What is the meaning of the phrase "cutting their noses to spite their faces"?
I came across this phrase in the following context :
As many as 22 states currently are cutting their noses to spite their faces: they are willing to forego billions of dollars in federal funds — funnelled through an expansion of Medicaid — to thwart the ACA.
Cut off your nose to spite your face
to do something because you are angry, even if it will cause trouble for you 'The next time he treats me like that, I'm just going to quit my job.' 'Isn't that a bit like cutting off your nose to spite your face?'
http://idioms.thefreedictionary.com/cut+off+nose+to+spite+face
As expressed here, it is doing something that will negatively impact you, so as to negatively impact another.
Other examples would be to miss an event you wanted to go to, just so that a companion cannot go either (in the case of an arguement and you want to be vindictive).
In your case, there could have been a profit at hand, but they missed out on that profit (which is inherently negative) in order to prevent another organisation benefiting
