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Healthcare reform fallout: Which states could lose financially?

States that have not already expanded Medicaid programs are worried about healthcare reform bringing new financial burdens.

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It would cost an extra $3.7 billion annually to cover those people, estimates Gov. Rick Perry (R). If all 1 million residents enroll in Medicaid by 2020, the state will be responsible for an extra $370 million per year for healthcare, he calculates.

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“As passed by the U.S. House, the bill will cost Texas taxpayers billions more, and drive our nation much deeper into debt,” said Governor Perry in a statement.

Some governors worry that Congress has underestimated the cost. That’s one of the complaints of Arizona Gov. Jan Brewer (R). Yet Arizona is actually an expansion state, meaning its Medicaid coverage already includes childless adults.

Arizona could incur billion-dollar Medicaid deficits in fiscal years 2012 and 2013.

“Based on our state’s own experience with underfunded government health care programs, Arizona can serve as a case in point for what will happen across our nation if your proposal is enacted,” Governor Brewer wrote in a letter to President Obama on March 10.

Mississippi governor: an 'unfunded mandate'

Gov. Haley Barbour (R) of Mississippi goes even further, calling the Medicaid expansion an “unfunded mandate.” He complains that the state will have to cut services and/or raise taxes to pay for its estimated $150 million annual commitment once the federal subsidy decreases.

Governor Barbour has urged state Attorney General Jim Hood to challenge the constitutionality of the federal legislation. Mr. Hood is still making a decision about joining the lawsuit that a dozen or so states have filed in federal court.

Some officials are worried not only about the number of people who are newly eligible for Medicaid, but also about the “welcome mat effect.” In this phenomenon, news about healthcare reform prompts more people who are already eligible for Medicaid to sign up.

“One of the reasons states have a concern is the more people they have out there but not enrolled ... the more potential for an increased state obligation,” says Anne Dunkelberg, associate director of the Center for Public Policy Priorities, a nonprofit in Austin, Texas, that works to improve the lives of low- and middle-income residents.

In the case of Texas, Ms. Dunkelberg estimates, some 600,000 to 700,000 children are eligible for Medicaid coverage but are not signed up.

“States do not get a special bonus for covering kids who they are supposed to be covering. So [Texas] could see an increased tab on ... Medicaid as early as 2014.”

Healthcare reform fallout:

Part 1: Which states are the winners?

Part 2: Which states could lose financially?

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