01.03.2012 0

Higher Medicaid Expenses Drown State Budgets Even Without ObamaCare

By Kevin Mooney — Medicaid costs continue to outpace expenditures for other vital services at the state level including education, transportation, corrections and various public assistance programs, according to the latest edition of the State Expenditure Report released by National Association of State Budget Officers (NASBO) and the National Governors Association (NGA).

In Fiscal Year 2011, Medicaid spending is estimated to be $398.6 billion, an increase of 10.1 percent over FY 2010, according to NASBO. This is almost three times the rate of higher education spending, which was 3.4 percent, and much higher than the spending on elementary and secondary education, which was 2.1 percent, and public assistance at 1.8 percent, corrections at 1.3 percent and transportation at 3 percent, the report shows.

This is before ObamaCare goes into effect on Jan. 1 2014.

The federal health care law formally known as the Patient Protection and Affordable Care Act (PPACA) calls for state Medicaid programs to be expanded to the point where they cover non-pregnant, non-elderly individuals who have an income up to 133 percent of the federal poverty level. Moreover, states are required to utilize a “five percent income disregard,” which means that Medicaid eligibility actually reaches 138 percent of the federal poverty level.

The Heritage Foundation estimates that 33 states will see their Medicaid rolls jump by at least 20 percent, and six states will see their rolls jump by at least 40 percent. “The perfect storm” of mandatory Medicaid expansion, tight state budgets and declining tax revenues means state legislators will be forced to make hard choices,” and possibly cut key services like education, the American Legislative Exchange Council (ALEC) warns.

“Even without the burdens ObamaCare will place on Medicaid, we see spending estimates rising to unprecedented levels,” Sean Riley, a legislative analyst with ALEC’s Health and Human Services Task Force, observes.  “Now, throw the federal health law’s constitutionally questionable Medicaid expansion scheme on top of that and it’s easy to guess what will happen to already strained state budgets.  Real Medicaid reform would include private options for beneficiaries or a variation of capped allotments and block grants to the states.  Instead, Medicaid expansion under the federal health law will only serve to make a big problem even bigger.”

While Medicaid has traditionally been a federal-state partnership, the federal government largely sets the rules and leave the states will little room for flexibility, Christopher Jaarda, president of the American Healthcare Education Coalition (AHEC), said.

“ObamaCare’s expansion of Medicaid poses a very real threat to state budgets,” he said. “The projections are that states will face a $175 billion shortfall over the next two years. In the face of ObamaCare’s Medicaid expansion, states have made, and will continue to make, dramatic cuts to other areas of state budget – including to primary, secondary and higher education. Repeal of ObamaCare is essential to preserving state education funding.”

Bill Wilson, president of Americans for Limited Government which tracks regulations being created to enact the law noted, “ObamaCare’s expansion of the Medicaid rolls is just one more example of how Obamacare passes the buck to the states.  More than that, it’s only one of many budget tricks the Obama Administration used to hide ObamaCare’s true costs.”

The U.S. Supreme Court is scheduled to hear arguments on the constitutionality of the law on March 26-28.

Kevin Mooney is a contributing editor to Americans for Limited Government. You can follow Kevin on Twitter at @KevinMooneyDC.

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