February 23, 2012
Enraged by the soaring price of gasoline? Worried that your
home’s value will never return to what it was in 2006? Convinced that the
national debt cannot be paid off? Frustrated over a 401(k) that’s been
less-than-impressive since the fin de
siècle tech bust?
Here’s one more thing to be steamed about: If you’ve got a
spouse and a couple of kids, your family’s annual bill to provide healthcare
for the “poor” is $5,552.
It’s an imperfect assessment, of course, given the demise of the
nuclear family and the fact that a
dwindling number of Americans face federal income-tax obligations. But 2010’s
total Medicaid outlay, reported
by the National Association of State Budget Officers, was $429 billion.
Apportioned on a per capita basis, an individual’s share came to $1,388.
Funny thing: When government offers a vital-service “entitlement”
to those who meet ever-more-generous eligibility criteria, demand balloons. In
1970, five years after LBJ created Medicaid, its cost was an inflation-adjusted
$28 billion. Forty years later, despite a higher standard of living and an explosion
of knowledge about nutrition, exercise, and healthy habits, its expenditures
had multiplied by a factor of 15.
(Population growth was 52 percent.)
Even in the era of fiscal atrocities wreaked by George W. Bush and Barack
Obama, $429 billion is serious money. Yet the fiscal burden doesn’t fall on
alone. The feds “partner” with the states on subsidized healthcare. Economist
Michael Bond, in an
analysis for the James Madison Institute, found that during a 17-year
Medicaid program “increased at approximately [a] 10.4 percent annual rate
versus around 6.6 percent for medical inflation generally. In 1990, [it]
represented approximately 10 percent of Florida’s
state budget. As of 2007, that total had increased to approximately 21
percept.” In January, Colorado’s
Department of Health Care Policy and Financing told The Denver Post that an “all-time
historical high” had been reached in Medicaid enrollment. The Centennial State is affluent and well-educated,
but 13 percent of its residents are now on the healthcare dole.
At least the Medicaid monstrosity can’t get any worse.
Oh yes, it can.
The “stimulus” windfall that states received to maintain --
indeed, enhance -- Medicaid is gone.
Obamacare, if it survives a constitutional challenge and isn’t repealed by
Republicans, will dramatically expand the subsidy. And an aging citizenry is
certain to swell the significant number of dollars that are devoted to nursing
homes, assisted living, and in-home care. (Currently, a jaw-dropping 40 percent
of the tab for long-term care is covered by Medicaid.)
No wonder states, struggling in the present and dreading the future,
are grasping for lifelines:
stab at relief, as described by The Salt
Lake Tribune, envisions “handing Medicaid over to [accountable care
organizations], managed care networks that would be paid lump monthly sums per
patient. If an ACO spends more than allotted for care and prescription drugs,
it absorbs the loss. If it spends less, it gets a share of the leftovers --
similar to old HMOs of the ‘90s.” Earlier this year, the Obama administration signed
off on the plan’s basics, but rejected other proposals. (No boosted co-pays, no
• The Chicago-based Civic Federation predicts
that Illinois’s Medicaid costs will rise by 41 percent in the next five years.
The state’s program already has $1.9 billion in unpaid bills that must be
satisfied by the end of the current fiscal year. Governor Pat Quinn has
announced that he “will work with the General Assembly to find a combination of
liability reductions, modernized eligibility standards, utilization controls,
rate reduction and reform, acceleration of integrated managed care, and
coordination of long-term care programs to manage Medicaid spending.”
Mexico Governor Susana Martinez has released her blueprint for reform.
She’s asking Washington
for the ability to charge co-pays for non-emergency ER visits, let adults use
school-based clinics, and -- this isn’t a joke -- distribute gift cards for
Attempts to wrestle with runaway expenditures, whether sensible
or silly, fail to grasp the underlying crisis. Several years ago, the Cato
Institute’s Michael F. Cannon put the problem succinctly: “Medicaid provides
average benefits twice as valuable as those available under [the] federal cash
assistance program -- and to 10 times as many recipients.”
Medicaid is financially unsustainable, it crowds out private coverage,
it advances the nation’s destructive culture of welfarism, and evidence abounds
that it provides lousy care. But it has a massive, growing army of
beneficiaries, and adamantine defenders in the political class. An ugly,
protracted reckoning is inevitable.
D. Dowd Muska (www.dowdmuska.com) writes about government, economics, and technology. Follow him on Twitter @dowdmuska.
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