“Within state budgets, police and education are often the alternative to Medicaid costs. Are we so sure that Medicaid produces the maximum benefit for the money? Low-quality moralizing about the poor is not an answer to this question.”
That was from Tyler Cowen. Of course, projects like Medicaid are less about producing maximum benefits and more about signaling to voters that we care about the poor. This makes it very difficult to effect the status quo.
That said, Medicaid should be one of the last parts of the health care budget to cut. More of our health care aid should be like Medicaid, which is relatively cheap and also targeted at those who really need the assistance. The correct Medicaid decisions depend on other budget choices, but ideally Medicaid is low on the list of recommended cuts, even if it may require some cuts.