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Because of the cost to states of Medicaid
From Wikipedia, the free encyclopedia


Not to be confused with Medicare.

Centers for Medicare and Medicaid Services (Medicaid administrator) logoMedicaid is the United States health program for eligible individuals and families with low incomes and resources. It is a means-tested program that is jointly funded by the states and federal government, and is managed by the states. Among the groups of people served by Medicaid are certain eligible U.S. citizens and resident aliens, including low-income adults and their children, and people with certain disabilities. Poverty alone does not necessarily qualify an individual for Medicaid.<2> It is estimated that approximately 6 percent of poor Americans are not covered by Medicaid.<3> Medicaid is the largest source of funding for medical and health-related services for people with limited income in the United States. Because of the aging Baby Boomer population, the fastest growing aspect of Medicaid is nursing home coverage.

Each state may have its own name for the program. Examples include "Medi-Cal" in California, "MassHealth" in Massachusetts, "Oregon Health Plan" in Oregon, and "TennCare" in Tennessee. States may bundle together the administration of Medicaid with other separate programs such as the State Children's Health Insurance Program (SCHIP), so the same organization that handles Medicaid in a state may also manage those additional programs. Separate programs may also exist in some localities that are funded by the states or their political subdivisions to provide health coverage for indigents and minors.

State participation in Medicaid is voluntary; however, all states have participated since 1982 when Arizona formed its Arizona Health Care Cost Containment System (AHCCCS) program. In some states Medicaid is subcontracted to private health insurance companies, while other states pay providers (i.e., doctors, clinics and hospitals) directly.

Some states have incorporated the use of private companies to administer portions of their Medicaid benefits. These programs, typically referred to as Medicaid managed care, allow private insurance companies or health maintenance organizations to contract directly with a state Medicaid department at a fixed price per enrollee. The health plans then enroll eligible individuals into their programs and become responsible for assuring Medicaid benefits are delivered to eligible beneficiaries.

Comparisons with Medicare
Medicare is an entitlement program funded entirely at the federal level.<7> It is a social insurance focusing primarily on the older population. As stated in the CMS website,<8> Medicare is a health insurance program for people age 65 or older, people under age 65 with certain disabilities, and people of all ages with end stage renal disease. The Medicare Program provides a Medicare part A which covers hospital bills, Medicare Part B which covers medical insurance coverage, and Medicare Part D which covers prescription drugs.

Medicaid is a program that is not solely funded at the federal level. States provide up to half of the funding for the Medicaid program. In some states, counties also contribute funds. Unlike the Medicare entitlement program, Medicaid is a means-tested, needs-based social welfare or social protection program rather than a social insurance program.

http://en.wikipedia.org/wiki/Medicaid#cite...


In otherwords, the Public Option becomes a boon to governors in cash strapped states (and most are), who have high medicaid administrative and joint cost. They opt out, and they are stuck with continuing footing a bill that they didn't have to. They stay in, and the cost of Medicaid would decline (as the whole point of the public option is to achieve bargaining power for more, and thereby reduce cost of all health insurance, including that which is paid by both the feds and States).


Offering an Opt-out aka the Put-up or Shut-up Option may be a win/win for Democrats.

(edited based on information provided lower down in the thread).