In the wake of a Heritage Foundation report reminding states that Medicaid is a voluntary, not mandatory, program, Gov. Jim Gibbons has asked his human resources department to analyze the impact of pulling out of it.
The state's portion of the Medicaid budget for this two-year legislative cycle is $870 million out of a total budget of $2.9 billion for Nevada. The federal government picks up the rest of the cost. If the state eliminated Medicaid, it would also lose the $2 billion in federal aid for medical care.
Medicaid supports medical services for low-income residents, nursing home residents and people with disabilities, among others, who qualify.
Deputy Chief of Staff Lynn Hettrick said opting out wouldn't save the state's share unless Nevada tried to immediately cut everybody receiving services off.
"The reality is we wouldn't do that," he said. "If people had started services through (Medicaid) we would have to pick them up. That would not be mandated but, morally, we would not do that."
He said the state would spend the $870 million on services and procedures the recipients are already qualified for, as well as care for those in long-term care - primarily seniors.
"It's a long-term issue because, in the short term, we'd pick up 100 percent of the expenses," he said.
He said over time, the cost would go down and the state would gain much more flexibility over how to provide services to those in need.
Those who lost Medicaid services, he said, would receive federal subsidies for the uninsured that are part of the proposed health care reform bill nearing passage in Congress.
If numerous states did the same, he said that would hit the federal government with a huge, unanticipated increase in costs.
Hettrick said no decision has been made because Health and Human Services Director Mike Willden and Charles Duarte, who manages the Medicaid program, haven't analyzed all the impacts.
He said he doubts it would ever actually happen because, if a number of states start looking at dropping Medicaid, the federal government "will close that loophole."
But he said the threat may help convince the government and Congress to fix some of the problems that are making it practically impossible for states to afford Medicaid.