Medicaid Madness

State bean counters have revised their estimates for what it would cost to expand the state Medicaid program under the Patient Protection and Affordable Care Act. The good news is that Virginia actually would save money, thanks to federal reimbursements and other provisions in Obamacare, through 2019. And when it does start costing the state, Virginia will lose only $1.1 billion over 10 years — half an earlier estimate and a modest sum for a budget that could exceed $500 billion over that period.

Moreover, Uncle Sam would cough up an extra $23 billion over that period, injecting billions of dollars into Virginia’s health care sector and extending health coverage to 250,000 who didn’t have it before, reports the Times-Dispatch.

Bacon’s bottom line: The positive economic stimulus is a powerful argument in favor of expanding Medicaid — an argument, I predict, that will be hard to overcome. But there is good reason to question the deal proffered by Obamacare. How confident is Virginia that the federal government will be able to make good on its promises into the indefinite future? If Washington fails to deliver, what expectation will there be for state taxpayers to make up the difference and maintain the entitlement? Once granted, an entitlement is extremely difficult to take away.

My perspective stems from my appraisal of the budget negotiations in Washington. I regard them as a catastrophic farce. Without getting into the partisan blame game, a useless exercise as far as predicting what will happen, it is increasingly clear that Republicans and Democrats are negotiating on the margins. The future likely holds some combination of slightly higher taxes on the rich, modest defense cuts, incremental changes to entitlements and a cap on discretionary domestic spending, which won’t come close to closing the $1 trillion-year budget gap.

In the slow-growth economy that the United States is likely to encounter for the foreseeable future, deficits will continue to run close to $1 trillion a year indefinitely. The national debt will exceed $20 trillion in four years. America’s fiscal path is unsustainable. The only question is how long we can prolong the inevitable reckoning. Against the backdrop of Boomergeddon, the idea of expanding entitlements is certifiable, throw-them-into-the-loonie-bin madness.

If you accept this analysis, then you have to ask this question: Will Virginia be willing and able to take up the slack for a faltering federal government? Or will it pull out the rug from consumers and health care providers after the industry has restructured itself to accommodate an expanded Medicaid program? It’s a huge risk to take. Governor Bob McDonnell is certainly correct in driving a hard bargain with the federalistas — he is seeking waivers that would give the state more flexibility in the benefits it provides — before signing on to an expansion.

— JAB