Budgeting is about setting priorities.
In most states, K-12 education is the top priority and receives the lion’s share of funding. Yet across the country, states are grappling with a budget monster that pits education funding against federal health care mandates.
In the last three years, total spending on K-12 education in Colorado has fallen by $389 million. Spending on health care, however, has increased by $763 million during that same period.
The problem is that states no longer have the ability to set their own priorities. The federal–state Medicaid “partnership” increasingly resembles a shotgun wedding. A state that rejects the federal spending mandates also loses out on federal matching funds that pay for half of the $5 billion price tag of Colorado’s program.
In the past five years, the number of Coloradans participating in Medicaid has swollen from 391,962 to 613,148. If that weren’t a big enough problem, ObamaCare (ironically named the “Affordable Care Act”) locks in current spending and requires states to expand eligibility to 133% of the federal poverty level. Worse still, government health care programs are notorious for exponentially exceeding estimated costs.
Two years ago, the Colorado legislature, then controlled by Democrats, passed a $600 million hidden tax on hospital patients. Hospitals are prohibited from itemizing this “fee” on patients’ bills. The state planned to use this fee to leverage more federal matching funds and expand Medicaid eligibility to all adults whose income was at or below the federal poverty level.
According a Denver Post story by Tim Hoover, state bureaucrats estimated that the new program would serve 49,200 people at a cost of $197 million per year. In fact, the number of eligible participants is closer to 143,000 and the cost of treating them $1.75 billion.
For now, Colorado’s Department of Health Care Policy and Finance has controlled costs by limiting eligibility. However, ObamaCare mandates that all states extend coverage to this entire population by 2014. The federal government promises to pay for it by heaping even more debt on our children and grandchildren.
Let’s be candid: Medicaid is government–sponsored charity — a noble but costly endeavor.
In our family budgets, we may choose to cut back on extras to support worthwhile charities, but we don’t slash basics, like food and shelter for our children, to be even more generous to charitable causes.
Given the choice, it’s inconceivable that legislators of either party would slash K–12 funding in order to expand Medicaid, but that’s exactly what’s happened. And the outlook grows even more grim under ObamaCare.
So, why haven’t those who want to raise taxes for education or want the courts to force the legislature to spend more on education taken aim at the chief culprit that’s cutting into education funding?
Either they don’t understand how Medicaid is eviscerating the state budget or perhaps they find it more expedient to lock arms with others who want higher taxes to pay for more spending on virtually everything.
Two sensible options exist for restoring fiscal sanity to Medicaid:
- Lobby Congress to turn Medicaid into a block grant program whereby states receive a lump sum from the federal government and are liberated to design their own program without federal mandates. Colorado will have allies because 49 other states are in a similar predicament.
- Require Medicaid recipients to pay a small premium or co-pay in exchange for the health care they receive — which costs the state about $4,800 per patient per year.
Some will object because Medicaid is a safety net program for the poor. Yet, households with an average income of $17,500 (just below 100% of poverty) spend an average of $879 on junk food and soda pop, $1,160 on eating out and $1,192 on entertainment.
If Medicaid patients paid an average of $400 a year out of pocket, the state could add some $300 per student in K–12 funding.
So which is more responsible—more cuts to K–12 education or requiring Medicaid customers to help pay for their health care costs by cutting back on a few extras?
Mark Hillman served as Colorado state treasurer and Senate majority leader. He is now the Republican National Committeeman and a Centennial Institute Fellow. To read more or comment, go to www.MarkHillman.com.