As D-Day looms for ObamaCare, one big question is how many states will sign up for its Medicaid expansion. The recent and spectacular flip-flop of Arizona Governor Jan Brewer is a case study in the political pressure and fiscal gimmicks designed to get states to succumb. It's also a study in the arcane and perverse ObamaCare incentives that are intended to gather ever more health-care spending under federal control.
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Arizona's current Medicaid program is well run by the program's standards—a low bar—but it is also too large. The program now finances one of every two in-state births and two of every three days seniors spend in nursing homes. Spending tripled in the last decade to $9 billion a year.
That's despite $1.8 billion in cuts since 2009. The state fisc was such a mess that in 2010 Arizona Medicaid banned paying for several types of organ transplants. In March of that year, Ms. Brewer wrote to Mr. Obama calling the Affordable Care Act "a vast new entitlement program that our country does not have the resources to support" and also one that "makes our situation much worse, exacerbating our state's fiscal woes by billions of dollars."
Arizona argued before the Supreme Court that the Medicaid mandate was unconstitutional, anti-federalist commandeering—and seven Justices agreed it was "a gun to the head" and allowed states to opt out without penalty.
But so much for that. In her State of the State address last month, Ms. Brewer pulled a political 180°—or maybe 540°—and said expanding Medicaid would "inject $2 billion into our economy and "save and create thousands of jobs." (Is Larry Summers moonlighting as a Brewer speechwriter?)
One secret of her switcheroo is Medicaid's "matching rate" formula, in which the feds pick up 67% of Arizona's existing spending and 100% (and later 90%) of the costs of ObamaCare's newly eligible population. The state supposedly no longer needs to spend "billions" but merely an extra $154 million in 2014—then bank $1.6 billion from Washington, which her budget documents call "a return on investment of more than 10-to-1." ...
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