just for the first year.
Remember, this is a law that already will cost as much as $2.7 trillion from 2014 to 2024, and will add more than $823 billion to the federal deficit — estimates that assumed state taxpayers would be picking up some Medicaid costs. How will Congress react if billions or perhaps trillions of dollars in new costs are added to the federal budget?
Here’s another complicating factor: Most states have not yet set up an exchange. Many, especially ones with Republican governors or legislatures, may refuse altogether. By most estimates, as few as 15 states are likely to have exchanges in operation by the 2014 deadline.
ObamaCare gives the feds the authority to step in, setting up and operating an exchange in any state that doesn’t set up its own — but there is reason to doubt that they have resources to do so in so many states.
Anyway, federal subsidies are available only through exchanges that the states set up. The feds can’t offer subsidies through a federally run exchange.
Thus, if states neither expanded Medicaid nor set up exchanges, that would effectively block most of ObamaCare’s new entitlement spending.
I wonder whether anyone thought this stuff through beforehand.
I don’t think anyone really expected SCOTUS to rule the way it did on the states, even though that portion of the decision was one on which even some of the liberal justices concurred (I believe the vote was 7-2 on that section). But even if politicians and tacticians on the far left didn’t see this exact thing coming (and I don’t think they did), my strong suspicion is that they didn’t really care all that deeply if the Obamacare legislation ran into big trouble, because that would help pave the way for their preferred solution and ultimate goal, single-payer.
[Hat tip: Althouse.]