One is the assumption that the 90 percent reimbursement rate remains permanently. Why should it? To curb budget deficits, Congress might cut it. “The ACA says what it says. Future Congresses can repeal or modify it,” says Matt Salo of the National Association of Medicaid Directors. Could the favorable reimbursement be bait-and-switch? States’ actual costs could be higher than assumed. Why make a bad problem worse?Over the past quarter-century, the percent of states' budgets going to Medicaid has risen from 9% to 19%. When these expenses put pressure on state budgets, either taxes will need to go up or other spending will be curtailed. Hello Detroit:
Even if this doesn’t happen, demographic trends — also ignored by the White House report — are devastating for states. Medicaid’s cost structure is peculiar. Children and adults under 65 represent three-quarters of beneficiaries but only one-third of costs. The quarter who are aged and disabled represent two-thirds of costs. They are especially sickly and poor. More than 60 percent of nursing home residents have Medicaid.
What this means is that, as the population ages, states’ Medicaid spending will rise inexorably. The competition between nursing homes and home health care — on the one hand — and classroom teachers, higher education, police and other governmental services — on the other — will intensify. Medicaid becomes a vise squeezing other public services or requiring continuous tax increases. More spending goes toward meeting past obligations and not present and future needs. Underfunded state and local pensions compound the effect.Opposition to the Medicaid expansion is always portrayed as a heartless choice by the states but I fail to see how setting a state on a glide path to slashed budgets and/or bankruptcy is particularly compassionate.