May 25, 2013
Republicans in charge of the state legislature frequently point to the federal government in explaining their opposition to expanding Medicaid. They may share Gov. John Kasichís view about aiding the working poor and those suffering from mental illness. They just donít trust the feds to hold up their end of the bargain, a commitment to pick up 100 percent of the cost at the start and then 90 percent for the duration.
The governor included a so-called circuit breaker in his proposal. If the feds renege, Ohio can opt out of the expansion. Of late, the argument about Washington welshing on the deal has weakened significantly. Consider the Congressional Budget Office analysis of the new budget plan put forward by President Barack Obama in April.
On Friday, the budget office reported that the plan would reduce projected deficits by $1.1 trillion during the next decade, the annual deficit near 2 percent of the overall economy in 2015, or at a level many economists view as responsible, and remaining there in the years ahead. In that way, the overall national debt would gradually shrink as a share of economic output.
That isnít to say the country has addressed its deficit problem for the long term. The retirement of baby boomers will add substantially to the burden of Medicare, Social Security and Medicaid. Worth noting is that the budget office also has adjusted its forecast for Medicare and Medicaid spending from 2010 to 2020, putting the cumulative spending at $900 billion less than earlier projected. Thatís a reduction of 10 percent and more savings than proposed by the bipartisan Bowles-Simpson deficit-reduction commission.
What the presidentís budget and the budget office adjustment reveal is that small changes can bring considerable savings. For instance, the president proposed altering the inflation factor in calculating Social Security benefits. Such measures serve to reassure that the federal government will be in position to keep its commitments.
So do two other elements in the White House budget plan. As originally approved, the Affordable Care Act included one provision that would establish a ďblendedĒ rate for Medicaid and the Childrenís Health Insurance Program and another that would limit states in their use of taxes on hospitals and other providers to leverage additional Medicaid dollars. Both promised to increase Medicaid costs for states. Neither now has a place in the presidentís budget plan.
As Edwin Park of the Center on Budget and Policy Priorities recently explained, the White House changed course after the U.S. Supreme Court made participation in the Medicaid expansion optional. Thus, the president has moved to reinforce the federal commitment to cover its share of the cost, eroding further the arguments of Republican state lawmakers that the feds wonít keep their word.