Hagenow Statehouse Report: Expanding Medicaid Exposes Iowa to Financial Risk

By Rep. Chris Hagenow

According to a recent poll in the Des Moines Register, Iowans are split on accepting additional money from the federal government for the expansion of Medicaid.  While a new source of funding is attractive to many, once we dig into the implications of Medicaid expansion, things become much more problematic.  

With a deep federal budget deficit and exploding federal debt, it would be wise to consider that if all fifty states chose not to expand Medicaid, the federal government would save $654 billion over the next 10 years. Iowa’s share of this federal appropriation alone would amount to $4.1 billion.

Second, the federal government has already said they will not fully fund this expansion in the out years.  While there is a commitment to 100 percent funding in the first two years, there is already a plan to cut back the federal share down the road.  If the government is already saying they won’t live up to their initial commitment, that is certainly one promise they will keep. 

What do you think? Should the Iowa Legislature expand Medicaid? Tell us why or why not in the comments. 

If the federal government should choose to go to a blended rate or reduce their part of Medicaid funding, Iowa taxpayers would have to pick up the difference. For instance, the Federal Medicaid Assistance Percentage (FMAP) was 63.8 percent in 2004 and by 2014 it is estimated to be down to 58.4 percent.  This decreased federal percentage means that over the past 10 years, Iowa has had to pay up to $192.5 million in additional benefits that the federal government was no longer covering.

Given the fiscal mess at the federal level, it is nearly certain that future shortfalls in federal commitments will fall on state taxpayers.  We must make certain that we are not setting ourselves up for trouble in the future, either through tax increases, cuts in services, or both.

This is not a decision that should be made hastily. The Centers for Medicare and Medicaid Services in Washington DC recently issued a letter stating that there is no expiration date on the decision to expand, so we can take our time on this decision.  Once this expansion is in place, it is not easily reversed.

Over the past 12 years in Iowa, the Iowa Medicaid program has already grown 50 percent, so we should not take this enormous decision lightly.  We should not rush into this decision before we have exhausted all of our options and looked for ways to improve our current Medicaid system.

(Rep. Chris Hagenow, R-Windsor Heights, represents District 43 in the iowa House of Representatives, where he is the majority whip. Email him at chris.hagenow@legis.iowa.gov or call him at 515-281-3221.)