Tuesday, June 12, 2012

Obamacare’s “Self-Inflicted Wounds” on States

The Washington Post has a story out today about today’s semi-annual report on the Fiscal Survey of States.  The article notes that even as state revenues stabilize following the recession, the skyrocketing costs of Medicaid obligations are “leaving most [state] governments in dire fiscal straits.”  The report indicates that Medicaid spending rose a by 20.4 percent this fiscal year, after a double-digit increase of 10.6 percent in fiscal 2011.  Moreover, enrollment growth surged by 7.2 percent during the recession, and will continue to increase: “The implementation of [Obamacare] will greatly increase the individuals served in the Medicaid program” – by as much as 26 million people, according to the Administration’s own actuary.  As a National Governors Association press release on the survey noted, the growth in enrollees is raising Medicaid spending much faster than other areas of the budget; NGA Director Dan Crippen admitted that “spending priorities” – including things like education, transportation, and law enforcement – “will again face competition for state budget dollars” due to skyrocketing growth in Medicaid.

On a related topic, Inside Health Policy has an article (subscription required) outlining comments from Connecticut’s Medicaid director about how that state’s early expansion of Medicaid has become a “self-inflicted wound” on that state’s budget.  Using new authorities granted by Obamacare to expand Medicaid to low-income childless adults, the state experienced a 70 percent increase in enrollment in “about a year, year and a half’s time.”  Even though Connecticut was granted additional matching funds by the federal government, “our revenue expectations were eclipsed by the new obligations of a…population that rushed headlong into this new program,” according to the Medicaid director.  As the article noted, Connecticut’s experience “is a bit of a red flag, as it is indicative of the difficulty states face because they don’t really know how many people will be signing up for Medicaid in less than two years.”

Today’s state fiscal survey reveals that over the past two fiscal years, states had to close a combined $146.3 billion in budget gaps.  Yet Obamacare is about to impose new unfunded mandates on states of at least $118 billion.  And today’s stories show how Obamacare will impose more “self-inflicted wounds” on states through its misguided policies.  The state survey illustrates how skyrocketing Medicaid spending is crowding out other priorities, and Connecticut’s example shows how state budgets can be greatly impacted by millions of people “rush[ing] headlong into this new program” in 2014.  It’s more evidence why America should NOT “rush headlong” into creating this massive and unsustainable new entitlement state.