A report just out from the National Association of State Budget Officers makes clear just how serious the problem is of rising state Medicaid spending. Total Medicaid spending reached nearly $399 billion in fiscal 2011, which ended in June for most states. That was up 10.1% from the year before when spending rose 6%.
Medicaid was nearly 24% of all state expenditures in 2011, compared with elementary and secondary education which accounted for 20% of all spending. The latter has been declining for the past few years. In 14 states, Medicaid represented more than 25% of total expenditures, and in 12 states it grew more than 10%. Incredibly, in California, Medicaid spending rose by more than 40%! Where is the money coming from? California is broke.
The Affordable Care Act (ACA), enacted in March 2010, is set to expand Medicaid dramatically starting January 1, 2014. Most analysts expect an increase of another 50%, in total, for Medicaid spending. This mandated spending under the ACA law cannot be accommodated by the states; the money simply does not exist in their budgets. Even now, states are being forced to cut or eliminate programs in education, road building, law enforcement and prisons, and many other critical areas.
There are bills in Congress which would allow states the ability to reform and better manage their Medicaid programs. The Obama administration wants no part of such bills, and prefers to leave the current broken and wasteful program in place. The budget officer’s report emphasized that states likely will have “austere budgets for at least the next several years and will continue to make difficult spending decisions.” Stated another way, sharp cuts to needed services will continue in order to fund the ill-conceived Medicaid mandate under Obamacare.
I see a disaster in the making. Things will not change unless there is a change in U.S. political leadership that enables the repeal and replacement of Obamacare and its costly array of new entitlements.
The New York Times – Bigger Share of State Cash for Medicaid – Dated: December 13, 2011
Yahoo News – State Medicaid Spending Soars – Dated: December 14, 2011