Leading health economist Uwe Reinhardt is baffled as to why Republican governors would turn down potential billions by refusing Medicaid expansion. He uses a helpful analogy to show just how irrational an economic decision refusal is.
Imagine being the shareholder of a publicly traded biotech company whose management and board were considering the economic merits of a truly awesome project involving a new drug.Imagine being the shareholder of a company that has a CEO refusing to participate in development of that drug just because he doesn't like the original developer of the drug. That's exactly the position of the citizens and the healthcare providers in states where Republican governors and legislatures are refusing Medicaid expansion. It's in fact worse, because all those residents are paying federal taxes that are providing the expansion to other states, while missing out on both the benefit of a healthier population and billions and billions in economic benefits.
Unlike most pharmaceutical and biotech products, which require billions of investment up front before revenues come rolling in, this peculiar product would require the firm only to put up monthly production costs of 10 cents for every dollar of revenue that will come in the same month. This is because the drug has already been developed by someone else, and this firm bought the patent on it some years ago.
The drug has been found to be so effective that its approval by the Food and Drug Administration is virtually a sure thing. Furthermore, there will be a solid market for the product as far as the eye can see.
It's utterly irrational. It's also despicable. Reinhardt predicts that most powerful stakeholders—doctors and hospitals and their lobbies—"will ultimately prevail and get the deal done." Possibly, but it's going to take a political revolution in some of these states.