John Kasich's Big Obamacare Mistake

Republican governors face a deepening conundrum over whether to accept more federal Medicaid dollars. Ohio's John Kasich shows what not to do.
Have a little compassion.

John Kasich, the Republican governor of Ohio who may be mulling a presidential bid, stepped in it this week.

He appeared to say that he thought the Affordable Care Act would never be repealed -- as many Republicans hope -- because it helps too many people. He then backtracked and said that he was only talking about the expansion of Medicaid that was part of Obamacare, not Obamacare itself.

Kasich is one of several Republican governors trying to do the same balancing act: opposing Obamacare while taking its Medicaid money. He pushed Ohio to participate in this expansion over the objections of many state Republicans. His remarks highlight the difficulty his party is having on Medicaid -- and point to a weakness that could hurt his chance at the presidential nomination.

Medicaid is structured in a way that makes it hard even for Republican governors to resist its expansion. Even before Obamacare passed, when a state would increase Medicaid benefits, the federal government would typically pick up half the cost. So governors and state lawmakers could offer voters two dollars of benefits for every dollar in taxes they imposed. Other states' taxpayers would make up the difference.

Obamacare offers an exaggerated version of this deal, in which the federal government picks up almost all of the extra costs of the Medicaid expansion. A state that opts out of the expansion doesn't save money; it just sees its tax dollars go to other states.

This fiscal dynamic is the basic reason so many Republican governors, including Kasich, have agreed to put more people on Medicaid. They're not doing it because of the popularity of government-provided health insurance. Few of them are doing it because they want to seem like compassionate conservatives (Kasich stands alone in vigorously making that case). They're doing it because, looked at from the narrow perspective of a state with no concern about federal spending, it simply makes sense to take the money -- and it makes sense even if Medicaid provides few health benefits for the people who receive it.

Conservatives have tried to counter this budget logic, but not very persuasively. They say that the federal government, facing a long-term debt problem, might one day renege on its deal and stop covering all the Medicaid costs it says it will. That's not a prediction that fits well with the federal track record, or with the picture conservatives usually paint of reckless federal spending.

None of the Republican governors who have opted to expand Medicaid has suffered politically for breaking with conservatives on the issue, and none of the Republican candidates for governor in these states wants to reverse the expansion.

Kasich has said, preposterously, that the Medicaid expansion has "nothing to do" with Obamacare. It's logically possible to support the Medicaid expansion while rejecting the rest of Obamacare. But the expansion isn't a small part of the law: It's responsible for most of the increase in coverage it provides.

So where does that leave conservatives who are still unhappy about Obamacare? I'd say there are three takeaways.

First, if Republicans remain committed to repealing Obamacare (as I think they should be), they must also outline a replacement plan that enables Medicaid beneficiaries to get some other form of coverage. The most promising approach would be to convert much of Medicaid into subsidies that let people buy insurance in the larger market.

Second, conservatives should judge the governors and state lawmakers who accepted Medicaid expansion on a sliding scale. The more liberal the state, the more leeway they should give. New Jersey Governor Chris Christie, whose state voted for Barack Obama by a wide margin, should get some slack on the issue. Governors who tried to couple Medicaid expansion with reforms of the program (even though they didn't have a lot of freedom to do so) should also get some credit.

Third, Kasich is in a class of his own on the issue. He has repeatedly suggested that those who oppose the Medicaid expansion are showing a lack of Christian charity toward the poor. It's an argument reminiscent of Texas Governor Rick Perry's line, in a 2011 debate, that those who oppose in-state tuition for the kids of illegal immigrants are heartless. Kasich's argument is also opportunistic. He never proposed this kind of Medicaid expansion when he was in Congress, and would almost certainly not have found it so compelling if he had to find a way to pay for it.

Even if Kasich has persuaded himself that he's on the side of the angels, though, his rhetoric seems politically ill-judged. It's one thing to try to persuade conservatives that they should set aside their instincts about whether to expand a government program. It's another to tell them that having those instincts makes them bad people. Kasich crossed that line, and he will almost surely pay a price if he runs in 2016.

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