By Nic Horton, Jonathan Ingram and Josh Archambault — Mr. Horton is Policy Impact Specialist, Mr. Ingram is Research Director, and Mr. Archambault is a Senior Fellow at the Foundation for Government Accountability.
A recent report from the Congressional Research Service (CRS) confirms what many policy experts have known for some time: states that reject Obamacare’s Medicaid expansion aren’t sending that Medicaid expansion money to other states. Instead, that money is simply never spent.
This revelation is important because numerous governors and state lawmakers from across the country have used this argument to justify their support for expanding Medicaid through Obamacare. However, as CRS succinctly explains, these arguments are entirely frivolous.
There’s No Fixed Pot of Obamacare Medicaid Money
Politicians have made the case for Obamacare’s Medicaid expansion based on the false idea that rejecting Medicaid expansion will send their states’ shares of Obamacare money to other states.
Governor John Kasich (R-OH), for example, has repeatedly claimed that rejecting Medicaid expansion would send Ohio’s ‘Medicaid expansion money’ to states like California. These false sentiments have been echoed repeatedly in Missouri, Tennessee, Utah and Wyoming– just to name a few. Obamacare advocates promise that Medicaid expansion won’t increase federal spending, but will instead simply ‘bring back’ their own federal tax dollars.
The new CRS report explains that this claim is bogus:
If a state doesn’t implement the ACA Medicaid expansion, the federal funds that would have been used for that state’s expansion are not being sent to another state. There is not a set amount of federal funding for Medicaid. Each state gets the federal funding necessary for their Medicaid program.
This explanation is pretty straightforward: if a state rejects expansion, they don’t get any expansion money. If a state does expand, they get expansion money. But one state’s actions have no relation to how much another state receives from the federal government because there is no pot of funding that’s being divvied up in Washington.
What happens to the money that might have gone to non-expansion states? It’s simply never spent. That means those dollars simply are not added to the national debt.
Rejecting Obamacare Expansion Reduces The Deficit
As the Congressional Budget Office has repeatedly pointed out, states that reject Obamacare expansion are reducing federal spending. The Obama administration confirmed that rejected Medicaid expansion saved federal taxpayers at least $26 billion in 2014. If those states continue to reject Obamacare, federal taxpayers will spend $368 billion less on Medicaid expansion through 2022.
Last year, the federal deficit stood at nearly $500 billion. That’s expected to more than double over the next few years. This means that every dollar spent on Obamacare’s Medicaid expansion is a dollar added to the deficit, adding those costs (plus interest) to our $18 trillion national debt.
No wonder Obamacare’s Medicaid expansion funding is a target in Congress.
The bottom line: there is no magic pot of Obamacare expansion money and rejecting Medicaid expansion does not send expansion money to other states. Hopefully, CRS has just authored this myth’s death certificate.
Ultimately, state lawmakers can have a serious impact on the fiscal future of this country and help slow the growth of our ballooning debt by rejecting borrowed money from Washington. The debate over Medicaid expansion represents one opportunity to do just that.
This article originally appeared at Forbes on March 12, 2015.