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Demagoguery Will Trump Financial Incentives in the Medicaid Expansion Fight

So far we have Florida and South Carolina definitively saying they will opt out of the Medicaid expansion in the Affordable Care Act, and a few other Republican governors, like Bobby Jindal in Louisiana, close on their heels. This represents well over a million potential covered residents who would go without Medicaid coverage in the event that the states follow through on this threat. And because the coverage subsidies in the Affordable Care Act only start at the federal poverty line, everyone under 100% FPL will get stuck in the status quo, with no way to afford coverage and no way to get subsidies. They won’t have the added indignity of a mandate penalty because of the hardship exemptions. They will just have no hope of health insurance, and all the dangers that go along with that.

Kevin Drum calls this grandstanding. After the 2012 election, these governors will wise up. You’ll see.

It’s an easy way of ginning up the base, but it means nothing until 2014 rolls around the Medicaid provisions of ACA actually kick in. I don’t doubt that some states will continue to hold out, but if Obama wins in November and ACA stays intact, I expect things to cool down over time. Some of the ideologues will stick to their guns, but not all of them. Eventually most will probably take the money.

The fact that denying Medicaid “gins up the base” should tell you that this doesn’t necessarily play as a political wedge issue for Democrats. 2014 is an election year, too. But let me introduce Mr. Drum to son of the South Ed Kilgore, who understands the historical dynamic at work here:

I know, I know, it’s widely thought to be incontrovertible that logic, pressure from providers, and the sheer idiocy of states with stingy Medicaid programs turning down a massive redistribution of resources in their favor, will all convince Republican governors to go along with the Medicaid expansion after they kick and scream for the benefit of “the base.” Perhaps that’s true, and that the rhetoric is the latter-day equivalent of the “massive resistance” southern lawmakers pledged to wage against the federally-imposed demise of Jim Crow.

But as the civil rights precedent showed, the competitive pressure of demagoguery is sometimes a lot more powerful than the “business logic” of going along with a more rational course of action. Now that Scott and Jindal have thrown down the gauntlet, can Nikki Haley or Scott Walker or Rick Perry or Sam Brownback be far behind?

If anything, this smug liberal complacency about how hospital lobbyists will do their bidding and force Republican governors into compliance only guarantees further that this won’t happen, and that millions of low-income Americans will go without health coverage.

It could be that red-state governors are using the threat of opting out as a bargaining chip in future negotiations, perhaps to get a block grant conversation for Medicaid (which would be a regrettable policy) or some other concession. But my vote is on ideological opposition, boosted by lies about the full costs to states and a lot of demonization of those lazy people who want their health coverage paid for them.

Now, I do agree with Drum on one thing, and I’ve said it before: this is an excellent opportunity to make a full-court push for federalizing Medicaid. The benefits to smoothing out federal health care policy across the states would be great, and the increased bargaining power from removing the balkanized current framework should be able to drive down prices. Now there’s the additional benefit of delivering coverage to millions who may not otherwise be able to get it. Lamar Alexander floated the idea this year of trading federal education spending for federalizing Medicaid, and while that requires further study, it just might be worth it.

UPDATE: The definitive list on this comes from Think Progress. As I said on Saturday, coverage for over 9 million is threatened now.

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David Dayen

David Dayen