Medicaid Must be Federalised
Posted by Michael A. Kamperman on November 23, 2010
Shockingly, the State of Texas is placing pulling out of Medicaid as agenda item number one in its attemtps to close a projected $25 billion two year budget shortfall. At first this seemed like just a back-bencher idea. But Governor Rick Perry has endorsed pulling out of Medicaid as a legitimate way to help close the budget gap. Medicaid will spend $24.7 billion in Texas in fiscal year 2011. The federal government will cover $16.6 billion and the state will cover the rest. Governor Perry claims they can save both the state and the federal government money and do more with much, much less funding. This is nothing short of libertarian ideology gone wild. First and foremost it is impossible to do more with that much less. Second, because Hospital Emergancy Rooms cannot refuse service based on the ability to pay a significant cost will be shifted to hospital budgets. County hospitals will require increased local tax support. Third, over one million Texans work in healthcare. The states unemployment rate will rise substantially and its tax revenues will decrease if this plan is enacted. However, the state will have to make dramatic cuts in public K-12 education if it is unable to find cuts in Medicaid. The math simply doesn’t allow Texas to balance its budget, leave Medicaid off the table, leave tax increases off the table, and leave K-12 education off the table. While libertarian ideology is making Medicaid a wedge issue in Texas, it is a budget wedge issue in almost all of the states. The states are broke and significant cuts are coming.
The simple solution is to federalise Medicaid. The federal government should absorb all of the costs of administering the program. Since the federal government doesn’t have to have a balanced budget it can continue the program even during severe economic downturns like the one we currently find ourselves in. The poor will continue to receive quality healthcare. The only growth area of the economy, healthcare, will not be thrown into an instant depression as would happen if multiple states opt out of Medicaid to balance bleeding budgets. And children in first grade will not be crammed into larger and larger classrooms where learning takes a back seat to baby sitting. Importantly, federalising Medicaid doesn’t increase overall government spending or taxation. It simply shifts the states existing burden to the federal government which mandated Medicaid.
All of this is the unintended consequence of a poorly constructed Health Care Plan rushed through on a party-line vote by the Whitehouse. The President should step forward and show leadership. The Health Care plan has to be fixed. But the political Rubics Cube of satisfying the left, the right, and the middle on this issue may be beyond the political skills of the best ploiticians, no less the current Hooveresque Whitehouse. Still the President should place this issue on the table. He should think big, not small.
