Flawed Medicaid Study Leads to Flawed Conclusions
On Wednesday, Bloomberg published an article regarding a new Bloomberg Government study surrounding state spending on Medicaid. The study (subscription required) alleges that Medicaid costs are growing less than state budgets as a whole. However, the study’s headline conclusion only examines state general fund spending on Medicaid, not overall state spending on Medicaid. And the report admits that, if ALL state spending is taken into account, Medicaid spending grew significantly during the past decade:
The increase in state Medicaid spending over the past decade was greater if one includes what the state budget officers’ association calls “other state funding,” which it defines as “other funds and revenue sources used as Medicaid match, such as local funds and provider taxes, fees, donations, assessments”….If one includes spending on Medicaid from other state funds, Medicaid costs grew by 54 percent from 2002 through 2011, one-third more than total statewide expenditures excluding bonds.
In other words, the study’s major conclusion is incorrect; when examining ALL state spending, Medicaid expenditures have increased faster than those on education, corrections, transportation, etc.
The Bloomberg study attempts to justify its focus on general fund spending by stating that other forms of state spending are merely gimmicks designed by states to get additional federal matching funds. It is true that both conservatives and liberals have opposed various provider taxes – where states raise taxes on hospitals and other providers, draw additional federal matching funds, and pass those matched funds right back to providers – as an abusive gimmick. That is why the Bush Administration in 2007-08 proposed several major regulations attempting to crack down on these abuses – regulations which Democrats in Congress blocked through legislative action.
But what the Bloomberg study misses is the fact that new maintenance of effort mandates imposed by the Obama Administration have forced states to resort to provider taxes and other similar “gimmicks” as a way to mitigate the effects of Washington’s additional mandates. Thanks to the mandates in Obamacare, states cannot raise co-payments, trim beneficiary rolls, or even engage in anti-fraud activities as a way to control rising Medicaid expenditures. Because Obamacare has taken away states’ freedom to manage their own Medicaid programs in a way that could help contain costs, many states have resorted to provider taxes and other budgetary gimmicks to offset this Washington-mandated spending. According to the Kaiser Family Foundation, 16 additional states have imposed new provider taxes on hospitals between 2009-2012 – actions which reflect states attempting to use any means necessary to alleviate the harmful effects of Obamacare’s at least $118 billion in unfunded mandates.
Some would argue the solution to this problem would involve Congress eliminating BOTH the Medicaid “tax gimmicks” AND the Medicaid mandates in Obamacare that have forced many states to resort to such gimmicks – not to assume that one washes out the other and there is no problem that needs addressing. Therein lies the Bloomberg study’s critical flaw, in presuming that two Medicaid wrongs – new federal mandates, and the tax gimmicks states have used to mitigate the harmful effects of those mandates – somehow combine to create a policy right.