Obamacare expansion flood threatens state budgets

posted at 8:41 am on November 18, 2016 by Jason Hart

State funding for public safety, education, infrastructure, and programs for the truly needy in dozens of states will be swept away in a flood of Obamacare Medicaid expansion costs unless lawmakers quickly change course.

In all 24 of the Obamacare expansion states that have released a year or more of enrollment data, sign-ups have already exceeded their projected maximums, the Foundation for Government Accountability reported in a study released Wednesday. Combined with per-person costs that were 49 percent higher than expected last year, Obamacare expansion enrollment is set to swamp states’ ability to fund taxpayer priorities.

Obamacare’s Medicaid expansion makes working-age adults with no kids and no disabilities eligible for a welfare program that was costly and ineffective long before Obamacare. The 24 states with a year or more of data available expected no more than 5.5 million would ever sign up, but their expansion enrollment is already 11.5 million – more than double its projected all-time maximum.

Alaska, Indiana, Louisiana, and Montana have not yet released a year of enrollment data, but have all reported Obamacare expansion enrollment higher than their expected maximums, FGA vice president of research Jonathan Ingram and FGA senior research fellow Nicholas Horton noted.

“Medicaid expansion already makes welfare for able-bodied adults a higher priority than services for the nearly 600,000 seniors, children with developmental disabilities, individuals with brain injuries, and other vulnerable individuals currently languishing on waiting lists for needed Medicaid services,” Ingram and Horton wrote. “Mounting overruns will soon exacerbate pressure on policymakers to shift even more money away from the truly needy and towards ObamaCare’s able-bodied adults.”

Obamacare expansion benefits are 100 percent federally funded through the end of the calendar year, which has shielded states from billions of dollars in cost overruns since expansion took effect in January 2014. That will soon change.

If Obamacare remains in place, states will be on the hook for five percent of their rapidly rising Medicaid expansion costs starting in January. And if President-elect Donald Trump and Republicans in Congress fulfill campaign promises to repeal Obamacare, federal funding for Medicaid expansion could be cut off in a matter of months.

On this issue, at least, there is precedent for congressional Republicans sticking to their word. Last January, President Obama vetoed an Obamacare repeal bill that would have ended Medicaid expansion.

None of the states expanding Medicaid in order to reel in billions in new federal deficit spending accurately predicted the number of able-bodied adults that would sign up, but estimates were markedly worse in some states than in others.

California officials estimated that 910,000 people at most would enroll in the state’s Obamacare expansion. At more than 3.8 million, actual California Obamacare expansion enrollment is four times higher than the projected maximum.

Illinois passed its maximum projected Obamacare expansion sign-ups in three months. More than 650,000 Illinois adults have enrolled in a welfare program that was never expected to enroll more than 342,000, and costs have run at least $2 billion over budget.

In Arkansas, a “Private Option” that was billed as the conservative approach to Obamacare expansion enrolled 324,000 working-age adults in less than two years, resulting in $80 million in cost overruns in the program’s first 18 months. Supporters said no more than 215,000 Arkansans would ever sign up.

Arkansas lawmakers killed the budget-busting Private Option, only to replace it with a new “Arkansas Works” Obamacare expansion. According to FGA research, the state’s Medicaid waiting list for children and adults with developmental disabilities has grown by 700 since Arkansas embraced Obamacare expansion.

Kentucky’s Obamacare expansion topped its expected maximum enrollment of 188,000 within two months, and enrollment now exceeds 439,000. Kentucky’s Obamacare expansion cost $3.6 billion in its first 18 months – twice as much as state officials anticipated.

Continued cost overruns prompted the Kentucky Cabinet for Health and Family Services to call Obamacare expansion “financially unsustainable,” rebutting supporters’ claims that the program would pay for itself.

Ohio’s Obamacare expansion, meanwhile, has cost $10 billion in less than two years and will easily double cost projections of $13 billion by 2020. At 714,000, enrollment is 60 percent higher than the maximum projected by state officials.

To control costs in the traditional Medicaid program after Gov. John Kasich implemented Obamacare expansion, state lawmakers cut Medicaid eligibility for 34,000 disabled Ohioans this year. Kasich has also proposed eligibility cuts for pregnant women and women being treated for breast or cervical cancer.

FGA’s new report follows an April 2015 analysis showing that many of the states implementing Obamacare expansion wildly underestimated how many people would sign up. The cost and enrollment numbers have worsened since then, and data from additional states confirm the trend isn’t limited to a few outliers.

Many of the states implementing Obamacare expansion did so with promises to end the program if it proved unaffordable. Now is the time to back out in order to avoid budgetary disasters threatening state infrastructure and programs for the truly needy, the study’s authors concluded.

“ObamaCare expansion remains an optional program for states, and federal officials have repeatedly assured states that they could roll back eligibility at any time,” Ingram and Horton wrote. “States should take them up on this offer.”


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