By Tom Curry National affairs writer
msnbc.com
updated 12/16/2009 9:56:53 AM ET 2009-12-16T14:56:53

Claim: Some states may drop Medicaid if Congress adds to their costs by expanding eligibility.

Medicaid insurance for the indigent is funded by the states and the federal government. Participation by the states is voluntary. The federal government usually pays about 57 percent, on average, of the cost of Medicaid benefits. Medicaid covers poor children in every state, but eligibility for adults varies widely from state to state. The House bill would require all states to increase eligibility to 150 percent of the poverty level, or about $33,000 for a family of four, while the Senate bill expands eligibility to 133 percent of the poverty level. Under both bills, the federal government would pay the full cost of care for the 18 million newly eligible people for a few years, but then the states would have to pay about 10 percent of the cost. Some state officials say that any Medicaid expansion would wreck their budgets.

Fact or fiction?
Fact. Expanded eligibility would force the states to increase their spending on Medicaid by about $25 billion from 2010 to 2019. "I can foresee a situation where states would say 'I don't have enough in general funds to put up my share of this new expanded Medicaid program, and I have to get out of the Medicaid program,' " said Washington state Medicaid director Doug Porter. Dennis Smith, who oversaw Medicaid during the Bush administration, said if a state exited Medicaid, its Medicaid recipients could get subsidized coverage in the new insurance exchanges -- and the cost of those subsidies would be paid entirely by the federal taxpayers. Joy Johnson Wilson, health policy director at the National Conference of State Legislatures, said, "I can't imagine the federal movement not responding" to a state opting out of Medicaid. "It would be a 'who blinks first?' kind of issue."

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