Congress on Health Care: Sticking It To The States

Kathryn Nix / January 07, 2010

In their quest for universal health care coverage, liberal lawmakers have come to a harsh awakening. As it turns out, insuring everyone is expensive! So, in an attempt to make good on their vast promises without going beyond President Obama’s $900 billion spending limit for health care reform, the Democrats have turned to Medicaid as a means to expand coverage in both the House and Senate health care bills.

Momentarily putting aside the question of whether expanding the nation’s worst program counts as reform, expanding Medicaid poses yet problems, using Medicaid to cover the uninsured is appealing to federal lawmakers because they can share the burden of paying for it with the states. Most state officials, unlike Congress, actually have to balance a budget.

In a recent paper, Heritage scholar Dennis Smith outlines why the states are simply incapable of carrying this burden, regardless of how high the federal matching rates are. Smith points out that, though state general fund expenditures over the last 32 years have increased at an average rate of 5.6 percent each year, in 2009 expenditures actually decreased. This trend is expected to continue into 2010. (more…)