... the mother and father and crazy uncle of unfunded mandates.
The more we inspect Max Baucuss health-care bill the worse it looks. Todays
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 $30000 for a family of four.
Starting in 2014 Mr. Baucus plans to spend $287 billion through 2019or about one-third of ObamaCares total spendingto add some 11 million new people to the Medicaid rolls.
About 59 million people are on Medicaid todaywhich 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 billionor 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 years 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 20.7exceeded 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 higher39 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. Baucuss 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 doesnt respect that no one size fits all at the state level.
He added: Unlike the federal government states cant 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 perpetuitydespite the fact that CBO expects purely federal spending on Medicaid to consume 5 of GDP by 2035 under current law.
As for the poor uninsured theyll be shunted off into what Democratic backbencher Ron Wyden calls a caste system. While some people will be eligible for subsidized private health insurance everyone in the lowest income bracket will be forced into Medicaid the countrys worst insurance program by a long shot.
States try to control spending by restricting access to prescription drugs and specialists. About 40 of U.S. physicians wont accept Medicaid at all.
Why? One reason is that Medicaids price controls are even tighter than Medicares which in turn are substantially below private payers. In 2009 or 2010 29 states will have either reduced or frozen their reimbursement rates to providers.
Democrats love Medicaid because is it much cheaper than subsidizing private insurance but that is true only because of this antimarket brute force. Of course
such coercion will be extended to the rest of the health market under ObamaCare.
The states arent entirely victims here. Both Republican and Democratic state houses regularly game the Medicaid funding formulawhich itself is designed to reward higher spendingto steal more money from national taxpayers. Then when tax collections fall during downturns budget gaskets blow all over the place.
This dynamic helps explain the spectacular budget catastrophes in New York and California. Wed prefer a policy of block grants which would extricate Washington from state accounting and encourage Governors to spend more responsibly.
Thats not going to happen any time soon but the least Mr. Baucus can do is not make things worse.
Instead his Medicaid expansion is a disaster on every levellike the rest of ObamaCare.
