Socialized Medicine by Fiscal Fiat

As I explained in my Breitbart piece on price controls for prescription drugs, government controls and regulations on health care literally cost lives. We haven’t experienced that on a broad scale here in America – not yet. However, with the ongoing, apparently unending expansion of Medicaid, we are running head first straight into the brick wall of socialized health care.

And expand it does. The vehicle, of course, is Medicaid Expansion. It is being sold to states as a budget blessing and a source of revenue. For reasons unknown to the intelligent life in the universe, there are legislators around the country – my home state Wyoming included – who really think that Medicaid Expansion adds more revenue to their state coffers.

Maybe a Common Core virus has compromised their arithmetic abilities. That’s fine so long as the politician is sitting at home opining to his dog, but when he brings his Common Corevid-19 math to the legislature and tries to argue that you end up with more money if you spend $100 and get $90 from Uncle Sam, then his deeds have sunk through the lower boundary of the intellectually tolerable.

Medicaid Expansion has clearly driven states into higher dependency on the federal government. Not only has it put more of their citizens on tax-paid health insurance (Montana and New Mexico are the worst examples), but Medicaid Expansion has also allowed the federal government to take more control over the Medicaid program. Using again NASBO numbers (just as in yesterday’s review of state finances), we find that in 2020, an estimated 63 percent of all Medicaid funding came from Congress. Of a total of $649.7 billion being spent on the program nationwide, $408.4 billion was federal funds for the states.

The rest came from state General Funds (27 percent) and Other Funds (10). However, the composition varied notably, with some states getting more than 70 percent of their Medicaid funds from Congress and three states paying for less than half of their Medicaid program with federal money.

And here is where it gets interesting. Of the 16 states in the first group, with 70 cents of every Medicaid dollar coming from the federal government, thirteen chose to expand Medicaid. By contrast, of the 14 states that got less than 60 percent of Medicaid money from Congress, only nine have Medicaid Expansion. The frequency of non-Expansion states is twice as high in the group with lower dependency on the federal government.

Two states, Arkansas and West Virginia, have gone all out on federal dependency, collecting 82.7 and 80.5 percent, respectively, of their Medicaid funds from Congress. New Mexico is a smidge behind with 79.9 percent, then comes Kentucky at 78.9 and Montana (77.9).

The 35 Medicaid Expansion states grew their spending on the program by an estimated 7.5 percent in Fiscal Year 2020. Fourteen of the non-Expansion states grew their spending by 5.1 percent. (Wyoming is excluded from the non-Expansion group because their state budget analysts were too lazy to report any new numbers to NASBO.) This difference is noticeable, even more so than the 3.6 vs. 3.2 percent difference from 2019.

In other words, the bigger a state lets Medicaid grow, the faster its costs will accelerate. It doesn’t help much to depend on Congress for the bulk of the funding: states still have to put up matching funds, and the federal share is going to decline over time. Yes, I know: a lot of states were pulled into the Expansion by the lure of a 90-percent federal funding share for that portion of their Medicaid program. However, that share only applies to the estimated Expansion enrollment; if actual enrollment exceeds the estimate, the state is on the hook for all of the excess enrollees.

Furthermore, it is not exactly a state secret that the federal government has its own budget problems. It would take an ostrich sticking his head in the sand to not see that the rapid build-up of the federal debt will eventually lead to drastic spending cuts. A reduction in Medicaid funding will be high on the list.

With that said, to wrap up our foray into socialized medicine, behold Figure 1 and its reporting of the federal funds share in Medicaid, as estimated for 2020 by the National Association of State Budget Officers:

Figure 1

Source of raw data: NASBO

Again, only three states pay for more than half of their Medicaid program with in-state funds: Massachusetts, Connecticut and Ohio.

With that, we sign off for today. Thank you for reading. Click the “Follow” button up to the right to make sure you get all the updates, right away.