Many of the views on Medicaid expansion are built on campaign promises instead of sound data and sound solutions. A common belief is that Medicaid expansion returns federal tax dollars. In reality, it returns higher tax rates and fiscal deficits.
This analysis is part of the Sandlian Center for Entrepreneurial Government’s “Myth Vs Fact: A Primer on Medicaid Expansion,” click here to download the full primer.
It’s long past time to expand Medicaid… the tax dollars that we’ve been sending to Washington can come back home to Kansas to help our families, our state, says Governor Laura Kelly
This argument is very dangerous for policymakers as it increases state deficits and the national debt. Kansans pay taxes for government services; therefore, the state has an obligation to draw in as much federal dollars to the state as possible. Medicaid expansion doesn’t provide funds based on the number of low-income people. It doesn’t provide funds for taxes paid, but rather how much taxpayer dollars are spent.
While federal dollars would come to Kansas, it encourages more policy that increases taxes and spending to obtain as much federal spending as possible. Kansans are both state and federal taxpayers and as federal and state government spending continues to climb, federal and state tax rates will climb. California is a prime example.
The federal government provides nearly all the funding for Medicaid expansion, creating a perverse incentive. There is little reason to believe the federal government will continue to foot the cost into perpetuity. Once state spending has ballooned, and the federal government wishes to lower its matching burden, Kansas taxpayers could face billions in higher taxes or cuts to government services.