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Noted for Your Afternoon Procrastination for January 31, 2014

The Cato Institute Tries to Make Kansas Poorer and Close Its Safety-Net Hospitals: The View from The Roasterie LXXXVII: January 31, 2014

So I was reading:

Jagadeesh Gokhale, Ph.D., and Angela C. Erickson: The Effect of Federal Health Care ‘Reform’ on Kansas General Fund Medicaid Expenditures

and I ran across this graph:

KPI Paper The Effect of Federal Health Care Reform On Kansas General Fund Medicaid Expenditures pdf

and the paper's accompanying conclusion:

By 2023, 21 percent of the Kansas population is projected to be on Medicaid under the PPACA—up from 13 percent currently. Kansas Medicaid expenditures are projected to grow by an additional $4.7 billion (29 percent) beyond the increase projected without PPACA.... With ongoing court and congressional challenges, the final chapter of the PPACA law and state Medicaid spending has yet to be written. However, since a federal court judgment has declared PPACA unconstitutional, Kansas lawmakers should vigorously oppose the implementation of PPACA’s health exchanges and other administrative and operational infrastructure...

And then there is, by Gokhale alone, a 2013 update on the Cato Institute's website:

Object cato org sites cato org files articles kpi policy brief should kansas expand medicaid under the aca pdf

and the paper's updated conclusion:

Kansas’ lawmakers face a crucial decision about whether to expand Medicaid according to the dictates of the ACA. That decision would expand the program and possibly improve health outcomes for low income households. However, that benefit must be weighted against the lost opportunities to spend on other budget programs that are also valuable.... The incremental 10-year cost to the Kansas general fund from expanding Medicaid of $625 million would arise “at the margin”.... It may be better to spend the $625 million on other Kansas budget items...

But there is one number that I cannot find on either graph or in either version of the policy brief:

$8 billion.

That $8 billion is the amount of federal dollars the U.S. government will commit to match 100% of extra costs for the first three years and 90% for the next seven if Kansas expands the Medicaid program as ObamaCare envisions. And that is money that will not flow to Kansas if Medicaid is not expanded by Kansas.

The argument that Kansas has better things to spend its $625 million on over the next decade than on expanding Medicaid rings a little hollow when you reflect that cutting $625 million over the next decade from ACA-projected levels reduces what Kansas can buy by not $625 million but rather $8.625 billion. Kansas would have to get 14 times as much state welfare out of a dollar spent elsewhere than out of a dollar spent on its Medicaid program for that argument to apply.

But, I suppose the honchos of the Cato Institute and of the Kansas Policy Institute think, if you don't mention and certainly don't stress the $8 billion number, maybe Kansas's Republican state legislators won't understand what they are doing in rejecting Medicaid expansion.

Here's the context of all mentions of this $8 billion over the next decade--all mentions of the word "match" in the 2013 version of the policy brief:

  1. "This assumes that the federal government maintains its match of state Medicaid expenditures, hardly a guarantee given the federal government’s extremely unsound financial condition."
  2. "Despite promises of generous federal matching in the short and medium term, a decision to expand Medicaid as prescribed by the ACA would risk an escalation of Kansas’ general fund health expenditure commitments beyond affordable levels."
  3. "It is unclear whether this matching rate schedule will be maintained beyond 2020 and even whether the schedule prescribed under the ACA through 2020 can be sustained."
  4. "The high currently-promised match rate is intended to suggest that state general-fund commitments for Medicaid expansion would be a relatively small portion of the total increase. and that federal matching funds for Medicaid expansion would help spur economic growth in states' health-care sectors and to state economies generally. The latter claim, however, is rather weak because the supply of health-care goods and services is unlikely to keep pace with the growth in demand."
  5. "The 'Mandate Effect' line and the 'with ACA' line begin to diverge in 2017 when the federal match rate for newly-eligible individuals is reduced to below 100 percent."
  6. "The Federal offer of free coverage to state residents (under a 100 percent match rate) together with the promise of almost feee coverage (at least a 90 percent match rate) through 2020 and possibly beyond.... Federal lawmakers are fully aware that such generous matching of new state Medicaid spending on account of Medicaid expansion is, in reality, infeasible."
  7. "The federal government's fiscal condition is so poor--with rising debt and deficits projected "as far as the eye can see" and debt projected to climb close to 100 percent of annual GDP--that sustaining a 90 percent match rate for state Medicaid expansion (or even the 100 percent match rates specified for the first three years of the ACA's implementation) is simply not feasible."
  8. "Even with the federal matching promised under the ACA, post-2016 growth in Kansas' outlay for Medicaid expansion will be quite rapid."
  9. "Once the federal matching rate stabilizes after the year 2019, the annual cost growth is estimated to be about 8 percent per year."
  10. "This calculus may remain valid, despite the federal government's promise of sizable matching funds, especially if Kansas' policymakers properly discount future federal dollars, recognizing the large uncertainties attaching to those promises."
  11. "The additional federal dollars from the generous matching rate promised for Medicaid expansion is unlikely to result in any significant expansion in economic activity in the state."
  12. "The generous federal offer of matching funds for Medicaid expansion may tempt some lawmakers into opting for Medicaid expansion. However, the federal government's financial condition his extremely unsound and recent Medicaid funding policy proposals by the Obama administration... reveal the unsustainable and time-inconsistent nature of the generous federal promise."

That's it. No $8 billion number anywhere I can find.

I could go on. I could point out that Gokhale's claims that sustaining the high match rate that produces the $8 billion number is "infeasible" are grossly overstated--and that we will see whether they are true or not in two years, when we will see whether Gokhale's claim that the "100 percent match rates specified for the first three years of the ACA's implementation" are "simply not feasible". That applies to his (12), (10), (7), (6), (3), (2), and (1). I could point out that his claim that federal Medicaid spending would not boost the Kansas economy rests on a bizarre and empty assertion that in the health care sector and the health care sector alone supply curves do not slope upward. That applies to his (11), (10), and (4). I could point out that his claim that federal lawmakers recognize that "such generous matching of new state Medicaid spending on account of Medicaid expansion is, in reality, infeasible" is simply a lie--a misrepresentation of the meaning of proposals and counterproposals in failed 2011 Supercommittee negotiations. That takes care of his (12), (10), and (6).

Now the federal government does have the power to break its deals with states: no congress can fully bind any future congress. But only in Cato Institute-land does the fact that circumstances may change and the optimal level of Medicaid funding for a state may fall in the future carry the implication that the optimal level of state Medicaid funding for a state is low now.

But the thing that strikes me the most is how anxious both Cato and the KPI appear to be to direct attention away from the numbers: that by failing to commit $625 million, Kansas is losing $8.625 billion.

It's as if they fear that their verbal case would simply dry up and blow away if they were to even whisper the terms of the deal being offered...

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