02.28.2010 0

Editorial: The Costs of Expanding Medicaid Will Bankrupt the States

  • On: 03/30/2010 09:50:46
  • In: Health Care
  • One of the central aspects ObamaCare, besides the individual mandate to purchase insurance, is the expansion of Medicaid eligibility to 133 percent of the poverty level. To entice Democrat lawmakers, especially in the Senate, to vote for this, Senate leaders assured the states that the federal government would cover the costs of the expansion until 2014. After that, they said, the states would be responsible for paying for 10 percent of the expansion.

    According to the Kaiser Commission on Medicaid and the Uninsured, the Medicaid expansion would “result in large increases in eligibles in most states and many new enrollees. Not only would eligibility standards be extended but the individual mandate, though somewhat difficult to enforce at these income levels, will mean that large numbers of both previously eligible and newly eligible people will enroll.” In other words, costs will go up. A lot.

    Now the states are pushing back. Their case: the cost increases are immediate—and they are devastating. As reported by the AP, Arizona has said that the new Senate bill is forcing Arizona to rescind cuts it intended to make to Medicaid to balance its budget. As a result, says Arizona, the state will have to pay at least $3.8 billion in additional costs before 2014.

    It gets worse, from the AP report, “For the seven years starting in 2014, Arizona will have to spend an additional $7.8 billion, AHCCCS Director Tom Betlach said in the report.” That’s money the people of Arizona simply do not have. Arizona, which already faces a $2 billion deficit on a $10 billion budget this year, now must find nearly an additional $1 billion to pay for the Medicaid cost increases.

    In contrast, if Arizona’s eligibility had not been expanded, its costs over that same seven year period would have only been $1.8 billion. Therefore, thanks to ObamaCare, by 2020, Arizona will be a full $9.8 billion more in the hole than they would have been. This is a state that is literally on the brink of bankruptcy. Only California has a worse financial predicament than Arizona.

    And that is just one example. In South Carolina, the state’s Department of Health and Human Services has said that the Medicaid expansion through 2019 will cost and additional $914 million, or about $100 million a year. South Carolina already faces a $1 billion deficit this year alone, and now will have to find additional sources of revenue to pay for what amounts to a mandate.

    Coupled with mandatory insurance, the states are, in effect, being forced to bear the burden of anyone who is eligible for expanded Medicaid. Consider California where, according to the state’s deputy director of health care programs, “the extra load will cost at least an additional $2 billion to $3 billion annually.” From 2014 to 2020, those additional costs could therefore range anywhere from $14 to $21 billion.

    In sum, the costs of the Medicaid expansion will be far beyond what anybody has estimated. For a state like California, the costs could be tens of billions of dollars by 2020. And for states in such fiscal dire straits, like California, New York, Arizona, and others, that is the difference between solvency and insolvency.

    Therefore, these new costs will be more than the states can bear, which is why at least eleven states are suing in federal court over the costs involved, according to Bloomberg News. The suits will need the support of the American people, and a little bit of luck in the federal courts, to be successful. For, if they are not, and the legislation is not repealed entirely, the states will likely be bankrupted.


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