NCPA - National Center for Policy Analysis


November 9, 2009

In his September address to the joint session of Congress, President Obama stated he would be the last President to take on health care.  Perhaps, but that may be at the cost of everything else, including education, says the Heritage Foundation.

By expanding Medicaid in the health care bill, Congress will set off political tornadoes across the country that will leave governors and state legislators to clean up afterward.  The math is simple, says Heritage:

  • State revenues are still in a slump and will continue for a least a few more years.
  • The two largest state and local expenditures are education and Medicaid.
  • If you have to balance a budget, which nearly every state does, and you cannot touch the entitlement to Medicaid, where will you turn to fill the budget gap?
  • There will be little choice than to go after education.

According to The Fiscal Survey of States, published by the National Association of State Budget Officers:

  • Some 31 states cut higher education and 26 states cut K-12 education in 2009.
  • Even with additional federal funding for Medicaid, 25 states still made reductions in Medicaid by cutting reimbursement to providers.
  • Next year will be more of the same; some states are already reporting higher Medicaid costs due not only to increased enrollment because of higher unemployment but also because of packed emergency rooms due to the swine flu.
  • Governors of both parties are wondering whether Washington really knows what is going on around the country.

There are more former governors serving in the U.S. Senate than in the U.S. House of Representatives which means the Senate should be more aware of the Medicaid vs. Education cage match, says Heartland.  When legislation gets to the Senate floor, it will be interesting to watch whether the "former governor caucus" will work together across party lines to protect all states or only their own.

Congress and the President have incorporated all sorts of budget gimmicks to protect the federal budget.  But they will wreak havoc on state budgets, says Heritage.

Source: Dennis Smith, "Expanding Medicaid Means Reducing Education," Heritage Foundation, November 6, 2009.

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