1. Once Obamacare goes into effect, it will be impossible to substantially cut it back. Both sides seem convinced of this — Republicans in terror, Democrats in glee. Funny thing, though — the other day, my father mentioned casually that many of his classmates at the Syracuse’s Maxwell School of Public Policy in the mid-to-late 1960s had been on Medicaid. And then, suddenly, they weren’t.
It turns out that in 1965, when Medicaid passed, the State of New York had a great idea: shower a bounty of federal money on New Yorkers by setting the income eligibility limits much higher than other states. They financed this by requiring the local government to kick in 25 percent of the cost. The Feds matched state + local dollars, so that for each dollar New York State spent, it got one local and two federal dollars to go along with it. At the income levels they set, a third of the state was eligible.
Then, the Federal government noticed that it was spending many multiples of what had been projected, with a lot of those dollars going to New York. New York cut back the program sharply, turning Medicaid into what it is today — a shoestring program for low-income families, rather than the comprehensive middle-income safety net that New York State had envisioned.
This drama has played out in other states, most recently in Tennessee, where a large Medicaid expansion into more middle-class populations had to be rolled back when the state could no longer fund it. Entitlements are hard to roll back, but it is clearly not impossible, because it’s been done.