Obamacare’s Raw Deal for States
Even as liberals attempt to argue that states should use Obamacare dollars to expand Medicaid because it’s a “good deal” for states, a report issued today provides clear reasoning why many states are thinking twice. The report of the State Budget Crisis Task Force gives six “major threats to fiscal sustainability,” and Medicaid spending growth is tops on that list. Because health costs continue to rise unabated, Medicaid spending is growing faster than state budget revenue. As a result, Medicaid spending has soared over the past four years, to outstrip K-12 education as the top source of state expenses:
With Medicaid spending skyrocketing, what did Obamacare do to the situation? It made it worse. Over the past two fiscal years, states had to close a combined $146.3 billion in budget gaps — yet the law is about to impose new unfunded mandates on states of at least $118 billion. And as today’s report again emphasizes, new Obamacare mandates prohibiting state flexibility in running their Medicaid programs “place an additional limitation on state cost reductions.”
Over and above the very real concerns that the federal government could engage in “bait-and-switch” tactics with states — enticing them into the Medicaid expansion with a high initial match rate, only to lower that rate and shift more costs to the states amid the coming federal budget crunch — many states will have to take a long look at the opportunity costs that participating in the Obamacare expansion will bring. As the head of the National Association of Medicaid Directors noted, states paying even 10 percent of a very large and costly Medicaid expansion is a big number or their budgets to bear. And at a time when other budget priorities are already being crowded out to finance Medicaid spending, taking more money from education, transportation, corrections, or elsewhere to pay for Obamacare’s unsustainable entitlement expansions may be a fiscal gamble states do not wish to make.