Green Room

No, It Will Cost Missourians Considerably More Than ‘$20 Per Person’ To Expand Medicaid

posted at 5:21 pm on July 16, 2012 by

The St. Louis Post-Dispatch has published a commentary by Saint Louis University School of Law Professor Robert Gatter in which the good professor claims that Missourians would only have to pay an extra $20 per person, per year to expand their Medicaid program. How does he arrive at that dollar amount? In short, some creative accounting.

Here’s the math. Under the ACA, Washington, D.C., will pay 100 percent of the cost of expanding Medicaid for three years starting in 2014. Then the federal share of that cost in any state that expands its program drops gradually over four years to 90 percent, and it remains there forever. Missouri’s budget director estimates that the state would receive about $2 billion on average each year from the federal government during the first 10 years of expansion. Meanwhile, Missouri would pay, on average, about $80 million per year. That cost would be divided among most of Missouri’s roughly 6 million residents. After excluding Missouri’s children and poor adults, about 4 million residents would share that average annual cost. Eighty million dollars divided by 4 million people equals $20.

Prof. Gatter is, unfortunately, just wrong. The cost of expanding Medicaid would not be $20 per Missourian. It would be much more.

First, Gatter lowballs the state cost of the expansion. As I have written before, the Kaiser Family Foundation estimates that the new program could cost the state almost $800 million in the program’’s first five years — twice what most news outlets have been reporting as the program’s potential cost to the state — and on an annual basis, likely over $100 million in the years that followed. Gatter’s “$20 per person” assumption is based on a rosy baseline that considers only the state budgetary costs in supporters’ ideal budgetary scenario. For a state already facing a battery of budgetary problems, such programmatic ambiguity is dangerous — and especially dangerous if that ambiguity is not admitted.

But the state contribution to the expansion is only a fraction of the cost to Missourians. Again, we are the federal government. Federal money that would go toward a Medicaid expansion is not, despite what the Post-Dispatch has called it, a “”windfall.”” It is our money, being paid back to us from our own pockets. Taking this into account and dividing Gatter’’s annual $2 billion cost to the feds between his four million Missourians, taxpayers can expect to pay closer to $500 total each year to expand Medicaid, not $20. (I say “closer” because there is, as with so much of this stuff, some taxing and spending nuance involved here.)

That said, and in Gatter’’s own words, those costs then “”remain there forever” — unless, of course, the law is repealed.

It is bad policy to let politicians essentially split their programs onto different credit cards and for us to act like one or both cards are free money, rather than a liability. If the cost of one bill rises, taxpayers’ overall bill rises. It i’s not an “investment” for a husband to spend $20 out of one family account and $500 out of another, and then to tell his wife he only spent $20 of the family’s money. It is, at best, a shell game, and one that will eventually bite all involved. The result? For Missourians, it means higher taxes, fewer services, or both, with a “reform” that does not credibly control health care costs.

And a word on Prof. Gatter’s assertion that the Medicaid expansion would produce net savings to the state economy. The professor writes that Missouri experiences “an annual loss to [the] economy of $720 million to $1.5 billion for the 308,000 Missourians [who the proposed] Medicaid expansion would cover.” But does spending $2 billion-plus in taxpayer money each year — state and federal money, much of it likely borrowed — to recoup even $1.5 billion in presumably taxable economic activity really make economic sense? Even liberally construing all of the savings Gatter contemplates in his piece to the maximum, his case for “savings” is far from made, both for individuals and for the government.

Missourians will not get off cheaply with an ACA Medicaid expansion, and in a very real way, much of the cost of the expanded program would just go to another, already maxed-out credit card also in the taxpayers’ name. That is a problem.

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You have to love the assumption right out of the gate that the federal money is a windfall, presumably from obama’s stash.

WitchDoctor on July 16, 2012 at 6:09 PM

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Ed Morrissey on July 17, 2012 at 12:10 AM

Yeah, but Missourians will have to pay for the Medicaid of people in Illinois, New York, and California too, so really, it’s going to be just that much more than $20 per person.

Solution for the Show-Me crowd: all y’all go on welfare now.

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