Medicaid and Its Children

Medical Insurance 'Public Option' is Son of Medicaid
06/17/09 - WSJ by Daniel Henninger

Lard atop lard that only a politician could love

Medicaid is 44 years old, the first attempt to provide a healthcare safety net for the poor. Its scope has expanded and its costs are bankrupting the states. Obama's plan is a further expansion. Will a bankrupt country make good on its promises?

[edited] In 1965 Congress erected the nation's first two monuments to health-care "reform", Medicaid and Medicare. Medicaid was described as a modest solution to the problem of health care for the poor. It would be run by the states and "monitored" by the federal government.

Medicaid is worth our attention now because Mr. Obama is more or less demanding that the nation accept another reform, his "optional" federalized health insurance program.

Whatever Medicaid's merits, more than any other factor, it has put California and New York on the brink of fiscal catastrophe. I'd even call it scary.

Spending on health and welfare, largely under Medicaid, makes up one-third of California's budget of some $100 billion. Governor David Paterson notes in his budget message that "New York spends more per capita ($2,283) on Medicaid than any other state in the country."

I believe that $2,283 is the average cost per state resident to pay for the benefits that are delivered to only the medicaid recipients.

Medicaid has crushed state budgets. Over the years, Congress has loaded up more coverage, shifting about 43% of the ever-upward cost onto someone else, mainly the states. A 1988 congressional mandate requires local schools to pay for schooling and related services for disabled children. Because Congress underfunds its mandates, the states pay the rest through Medicaid.

The list of add-ons is endless, and little is thoughtful. Obama's "Public Option", like Medicare and Medicaid, will become an impossible fog for patients to navigate. The administrative complexity will provide work for bureaucrats, Members of Congress, their staffs, lobbyist spouses, and the "health-care" establishment of foundations and economists.

This is a public program inviting congressional meddling and litigation. Over time, the Sotomayors of the federal bench will make it bigger. For example, one piece of California's incredible budget mess flows from a federal judge's 2006 decision. He seized control of the state's prison-health system and made the state pay additional billions for new health benefits.

In his speech, Mr. Obama said the cost of the Public Option won't add to the deficit: "I've set down a rule for my staff, and I've said this to Congress. Healthcare reform must be, and will be, deficit-neutral in the next decade."

If we are honest, that means tax increases are inevitable. Sounds scary to me.