Medicaid: the beast that’s devouring Oregon’s budget

medicaid-cartoon

An increasing number of Oregonians and their elected representatives appear to believe that affordable medical care is a right.

But fewer Oregonians seem to worry about paying for it.

Take Medicaid.

Like “The Eggplant That Ate Chicago,” Medicaid is gnawing away at Oregon’s budget.

Medicaid was created as a Federal-State funded program by President Lyndon B. Johnson in 1965 as part of his “Great Society” initiative. It was originally intended to be a fairly limited government program to subsidize health care for the poor.

But like so many initially modest government programs, Medicaid has metastasized into what one commentator has called “a budget-gobbling fiscal disaster.” Medicaid is now the third largest domestic program in the federal budget after Medicare and Social Security and, as Pew Charitable Trusts noted in a recent report, Medicaid is now most states’ biggest expense after K-12 education.

Spiraling enrollment is the major reason for the cost jumps.

In the beginning, federal and state Medicaid money allowed states to provide medical care only for single parents and children on welfare. Over time the universe of people eligible for benefits grew to include two-parent families, children with speech and development impediments, people who could be cared for at home rather than in an institution, children up to age 5, 8 and then 18, individuals with mental retardation, pregnant women and so on.

Just since 2000, the number of enrollees nationally has more than doubled, going from 34.5 million to 73.5 million. And because Medicaid is an entitlement program, states have to provide required benefits to eligible enrollees, with the state paying part of the cost. In other words, as more people join the program, it costs more.

Medicaid went into effect on July 1, 1966. Just a few million people enrolled the first year and about $850 million of public money was spent on the program, partly because only 28 states implemented it immediately.

Oregon introduced Medicaid in July 1967. By the end of that year, 37 other states had also implemented their Medicaid programs. In 1982, Arizona became the last state in the nation to implement a Medicaid program.

That same year, the first hints of federal cost concerns surfaced when Congress passed legislation limiting Medicaid eligibility to the “medically needy” whose income was at most 133 1/3 percent of the AFDC income eligibility level in a state. But the program’s explosive growth continued.

By 1973, national enrollment had reached 17 million and total Medicaid spending $9.4 billion. By 2013, Medicaid enrollment was 52.3 million and spending totaled $460 billion. In 2016, Medicaid enrollment reached 72.2 million and Medicaid spending totaled $553.5 billion.

The Centers for Medicare and Medicaid Services’ Office of the Actuary projects national enrollment will reach 77.5 million in 2024.

According to the National Association of State Budget Officers, the run-up in Medicaid costs meant that Medicaid spending accounted for 28.2 percent of total state spending in fiscal 2015, the single largest component of total state expenditures, and 19.7 percent of general fund expenditures. The Association projected that in fiscal 2016, Medicaid spending will come out at 29 percent of total state spending and 20.3 percent of general fund expenditures.

Oregon’s Medicaid spending has also seen explosive budget-busting growth, posing fiscal challenges for the entire government.

The Patient Protection and Affordable Care Act (ACA) called for states to expand Medicaid to low income adults and provides federal funds to cover 100 percent of the costs of the newly eligible people from 2014 through 2016. The federal matching rate was then set to decrease over the next four years to 90 percent in 2020.

When Oregon made the well-intended but ill-conceived commitment to expanding Medicaid under Obamacare, a report commissioned by the state estimated that the Medicaid expansion would cost the state $217 million in the 2017-2019 biennium, the first full two-year budget cycle in which the state would begin shouldering some of the costs. The Oregon Health Authority later revised that to $369 million, about 70 percent more.

In June of this year, the Legislature sent to Gov. Kate Brown a plan to raise $550 million in health care taxes to fund Oregon’s Medicaid program in the 2017-2019 biennium.

The Legislature even went so far as to extend Medicaid to children brought to the United States illegally. Coverage will begin in January 2018, with total enrollment of about 15,000 anticipated.

The Oregon Health Authority has calculated that the fiscal impact of this expansion will be about $36 million during the 2017-19 biennium. Under federal law, illegal immigrants can only receive Medicaid for emergency conditions, including pregnancy-related costs. To get around that, Oregon will pay 100 percent of Medicaid costs for illegal immigrants.

Some people breathed a sigh of relief at the enactment of the Medicaid package, but the solution is temporary and elected officials know it. Escalating costs are only going to get worse, partly because of the scheduled decrease in the percentage of the bill to be covered by the federal government.

Newly eligible Medicaid beneficiaries were fully financed by the federal government for 2014 through 2016, but the federal share will decline until the federal government funds just 90 percent of the costs and the states pick up 10 percent starting in 2020.

