Thursday, June 2, 2011

The Cost of Obamacare’s Mandates

Two developments in the past week have provided further evidence of the impact of the health care law’s Medicaid mandates on state budgets.  First, the National Governors Association released its updated Fiscal Survey of States, which shows that states are having difficulty funding their Medicaid programs:  For Fiscal Year 2012 (which in many states starts on July 1), 37 states have considered reducing or freezing provider payments, 28 states have proposed limiting or eliminating benefits, and 30 states have proposed limitations or other restrictions on prescription drug spending.

At a time when states cannot afford the Medicaid programs they already have, Obamacare imposes at least $118 billion in new mandates on states by requiring them to cover as many as 25 million MORE beneficiaries.  The opportunity costs of these Medicaid mandates were made plain last week, when the Wall Street Journal profiled the rising fees imposed in many public schools – “registration fees, technology fees, and unspecified ‘instructional fees’” that can run in the hundreds, if not thousands, of dollars for students.  The article notes that schools are implementing these fees in part because “states have cut education funding by a collective $17 billion” due to “higher expenses for programs such as Medicaid.”  Given the new costs once Obamacare’s Medicaid expansion is fully implemented in 2014, one can reasonably conclude that the state cuts to education spending – and resulting impact at the local level – will only accelerate in years to come.

While some of the school fees referenced in the Journal article may be defensible on their own merits, and while rising teacher salaries and benefits certainly contribute to budgetary shortfalls in some school districts, the larger point remains:  In imposing new Medicaid mandates in the health care law, Democrats FORCED states to prioritize health care spending over other important priorities like education and public safety – and that federal mandate will not come without costs or trade-offs to states and local governments in both the short and long term.