Medicaid Expansion: Poor States Are Subsidizing Rich Ones

State lotteries result in the voluntary transfer of wealth by the poor to the rich. It seems the Affordable Care Act is having a similar impact.

In Massachusetts, residents of lower income towns like Chelsea spend more than 10 times as much per capita on the lottery as their affluent neighbors in places like Weston. Lottery spending by the poor enables the rich to pay lower taxes.

State lotteries result in the voluntary transfer of wealth by the poor to the rich. It seems the Affordable Care Act is having a similar impact.

In Massachusetts, residents of lower income towns like Chelsea spend more than 10 times as much per capita on the lottery as their affluent neighbors in places like Weston. Lottery spending by the poor enables the rich to pay lower taxes.

It never really occurred to Congress that states would refuse to expand Medicaid under the Affordable Care Act. After all, expansion brings billions in new funding to states, benefiting residents and ultimately flowing into the pockets of local physicians and hospitals. But 23 states have rejected Medicaid expansion, stubbornly refusing federal largesse even though their residents continue to pay federal taxes that fund states that have expanded.

 

Take a look at the map of Medicaid expansion. States with high per capita income like Connecticut, New York, Massachusetts, Minnesota and California are expanding Medicaid. Lower income states like South Carolina, Alabama, Mississippi, Louisiana and Texas are not. Instead their taxpayers are sending billions upon billions of dollars to Washington for redistribution to the higher income states.

On the one hand, I benefit from the foolishness and stubbornness of the non-expanders. On the other, I do feel badly about those individuals –and provider organizations– who are suffering needlessly from lack of Medicaid coverage.

At least people who spend a big chunk of their incomes on the lottery can dream and maybe even win something. The same can’t be said for the suckers in non-expansion states who are foregoing the same federal benefit they are financing for others.