That’s going to have a bad enough impact on the state budget, but what happens after that could be even worse. Oregon’s expansion of Medicaid eligibility was considered a no-brainer by supporters because of the 90 percent commitment, but government can be fickle. From a fiscal perspective, it is unrealistic to expect the federal government to continue to pay 90 percent.

Congress could change the state/federal shares at its discretion, a possibility John Kasich, Ohio’s Republican governor, raised on July 19. “…states cannot expect the federal government to continue paying 90 percent of Medicaid expansion costs given our nation’s historic debt; they must accept a gradual return to traditional cost-sharing levels,” Kasich wrote in a New York Times opinion piece.

The federal government has historically provided states with Medicaid funding on a sliding scale based on their per capita income, with more affluent states getting a 50 percent match and poorer states getting up to 83 percent.

If efforts to constrain burdensome Medicaid costs are made again, you can be sure they will be met with overwrought cries of despair. There will also be new accusations like the claim by Sen. Elizabeth Warren (D-MA) that the House GOP’s plan to repeal and replace parts of the Affordable Care Act “…will devastate Americans’ healthcare. Families will go bankrupt. People will die.”

But not tackling the escalating costs of Medicaid will be medical malpractice.

So hold on to your hats, folks. This isn’t over.

medicaidtable

Musings: cowardly snipers, Selma, the Oregon Cultural Trust and failing schools

Lot’s of random thoughts lately.

Cowardly snipers

That great progressive American patriot, Michael Moore, made another of his well-informed, well-reasoned comments the other day on his Twitter account. Speaking out about Clint Eastwood’s movie, “American Sniper”, Moore said, “My uncle killed by sniper in WW2. We were taught snipers were cowards. Will shoot u in the back. Snipers aren’t heroes. And invaders r worse.”

Current and former American soldiers alive today because of the effectiveness of American snipers in Iraq and Afghanistan had no comment.

AmericanSniper1

Selma

The hyperventilating critics of President Lyndon B. Johnson’s portrayal in the movie, Selma, need to chill out.

Joseph Califano Jr., a top assistant to Johnson, said, for example, that the movie took “dramatic, trumped-up license” with the truth and “falsely portrays President Lyndon B. Johnson as being at odds with Martin Luther King Jr. and even using the FBI to discredit him, as only reluctantly behind the Voting Rights Act of 1965 and as opposed to the Selma march itself.”

President Lyndon B. Johnson signs the Voting Rights Act of 1965

President Lyndon B. Johnson signs the Voting Rights Act of 1965

It’s a MOVIE, folks, not a documentary. And, by the way, where were all you historical accuracy nuts when the idolatrous TV and theater movies about John F. Kennedy omitted scenes of his sexual escapades and the hagiographies about his brother, Ted Kennedy, skipped over his responsibility for the death of Mary Jo Kopechne?

Oregon Cultural Trust

The billboard on Broadway urges donations to the Oregon Cultural Trust. “Donate/Match, get the whole match back,” the billboard says.

CulturalTrust-Billboard

The way the program works is you add up your donations for the year to one or more of the participating cultural nonprofits and then make a donation to the Cultural Trust in an equal amount. Your donation to the Cultural Trust will come back to you dollar for dollar at tax time when you claim your cultural tax credit.

In 2009, the Legislature stole $1.8 million from the Trust for Cultural Development account of the Oregon Cultural Trust to deal with state budget pressures. The Senate tried to defend itself by claiming it just took money from Oregon Cultural Trust license plates, not public donations.

Horsepucky! It was out-and-out theft.

So don’t trust ’em. If they were willing to break the public trust over a lousy $1.8 million, they’ll do it again. Don’t donate a dime to the Trust this year, or next. We both know the Legislature will raid it again someday.

Failing schools

In his Jan. 20 State of the Union address, President Obama said he wants the federal and state governments to cover 100 percent of the junior college tuition for students who meet minimal standards. Of course, the program wouldn’t really be free. Obama wants to raise taxes to pay for the fed’s share.

And the proposal ignores the fact that the biggest problem at community colleges isn’t the cost, but the dismal completion rate. According to the National Center for Education Statistics, at 2-year degree-granting institutions, only 31 percent of first-time, full-time undergraduate students who began their pursuit of a certificate or associate’s degree in fall 2009 attained it within three years. This graduation rate was just 20 percent at public 2-year institutions.

Portland Community College graduation

Portland Community College graduation

Part-time junior college students don’t do well either. Even when given four years to complete certificates and degrees, no more than a quarter make it to graduation day, according to a Complete College America report to the nation’s governors. The rest wander aimlessly through too many class choices, get committed to jobs, relationships mortgages and more and end up with nothing finished and backbreaking debt.

Of course, it’s not just the junior colleges that fail. Too many students arrive ill-prepared by their K-12 educations to succeed at higher education and channeled into remedial courses that don’t work.