Sinking Ships

Florida Gov. Rick Scott has joined the growing number of GOP governors (including Gov. John Kasich of Ohio and Gov. Jan Brewer of Arizona)  in expanding Medicaid in his state.  But, as the WSJ shows, the move is akin to tying oneself to the anchor of a sinking ship.  Here are few of the main justifications that have been made publicly by these governors that, on closer inspection, ring hollow:

• Take the money or run. The Governors now expanding Medicaid are candid about their flight from their own fiscal principles: They want to take political credit for taking "free" money from Uncle Sugar and for appeasing the state hospitals lobbying for federal cash. The Health and Human Services Department will pay 100% of the cost of new beneficiaries, later 90%. 

Indiana Governor Mike Pence spoke for the 13 Governors so far who reject this seeming windfall when he called it "the classic gift of a baby elephant," with the feds promising to buy all the hay for only the first few years. So Governors like Mr. Scott and Ohio's John Kasich are trying to inoculate themselves on the right by creating triggers or "sunsets" that would automatically rescind their participation in new Medicaid if—make that when—Washington reneges on funding. 

They're only conning themselves. HHS can simply impose a blanket "maintenance of effort" rule that prohibits opting out—or any other change. 

• The cost-shift trick. Then again, why would states want to drop out, when they claim that expanding Medicaid will lower health-care costs for businesses and individuals? So-called uncompensated care "drives up the cost of everybody's health insurance," Mr. Kasich said at a recent press conference. "When they visit these emergency rooms and cannot pay, we pay for them." 

Hmmm. This is also the justification President Obama used to impose an individual mandate to buy coverage or else pay a penalty. Does Mr. Kasich now support that too?
And do these Republicans really think that private costs will fall by expanding a government program? Unlikely, since the federal statistics put the total amount of uncompensated care due to the uninsured at $12.8 billion—or less than 0.5% of health-care spending. The Ohio Hospital Association estimates its members provide $3.2 billion in uncompensated care—but $1.3 billion is Medicaid losses, more than bad debt or charity care. Ohio price controls are so onerous that hospitals lose 17 cents for every dollar they spend treating Medicaid patients.

Wisconsin Gov. Scott Walker, however, has a plan that does not involve tying his state to the sinking ship that is Medicaid:

When Mr. Kasich is done counting his magic beans, he might look north to Wisconsin for a better Medicaid role model. Last week Scott Walker released an innovative reform that rejects the HHS bribe and will also test the department's putative "flexibility."
Under former Democratic Governor Jim Doyle, Wisconsin greatly expanded its BadgerCare Medicaid program, opening it to everyone earning up to two times the poverty line. Enrollment climbed 73% between 2003 and 2012, state spending increased 99% and proved so expensive that Mr. Doyle was forced to cap enrollment and put eligible people on a wait list. 

Mr. Walker wants to roll back Medicaid to the poverty line and use the savings to open up new BadgerCare slots so the truly poor can use the safety-net program intended for them. (Imagine that.) Wisconsin would forgo the 100% federal magic money, because ObamaCare mandates that states expand Medicaid to 138% of poverty and also in this case end the waiting list, which would grow the rolls by another 32%.
The Walker plan would dump a lot of people onto ObamaCare's subsidized insurance "exchanges," though that would happen anyway. At least he would reduce one entitlement and insulate the Wisconsin budget from Washington uncertainty.

 A lot of the talk from these governors about how times have changed, Obamacare is here to stay, and one must cast aside their principles in order to save the system reminds me of this quote by a gentleman who strangely used the same exact justifications for his purposes:

"I'm a strong believer in free enterprise, so my natural instinct is to oppose government intervention," he said. But "these are not normal circumstances. The market is not functioning properly. There has been a widespread loss of confidence.

The speaker is none other then former President George W. Bush regarding his support of the plan to bail out the auto manufacturers.