Sunday, July 22, 2012

The Medicaid Melee

Let the Medicaid melee begin. Obamacare offers an expansion of Medicaid up to 133% of the poverty level. The federal government pays for the increase for several years before the state pays 10% of the new coverage each year. Needless to say, the offer has sparked a battle royale between Mississippi Republicans and Democrats as the Republicans say the state can not afford to pay $160 million when its time for Mississippi to start paying the piper.

Cottonchicken is quoting the usual Democratic Party line and using reports published by the Mississippi Economic Policy Center. MEPC claims the expansion will expand the state economy:

"As we saw in an earlier post, over 270,000 working individuals who are currently without health insurance would be eligible for coverage in Mississippi. As more people receive coverage, they will demand health care services. As more people demand services, Mississippi will need workers to fill the jobs associated with providing additional services. These jobs not only include doctors and nurses, they also include medical billers and coders and other occupations that pay family supporting wages....

After three years, the federal match will slowly decrease to 90 percent of the expansion costs in 2019. With Mississippi only paying 10 cents for every dollar on the population covered through the expansion, the policy will remain an incredibly good deal.

Just one problem. Paul Volker's State Budget Crisis Task Force issued its own report on Medicaid spending. Summary,full report Although the report only covered six large states. It presented a different picture of Medicaid:

"Medicaid, the single largest spending category in most state budgets, is growing faster than the economy and faster than state tax revenues. This trend will continue as long as health care costs grow faster than the overall economy and Medicaid caseloads continue to increase.

According to the federal Centers for Medicare and Medicaid Services (CMS), total Medicaid costs are likely to grow at an average annual rate of 8.1 percent between 2012 and 2020 if the health care reforms in the Affordable Care Act (ACA) are implemented and at a rate of 6.6 percent if they are not.If state Medicaid spending and state tax revenues continue their trends of the past decade, with a 7.2 percent average annual growth for Medicaid and a 3.9 percent growth rate for revenues, the gap between Medicaid and state tax revenue growth will increase by at least $22 billion annually within five years and will grow even larger thereafter.

Medicaid will face further pressure with the growth of its medically expensive elderly population. The elderly population in the nation increased by an annual average of 13 percent in each of the last two decades but is projected by the Social Security Administration to increase by 30 to 35 percent in this decade and the next.....

Medicaid recently surpassed K-12 education as the largest area of state spending when all funds, including federal funds, are considered; and Medicaid appears likely to continue to claim a growing share of state resources. (See Figure 9.) During the deepest part of the recent fiscal crisis, states cut education aid, adjusted for inflation and enrollment growth, while Medicaid spending continued to grow...

States with currently low eligibility levels and high uninsured populations, like Texas, Virginia, and Illinois, could have a substantial increase in their Medicaid caseloads if they participate, putting great pressure on provider capacity - already strained in these states - and increasing pressure for increased rates of payment to providers....

Federal health care reform, as upheld by the Supreme Court, will not change the fundamental imbalance between rising Medicaid costs and state revenues. The longer term cost pressures resulting from dramatic increases in the elderly population and the inexorable growth in health care costs continue to build. As the CMS Actuary puts it, “The increased Medicaid costs associated with growing caseloads and the pressures on government revenues are likely to add to the financial stress of States’ Medicaid programs...

Who you going to believe? Cottonchicken and MECP or Paul Volker?


Anonymous said...

I believe that socialism is not the answer. I also believe that the government is obviously not effective in money management. If the gov't,state or fed, can't pay the bills it has how will it pay for these? Fraud in welfare is rampant but many don't want drug testing and other measures in order to get it under control and to those who need it; not abuse it.

Shadowfax said...

If the goal is for 100% of the population to eventually be covered by 'the government run program', what difference does it make whether we call it medicaid or socialciad or Obamacaid?

10:50 slips in a veiled chant for 'drug testing' welfare recipients as a means to 'get it under control'. The expense and increased bureacracy required to 'drug test' recipients would far outweigh any savings (which would never result). If you know anything at all about drug testing programs you know it's much simpler than "Pee here. You're disqualified."

Shadowfax said...

Sorry; meant 'not nearly as simple as'............

Anonymous said...

No guess we should waste money forever. It is that simple. Much of government could be that simple except for the back door dealing and kid gloves for certain groups of the voting public. I also realize that the reality is the bureacracy would complicate things and that's the government we have. So in part I agree that it would be difficult to implement but I think it is worth it in the long run.

bill said...

The job of government at any level is to redistribute wealth, and they've been doing that since the first dollar of tax money was collected. Roads, bridges, schools, standing armies...all built and maintained by money that people gave to the government. Rich people gave more money but have no more use of the roads, bridges, schools and standing armies than poor people do, so by definition that is wealth redistribution. It's been going on since the Revolutionary War but it's never been as noticeable as it is today because fewer people are providing the benefits and more are collecting them. Any form of government provided health care is wealth redistribution. I'm not judging whether it's wrong, but that's what it is - people who have money paying for health care for people who don't. Money from well people used to pay for health care for sick people. A government sponsored system may work, but people will die because the quality and supply of health care will decrease. A completely private system may work, but people will die because they won't be able to afford the care they need. Pick your poison...

Anonymous said...

Bill, it's true that rich people don't use the roads more...well except maybe those who make widgets and need to transport them.

But, the rich benefit the most from living in a country where they can become rich in spite of humble beginnings. We have the most to lose if this " little experiment in democracy" fails.

As one of the 1%, I can't think of anything I want or need so bad that our infrastructure should continue to decline and our infant mortality rate should continue to increase or kids not born into the fortunate sperm and egg club should suffer so I can have more STUFF.

Besides, there's more than a few examples in history where the hungry hordes become so large that they show up at the doors of the wealthy that got way too greedy and the hungry hordes always win.

I think the principle of "noblesse oblige" is important, Bill. We should be having a discussion on how to do that better. We've crossed the line from elegance to into ostentation.

Anonymous said...


Your premise is quite flawed. Taxes used to provide for common items like roads, defense, police, etc are not items of redistributive wealth.

Items that can be/are utilized by any citizen are not the same as subsidizing or providing vouchers to individuals. Taking wealth, property, income etc from one individual and providing that to another class of individuals is wealth redistribution. Providing for common use is a simple function of government.

Your analysis does nothing but attempt to further cloud the issue, in my opinion.

Anonymous said...

It seems silly to consider any expansion of any government program when ALL the evidence shows it costs more than original estimates, gives us chronically wasteful spending, embarrassingly overruns of State budgets that MUST be balanced, and big rewards going to the movers and shakers in Washington, and NOT performing as promised by those socialists who write these idiotic programs. Never has a government public assistance come throuh with an effective answer to a public problem it was supposed to eliminate.
Obamacare has so far followed this course exactly, and they want us to do this again? I think not. The regulations of mammoth proportions are coming out reams at a time, no idea when they will all be written. No businessman, small or large, would sign such a contract without knowing the terms. This is pure craziness to expect States to sign onto this boondoggle.
Furthermore, medical care is very personal and it is REQUIRES personal responsibility. Medicaid as it is, has not achieved compliance with those who benefit from it, because they don't know how much it costs, and thus they have no compunction to respect what they have been GIVEN FOR FREE! They have no "skin in the game". Therefore they don't know that it requires much from those who finance it and from those who provide the services! It is time for all to pay SOMETHING for what they receive in public assistance programs.

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