Never Any Way to Fix Costly Government Programs, Medicaid Edition


Reporting on a study by a couple of health care experts, Ted Nesi writes on WPRI:

Using 2015 data, their projections showed Rhode Island would lose $514 million in annual federal Medicaid funding under such a formula – a huge amount of money, equal to 22% of the state’s $2.3 billion in total Medicaid spending during the 2014-15 budget year. Massachusetts would lose $3.4 billion under the scenario.

First, let’s have a little perspective, here.  The revised spending on “Medical assistance (including Medicaid)” for fiscal 2015 was $2,382,919,281.  The year before — in fiscal 2014 — it was $1,819,597,682.  If you don’t have a calculator handy, that’s a difference of $563,321,599, or about $50,000,000 more than the “huge amount of money” in the possible reduction.

According to the mainstream calculus, government spending can never go down, even just to the prior year’s level.  On the one hand, we’re told it would be a terrible thing if Congress were to block grant Medicaid based on state income because states that rely on the program as a large part of their budgets would face massive reductions.  As the study says, it “would result in a seismic redistribution of federal spending.”

On the other hand, the authors go on to say, we can’t possibly calculate block grants based on current spending, because that “would lock in large and arguably unfair variation in funding across states.”  The only solution, clearly, is to just keep giving states as much money as they need for however many Medicaid recipients they’re able to sign up.

Folks, this is the government plantation, or company state.  As I wrote when I first began tracing that economic model in Rhode Island, when the state’s major industry (government) relies on its ability to sign up people for services in order to charge other people for them, the people forced to pay the bill will eventually flee the system, if they’re local, or push their own representatives to stop the bleeding, if they’re in other states being soaked by the feds.

Rhode Island should take the opportunity of the Trump Administration to get off this track.  The chasm toward which it leads has no bridge.