Medicaid – The State Killer


ObamaCare is killing jobs. We discussed that recently (ObamaCare – The Jobs Killer). It is also ruining state budgets because of the changes it made in Medicaid.

State Budget Choices

Unlike the federal government, states must balance their budgets. That makes it a zero-sum game. If the cost of one budget item goes up then the revenues available for other budget items must go down.

Former Oklahoma Governor Frank Keating and Dr. Doug Beall, a radiologist in Oklahoma, explain the impact that Medicaid growth is having on Oklahoma in an Op-Ed to The Wall Street Journal. They say they until recently, education always was the number one expense item in the budget. But now Medicaid has reached the top of the budget requiring spending of over $5.1 Billion a year; more than the $3.4 Billion spent on K-12 schools and the $9.4 Billion spent on higher education combined.

What is the impact of these changes in the state budget?

There are real consequences to these changes. In Oklahoma it means lower teacher pay, fewer textbooks, deferred road maintenance, fewer mental health treatment options in the state justice system to prevent incarceration of nonviolent offenders, and lower reimbursement rates for doctors who treat Medicaid. This later change means fewer doctors accepting Medicaid, which means decreased access to healthcare for Medicaid patients. All these adverse effects despite the fact that Oklahoma declined to accept the Medicaid expansion of ObamaCare!

In states that did accept Medicaid expansion the situation is worse. States like Illinois, Ohio, Washington, and California find themselves in real budget crisis since ObamaCare pays more for able-bodied adults on Medicaid (who don’t cost as much) than they do for those with serious disabilities who are covered under the old rules.

According to state documents reviewed by the Foundation for Government Accountability, as Illinois expanded Medicaid more than 800 people already on the program’s waiting list died. Even in states that refused the expansion, like Oklahoma, surging costs have cut people off from care while leaving them still technically “covered.” This is due to the growth in Medicaid spurred by the Individual Mandate of ObamaCare that forced those previously eligible, but not enrolled, to enroll to avoid a tax. These “old eligibles” are not reimbursed under the generous new ObamaCare rules but rather the old, less generous reimbursement rates.

In Oklahoma this resulted in a growth of Medicaid from just under 500,000 before ObamaCare to more than a million. Today more than one-fourth of the state’s population is on medical welfare. Medicaid covers 57% of all births in Oklahoma. Up to 72% of all children are on Medicaid at some point in their first five years, according to the Oklahoma Health Care Authority. Government dependency has growth despite a 70.9% growth in per capita income from $26,720 in 2003 to $45,682 in 2016.

This is precisely why the growth of Medicaid needs to be curtailed with caps on spending growth tied to inflation – just as the Senate healthcare reform bill stipulates. The alternative is out of control spending that threatens other important government services including public education, law enforcement, and infrastructure spending. Worst of all, those most vulnerable Americans who really need Medicaid or other forms of government support will fail to get it. This is the reality that progressives refuse to acknowledge.

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