The following is written by Dwight Flax today, a colleague and fellow health reform information disseminator.
ObamaCare Shoves Costs Onto The States
According to the Wall Street Journal, the Medicaid expansion on which both H.R.3200 and the Baucus Bill in the Senate is predicated will create massive budget crises in all 50 states:
Max’s Mad Mandate
The Baucus health bill will break 50 state budgets via Medicaid.Article
SEPTEMBER 27, 2009
The more we inspect Max Baucus’s health-care bill, the worse it looks. Today’s howler: One reason it allegedly “pays for itself” over 10 years is because it would break all 50 state budgets by permanently expanding Medicaid, the joint state-federal program for the poor.
Democrats want to use Medicaid to cover everyone up to at least 133% of the federal poverty level, or about $30,000 for a family of four. Starting in 2014, Mr. Baucus plans to spend $287 billion through 2019—or about one-third of ObamaCare’s total spending—to add some 11 million new people to the Medicaid rolls.
About 59 million people are on Medicaid today—which means that a decade from now about a quarter of the total population would be on a program originally sold as help for low-income women, children and the disabled. State budgets would explode—by $37 billion, according to the Congressional Budget Office—because they would no longer be allowed to set eligibility in line with their own decisions about taxes and spending. This is the mother—and father and crazy uncle—of unfunded mandates.
This burden would arrive on the heels of an unprecedented state fiscal crisis. As of this month, some 48 states had shortfalls in their 2010 budgets totaling $168 billion—or 24% of total state budgets. The left-wing Center for Budget and Policy Priorities expects total state deficits in 2011 to rise to $180 billion. And this is counting the $87 billion Medicaid bailout in this year’s stimulus bill.
While falling revenues are in part to blame, Medicaid is a main culprit, even before caseloads began to surge as joblessness rose. The National Association of State Budget Officers notes that Medicaid spending is on average the second largest component in state budgets at 20.7%—exceeded only slightly by K-12 education (20.9%) and blowing out state universities (10.3%), transportation (8.1%) and prisons (3.4%).
In some states it is far higher—39% in Ohio, 27% in Massachusetts, 25% in Michigan, Rhode Island and Pennsylvania. Forcing states to spend more will crowd out other priorities or result in a wave of tax increases, or both, even as Congress also makes major tax hikes inevitable at the national level.
The National Governors Association is furious about Mr. Baucus’s Medicaid expansion, and rightly so, given that governors and their legislatures will get stuck with the bill while losing the leeway to manage or reform their budget-busters. NGA President Jim Douglas of Vermont recently said at the National Press Club that the Baucus plan poses a “tremendous financial liability” and doesn’t “respect that no one size fits all at the state level.” He added: “Unlike the federal government, states can’t print money.”
Mr. Baucus hopes to use his printing press to bribe the governors, at least for a time. Currently, the federal government pays about 57 cents out of every dollar the states spend on Medicaid, though the “matching rate” ranges as high as 76% in some states. That would rise to 95%—but only for five years. After that, who knows? It all depends on which budget Congress ends up ruining. Either the states will be slammed, or Washington will extend these extra payments into perpetuity—despite the fact that CBO expects purely federal spending on Medicaid to consume 5% of GDP by 2035 under current law.
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It does seem like we are jumping from the frying pan into the fire!
All this reform was supposed to fix the system!