Oklahoma can't afford to expand Medicaid

When the Oklahoma Education Association tried in 2010 to push through a ballot measure hiking education spending, many of the other tax consumers in Oklahoma—eyeing each other like folks in an overcrowded lifeboat that needs to be lightened to stay afloat—formed a coalition to defeat it. 

Now with the Medicaid monster gobbling up an increasing share of state spending, the tax consumers might want to think about getting the band back together again. Some of the coalition members would change, of course—the Oklahoma Hospital Association would drop out, for example, and the Oklahoma Education Association could take its place—but the general idea is the same.

“Financing Medicaid is a growing problem that threatens state governments,” The Oklahoman noted last week.

That point is reinforced by a new national report. It shows that maintaining Medicaid, even without the expansion authorized by Obamacare, could require states to cut school funding or levy tax increases.

The Report of the State Budget Crisis Task Force, co-chaired by former Federal Reserve Chairman Paul Volcker, notes national trends. The report doesn’t focus on Oklahoma specifically, but local policymakers should still pay attention to its conclusions.

The report notes the cost of Medicaid has been “growing faster than the economy since the program’s inception” and costs “generally have grown faster than state revenue as well.” Today, the program is “such a large part of state spending” that its costs “can no longer be absorbed without significant cuts to other essential state programs like education or unpopular tax increases or both.”

In fact, recent school funding cuts may be due in part to Medicaid. The report notes, “During the deepest part of the recent fiscal crisis, states cut education aid, adjusted for inflation and enrollment growth, while Medicaid spending continued to grow.” … The trend isn’t expected to improve any time soon; the impact on Oklahoma schools and roads in the future could be significant.

With Medicaid turning 47 today (LBJ signed Medicare and Medicaid into law on July 30, 1965), it’s time for states to say enough is enough. Amy Payne of The Heritage Foundation writes:

The only ways to expand Medicaid are to raise taxes, cut other state programs, or slash health care providers’ reimbursements in Medicaid even more. And so far, the majority of America’s governors have said they won’t do it.

Governor Bob McDonnell (R–VA) sent a letter to President Obama on behalf of the Republican Governors Association: “Before making any final policy decisions,” he explained, “governors must carefully consider the short and long-term implications of an expanded entitlement program and the consequences of significantly increasing the size of government to manage these programs.” The question of a Medicaid expansion faces every state, including Democratic governors who are still on the fence.

Governor Phil Bryant (R–MS), who has declared that his state will not expand Medicaid, explains the necessary trade-off between state priorities: “I would resist any expansion of Medicaid that could result in significant tax increases or dramatic cuts to education, public safety and job creation.” …

As Heritage’s Nina Owcharenko noted, “Long before the Supreme Court’s decision to strike down the Medicaid mandate on the states as unconstitutionally coercive, opponents of the health care law argued that it would be financially unsustainable and administratively unworkable. The Court’s decision likely puts the law on a faster pace to collapse.” …

Between now and the election, states should not entangle themselves in implementing the law, in particular with regard to committing to a Medicaid expansion or even pursuing the Obamacare exchanges. Owcharenko writes that “Even if President Obama is reelected and full repeal fails, the law will undoubtedly have to be reopened. States could push for reopening and use their power to reverse and restructure key provisions in the law.”

What Medicaid needs is reform, not expansion. In President Obama’s words, “it is not sufficient for us to simply add more people to Medicare or Medicaid to increase the rolls, to increase coverage in the absence of cost controls and reform. … Another way of putting it is we can’t simply put more people into a broken system that doesn’t work.”

This is no time for Oklahoma’s political leaders to be taking on more entitlement spending. Gov. Mary Fallin is right to be “very concerned about the federal healthcare bill and what it’s going to do to Oklahoma, and especially to our state budget.” When it comes to the federal healthcare bill, it’s time for Oklahoma’s political leaders to walk the walk.