Medicaid, Immigration Game of Chicken

By James R. Edwards, Jr. on February 18, 2011

Remarkably, the Obama administration won't block the state of Arizona from paring back its Medicaid rolls. Some 250,000 people could have to forego taxpayer-funded health care. This is notable, because cutting Medicaid rolls goes against the grain of Obamacare's forcing of states to add millions more to this entitlement program.

HHS Secretary Kathleen Sebelius skirted the issue in reply to Arizona Gov. Jan Brewer requesting permission to make this move. But the matter has much wider importance, as 29 governors have sought relief from the Medicaid expansion mandate. Further, it's no secret that the combination of the expansion of Medicaid plus premium subsidies for people well into the middle class will create a burden for American taxpayers – and provide "free" health care to millions of immigrants.

Congress has been busy this week trimming federal spending for the remainder of this fiscal year. But the real money isn't in discretionary spending. It's in entitlement programs: Medicare, Medicaid, Social Security.

Entitlement programs like these benefit lower-income households, such as immigrants. These workers pay much less into the programs than they end up receiving in benefits. Thus, the stakes really are high, from the standpoint of taxpayer and fiscal responsibility vis-a-vis immigration policy. Lax barriers to illegal-alien access to Obamacare's government programs plus newly eligible legal immigrants will add billions to health costs for both states and the federal government.

The Medicaid program, which is welfare health care, is already breaking state budgets. As states wrestle to find ways to balance their budgets, governors and state legislators are making tough decisions. That means cutting muscle and bone, not fat. In state budgetary terms, that means Medicaid and education.

Here's a sense of the financial stakes:

So far, Arizona has specifically requested such a waiver, and 29 Republican governors have asked Sebelius to offer such waivers to help states close a combined budget shortfall estimated at $111 billion. In response, Sebelius wrote governors to suggest a series of cuts to their Medicaid programs' optional benefits that could save about $100 billion without cutting their overall enrollments.

In states with sizeable immigrant populations, such as California, Arizona, New York, or Texas, Medicaid expansion will tack billions of dollars to their Medicaid budgets, starting in 2014. Don't bet the farm on the federal government's good graces giving states exceptions like Arizona's present reprieve.