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Monday, September 28, 2009

The unfunded mandate at the heart of the Baucus Bill

The WSJ has been reading through Max Baucus's bill and has found out the secret sauce that allowed Baucus to write a bill that didn't expand the federal deficit as much as the House bills. He just dumps the burden onto the states.
The more we inspect Max Baucus's health-care bill, the worse it looks. Today's howler: One reason it 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.

Democrats want to use Medicaid to cover everyone up to at least 133% of the federal poverty level, or about $30,000 for a family of four. Starting in 2014, Mr. 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—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.
Medicaid is already breaking state budgets. This will only exacerbate their problems.
Mr. Baucus hopes to use his printing press to bribe the governors, at least for a time. Currently, the federal government pays about 57 cents out of every dollar the states spend on Medicaid, though the "matching rate" ranges as high as 76% in some states. That would rise to 95%—but only for five years. After that, who knows? It all depends on which budget Congress ends up ruining. Either the states will be slammed, or Washington will extend these extra payments into perpetuity—despite the fact that CBO expects purely federal spending on Medicaid to consume 5% of GDP by 2035 under current law.

As for the poor uninsured, they'll be shunted off into what Democratic backbencher Ron Wyden calls a "caste system." While some people will be eligible for subsidized private health insurance, everyone in the lowest income bracket will be forced into Medicaid, the country's worst insurance program by a long shot. States try to control spending by restricting access to prescription drugs and specialists. About 40% of U.S. physicians won't accept Medicaid at all.
Where are the doctors going to come from to take all these additional Medicaid patients?

Expect a further law that would forbid doctors from refusing to take Medicaid patients. And then expect fewer people to go into the medical profession as more federal laws control what they do.

2 comments:

orthodoc said...

Actually, several state legislatures have toyed with the idea of denying medical licenses to any practitioner who doesn't take Medicaid. Of course, these same legislatures could fix the problem by tightening eligibility, and paying the physician more than it costs to see the patient.

That being said, I would anticipate that many offices would simply go to a multi-tiered appointment scheme:
Private insurance: see the doctor in 2 days
Medicare: see the doctor in two weeks
Medicaid: see the doctor in two months.

davod said...

Romney did much the same thing to make his state's health care plan look financially credible. He dumped a lot of people onto a federal program.