ObamaCare shoves costs onto states

Posted on HotAir.com
by Ed Morrissey
September 28, 2009

Barack Obama and his allies in Congress insist that their plans to overhaul the American health-care system won’t increase the federal deficit. So far, the CBO begs to differ, but even if one accepted that premise, it does nothing but shove costs off to the states. According to the Wall Street Journal, the Medicaid expansion on which both HR3200 and the Baucus plan in the Senate is predicated will create massive budget crises in all 50 states:

Democrats want to use Medicaid to cover everyone up to at least 133% of the federal poverty level, or about $30,000 for a family of four. Starting in 2014, Mr. Baucus plans to spend $287 billion through 2019—or about one-third of ObamaCare’s total spending—to add some 11 million new people to the Medicaid rolls.

About 59 million people are on Medicaid today—which means that a decade from now about a quarter of the total population would be on a program originally sold as help for low-income women, children and the disabled. State budgets would explode—by $37 billion, according to the Congressional Budget Office—because they would no longer be allowed to set eligibility in line with their own decisions about taxes and spending. This is the mother—and father and crazy uncle—of unfunded mandates.

This burden would arrive on the heels of an unprecedented state fiscal crisis. As of this month, some 48 states had shortfalls in their 2010 budgets totaling $168 billion—or 24% of total state budgets. The left-wing Center for Budget and Policy Priorities expects total state deficits in 2011 to rise to $180 billion. And this is counting the $87 billion Medicaid bailout in this year’s stimulus bill.

While falling revenues are in part to blame, Medicaid is a main culprit, even before caseloads began to surge as joblessness rose. The National Association of State Budget Officers notes that Medicaid spending is on average the second largest component in state budgets at 20.7%—exceeded only slightly by K-12 education (20.9%) and blowing out state universities (10.3%), transportation (8.1%) and prisons (3.4%).

This accomplishes two tasks for Democrats in Congress and Barack Obama in the White House. It shifts the costs off of the federal books, which allows them to hide a large increase in public spending for ObamaCare that won’t get covered by the illusory “savings” they predict. Shoving more people into Medicaid also means that the states will have to enact large tax hikes or cut services elsewhere, placing all of the political risks on governors and state legislators while looking like Santa Claus inside the Beltway…

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