Bacon's Rebellion

Democracy Thrives in Sunlight

Medicaid Madness

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by

James A. Bacon
in , , ,

State bean counters have revised their estimates for what it would cost to expand the state Medicaid program under the Patient Protection and Affordable Care Act. The good news is that Virginia actually would save money, thanks to federal reimbursements and other provisions in Obamacare, through 2019. And when it does start costing the state, Virginia will lose only $1.1 billion over 10 years — half an earlier estimate and a modest sum for a budget that could exceed $500 billion over that period.

Moreover, Uncle Sam would cough up an extra $23 billion over that period, injecting billions of dollars into Virginia’s health care sector and extending health coverage to 250,000 who didn’t have it before, reports the Times-Dispatch.

Bacon’s bottom line: The positive economic stimulus is a powerful argument in favor of expanding Medicaid — an argument, I predict, that will be hard to overcome. But there is good reason to question the deal proffered by Obamacare. How confident is Virginia that the federal government will be able to make good on its promises into the indefinite future? If Washington fails to deliver, what expectation will there be for state taxpayers to make up the difference and maintain the entitlement? Once granted, an entitlement is extremely difficult to take away.

My perspective stems from my appraisal of the budget negotiations in Washington. I regard them as a catastrophic farce. Without getting into the partisan blame game, a useless exercise as far as predicting what will happen, it is increasingly clear that Republicans and Democrats are negotiating on the margins. The future likely holds some combination of slightly higher taxes on the rich, modest defense cuts, incremental changes to entitlements and a cap on discretionary domestic spending, which won’t come close to closing the $1 trillion-year budget gap.

In the slow-growth economy that the United States is likely to encounter for the foreseeable future, deficits will continue to run close to $1 trillion a year indefinitely. The national debt will exceed $20 trillion in four years. America’s fiscal path is unsustainable. The only question is how long we can prolong the inevitable reckoning. Against the backdrop of Boomergeddon, the idea of expanding entitlements is certifiable, throw-them-into-the-loonie-bin madness.

If you accept this analysis, then you have to ask this question: Will Virginia be willing and able to take up the slack for a faltering federal government? Or will it pull out the rug from consumers and health care providers after the industry has restructured itself to accommodate an expanded Medicaid program? It’s a huge risk to take. Governor Bob McDonnell is certainly correct in driving a hard bargain with the federalistas — he is seeking waivers that would give the state more flexibility in the benefits it provides — before signing on to an expansion.

— JAB

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2 responses to “Medicaid Madness”

  1. larryg Avatar
    larryg

    Well… if you believe as Gov McDonnell does, then you doubt the Feds will actually deliver the promised subsidies because they will be broke.

    The Affordable Care Act is justifiable one of the most misunderstood pieces of legislation every to emerge from the sausage-making process. I’d only point out that it’s not near as unique as claimed and if you don’t believe it go try to read the legislation for Medicare Part D which the GOP passed under Bush.

    Of course the other aspect of MedicAid is the presumption that we are going to offer free care that until now has not been given.

    Anyone who believes that people who need health care don’t get it for free lives in LA LA Land as long as EMTALA exists which basically says that if you wait until your disease progresses to the point where only heroic and expensive care is possible, then and only then will you receive free care – courtesy of taxpayers and existing employer-provided insured.

    the theory (and I’ll admit it’s a hope more than a promise) that people who get MedicAid will get care earlier than the advanced burn-money phase and in doing so the folks who pay the bills (anyhow) will end up paying less.

    but I don’t share Jim’s ” we ain’t going to cut spending” pessimism and perhaps I’m a fool for thinking that but I do think we ARE going to cut not only DOD but increase the premiums for Medicare (i.e. “cutting” Medicare).

    I travel in geezer circles these days and most geezers that I know that love their Medicare will readily admit that it’s too cheap and needs to cost more.

    they just want the pain to be equally shared and not make Medicare the only thing to cut.

    cutting entitlements alone will not balance the budget and many seniors actually want to see the budget balanced but across the board so that everyone gets a haircut and at the end of the process, we do get to a balanced budget.

    you just cannot get there – politically- if all you do is demonize entitlements and really have no intentions of actually doing across the board cuts and achieving a balanced budget.

  2. Richard Avatar
    Richard

    Way too pessimistic. When it becomes in everyone’s interest to make changes, they will be made, and we’re nearing that point. I have faith in Obama, the moderate. The only path all along has been short-term stimulus and long-term entitlement reform. Everybody knows it. And entitlement reform doesn’t mean just cuts. Some cuts may be necessary (means testing perhaps), but it’s the reform part that most politicians don’t get. Reform, including free market solutions, will make the system more efficient and can be consistent with American ideals of fairness. Politicians are unwilling to agree to solutions that will anger their primary constituencies, including the financial and medical status quo, but it’s time to get realistic.

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