NCPA - National Center for Policy Analysis


September 28, 2009

One reason Max Baucus's (D-Mont.) health care bill allegedly "pays for itself" over 10 years is because it would break all 50 state budgets by permanently expanding Medicaid, the joint state-federal program for the poor, says the Wall Street Journal.


  • Democrats want to use Medicaid to cover everyone up to at least 133 percent of the federal poverty level, or about $30,000 for a family of four.
  • Starting in 2014, Baucus plans to spend $287 billion through 2019 -- or about one-third of ObamaCare's total spending -- to add some 11 million new people to the Medicaid rolls.
  • About 59 million people are on Medicaid today -- which means that a decade from now about a quarter of the total population would be on a program originally sold as help for low-income women, children and the disabled.
  • State budgets would explode -- by $37 billion, according to the Congressional Budget Office (CBO) -- because they would no longer be allowed to set eligibility in line with their own decisions about taxes and spending.

This is the mother -- and father and crazy uncle -- of unfunded mandates, because this  burden would arrive on the heels of an unprecedented state fiscal crisis, explains the Journal:

  • As of this month, some 48 states had shortfalls in their 2010 budgets totaling $168 billion -- or 24 percent of total state budgets.
  • The left-wing Center for Budget and Policy Priorities expects total state deficits in 2011 to rise to $180 billion. And this is counting the $87 billion Medicaid bailout in this year's stimulus bill.

While falling revenues are in part to blame, Medicaid is a main culprit, even before caseloads began to surge as joblessness rose, says the Journal:

  • The National Association of State Budget Officers notes that Medicaid spending is on average the second largest component in state budgets at 20.7 percent -- exceeded only slightly by K-12 education (20.9 percent) and blowing out state universities (10.3 percent), transportation (8.1 percent) and prisons (3.4 percent).
  • In some states it is far higher -- 39 percent in Ohio, 27 percent in Massachusetts, 25 percent in Michigan, Rhode Island and Pennsylvania.
  • Forcing states to spend more will crowd out other priorities or result in a wave of tax increases, or both, even as Congress also makes major tax hikes inevitable at the national level.

Source: Editorial, "Max's Mad Mandate; The Baucus health bill will break 50 state budgets via Medicaid," Wall Street Journal, September 28, 2009.

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