According to a Wall Street Journal article, some Republican governors are thinking of doing exactly that:
Medicaid is a state-level program but combines that with federal subsidies. Those subsidies wouldn't be forthcoming for the states who would abandon it.
Huge budget shortfalls are prompting a handful of states to begin discussing a once-unthinkable scenario: dropping out of the Medicaid insurance program for the poor.
Elected and appointed officials in nearly a half-dozen states, including Washington, Texas and South Carolina, have publicly thrown out the idea. Wyoming and Nevada this year produced detailed studies of what would happen should they withdraw from the program. Wyoming found that Medicaid accounts for 63% of the state's nursing-home revenue.
The idea of abandoning Medicaid as a solution is so extreme that even proponents don't expect any state will follow through, but officials are floating the discussions because dire budgetary pressures have forced them to at least look at even the most drastic options.
Medicaid, begun in 1965 and jointly funded by federal and state dollars, is the nexus of care for the neediest Americans, and a huge payer to hospitals, nursing homes and doctors. Medicaid enrollment totaled 62 million nationwide in 2007, the most recent data available.
This is not a likely solution, even in Republican states, because an open secret about Medicaid is that it doesn't just cover the people one usually regards as poor but is also a major funding source for long-term nursing care, including for people who weren't poor earlier in their lives. It's the latter which would make meddling with Medicaid a third-rail political move, I think:
Could care be provided more efficiently than is currently done under Medicaid? Texas governor Rick Perry believes so:
In Washington state, which has a Democratic governor, Medicaid Director Doug Porter says he discussed the idea of dropping out of Medicaid with members of a citizen advisory committee the governor pulled together to tackle a $5.7 billion budget shortfall over the next two years.
"It's not a serious consideration, but it's illustrative that people are even thinking about it," Mr. Porter said. "That I'm doing it is stunning."
However, many elderly people rely on Medicaid to pay for long-term care at nursing homes, and that makes pulling out a "deal killer," Mr. Porter said. No good alternative currently exists to cover such nursing-home costs.
That's truly fascinating! I happen to know quite a lot about this particular topic and unless Perry is willing to tackle prices, wages and salaries in the Texas health care sector (not likely for a Republican) or the humongous task of finding out which treatments actually work best, the most likely outcome of his plan would be a reduction of quantity of care, quality of care or both.
Some states, in particular those led by Republicans, are calculating whether they'd be better off giving up the federal funding and replacing Medicaid with a narrower program of their own. Texas Gov. Rick Perry has proposed that his state get out of Medicaid in favor of a state-run system unburdened by federal mandates—including the one that prohibits states from reducing eligibility for the program if they want to qualify for the federal matching funds.
"We feel very comfortable that we could come up with a more equitable, a more efficient, and obviously a more cost-effective way to deliver health care," he said.