John Hood has an instructive post on one of the problems of Medicaid expansion:
"Here in North Carolina, I think the evidence also indicates that previous legislative actions have induced many families of modest means not to enroll in private plans but instead to secure free or low-cost government insurance, thus increasing the cost to taxpayers without dramatically reducing the ranks of the uninsured. Legislators should certainly consider other alternatives that pose less risk and promise more reward."
I would add to his crowd-out problem, the problem of the low wage trap (from a forthcoming publication I wrote the conclusion for):
"Medicaid also has the effect of trapping families in low-wage jobs because it covers more than just the very poor. Such is a kind of artificial poverty among those who could feasibly afford private insurance. That is, at a certain point of income increase (i.e. as one betters him-or-herself) one will have no incentive to accept, say, the higher paid position, because he-or-she will lose out on net. There is no financial incentive to get higher wage job after a certain point due to the total government benefit. The more you earn, the fewer overall benefits you receive—which rewards you simply to subsist (much like Welfare did prior to 1996). When the worker improves her condition with a better job, the effective tax rate on her earnings becomes 100 percent. In other words, she starts losing out by doing better. Medicaid thus keeps people in poverty, or at least in the low-wage trap. Expanding Medicaid would result in more of the same trap, only deeper." (For more on the gov’t benefits trap, see this report.) Update: for more on the subject.