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It’s free money! That’s the line used by actor Jimmy Fallon in a series of credit card commercials. It is also the line increasingly being used by advocates of Medicaid expansion here in New Mexico and across the nation.
After all, who but a bunch of anti-social, uncaring, right wing conservatives could possibly turn down “free” money?
The answer is that anyone with even the most cursory knowledge of economics knows that there is no such thing as a free lunch or “free” money. Even barring that first-semester ECON 101 lesson, in this case the money doesn’t stay “free” forever. New Mexico taxpayers will be on the hook for hundreds of millions of additional dollars in Medicaid spending if they accept this money. Lastly, since when does Congress keep its promises?
First, some background: The Affordable Care Act (ObamaCare) tried to force the states to expand Medicaid to cover most people with incomes up to 138 percent of the federal poverty level. While the Supreme Court accepted a bulk of the new law, it did throw out the requirement that states expand Medicaid. Nonetheless, the federal government can bribe states with taxpayers’ own money.
Currently, New Mexico’s system provides coverage at somewhat lower income levels. Despite the fact that the federal government pledges to cover New Mexico’s Medicaid expansion at rates starting at 100 percent and shifting to 90 percent, the Heritage Foundation finds that the Medicaid expansion will cost New Mexico taxpayers $306 million from the years 2014-2020.
Medicaid – despite the fact that the federal government already picks up about 80 percent of costs in New Mexico – is already the fastest-growing program in the state’s budget. While the General Fund was $5.7 billion back in FY 2008 and it is not about the same at $5.65 billion, Medicaid spending in the General Fund grew by 30 percent. That means less money for education, roads, or tax reform and/or cuts.
Of course, even the federal pledge to reimburse between 90 and 100 percent of Medicaid expenses is based on the massive assumption that Congress will keep its promise to fund the Medicaid expansion indefinitely into the future. Federal Medicaid spending is growing at unsustainable rates (even before the ObamaCare expansion) and the nation is running trillion-dollar deficits every year.
Of course, these top-down, government health care “solutions” always come in over-budget. According to Reason Magazine, at its start, in 1966, Medicare cost $3 billion. The House Ways and Means Committee estimated that Medicare would cost only about $ 12 billion by 1990 (a figure that included an allowance for inflation). This was a supposedly “conservative” estimate. But in 1990 Medicare actually cost $107 billion. Similar cost explosions will likely plague ObamaCare. Who will pick up these cost overruns?
All of the added expense and debt might be worth it if Medicaid was proven to improve health outcomes, but it isn’t. For starters, a University of Virginia study of nearly 900,000 major surgical operations found that patients on Medicaid are 13 percent more likely to die than those without insurance of any kind.
While some studies – specifically reports from a unique program in Oregon – do find that Medicaid expansions improved self-reported health, questions remain as to whether this improvement could reflect “an improved overall sense of well-being” rather than “changes in objective physical health.”
New Mexico needs more than a costly Medicaid placebo or an expanded program that actually harms overall health outcomes.
Gov. Martinez should “just say no” to Medicaid expansion. Instead, she should take a close look at a pilot Medicaid reform program from Florida where program enrollees are given incentives to take control over their own health care both in terms of dollars and treatments. Recipients in the state’s pilot programs have seen dramatic improvements in health care outcomes combined with lower program costs.
If the ObamaCare Medicaid expansion were based on sound policy, the federal government would not have to print and borrow trillions of dollars to bribe states to participate.
Paul Gessing is the President of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, non-partisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.