Can we really trust Congress to pay for the Obamacare Medicaid expansion?

Few of the promises made related to Obamacare have been kept:  "If you like your healthcare plan you can keep your healthcare plan period", "there will be no taxes for any family earning under $250,000", "healthcare costs for families will be reduced by an average of $2,500," and "Obamacare will cover the more than 30 million Americans who do not have access to insurance."

The notable success of Obamacare has been the growth in Medicaid enrollees -10 million concentrated in states that accepted the federal government's incentives for expansion. But will the promise of continued federal funding for the expansion be kept? A report published April 9, 2015 by the Foundation for Governmental Accountability, the FGA, warns in its title: "Promises made, promises broken: State's cannot trust Washington's promise to fund Obamacare Medicaid expansion."

The FGA has few liberal friends, and the content of the report is unlikely to appear in the popular press. So, you get an opportunity to learn about it here.

The report quotes former HHS Secretary Kathleen Sebilius as calling Obamacare's Medicaid expansion "the most generous federal offer ever put on the table." The expansion extends coverage to all individuals earning up to 138% of the federal poverty level. The federal government is obligated to cover the full cost of the expansion through 2016 and to ratchet down the portion it covers over the next 4 years to 90%, which it will them pay indefinitely.

The FGA report goes on to detail the growing debt of the federal government, currently more than $18 trillion. The Congressional Budget Office (CBO) projects that the debt will rise to more than $27 trillion by 2025.

And with this budget hole, CBO estimates that the expansion will require the federal government to spend $576 billion for Medicaid alone in 2025.

The Government Accountability Office has called the federal debt trajectory an "unsustainable long-term fiscal path." Ben Bernacke, former Chairman of the Federal Reserve, testified that this unsustainable debt trajectory "cannot actually happen." His statement was predicated on the assumption that creditors would stop lending to the federal government before such levels are reached.

So, what is likely to happen? After Obama leaves office at the beginning of 2017, new leadership will have the responsibility to face the actual economic problems confronting the country. The funding of Medicaid will have to be a priority because of its large cost. Unfortunately, Medicaid is also the largest single budget item for most states. The federal government will face pressure to shift more of the burden of Medicaid to the states. The states will, as a result, find themselves in great financial difficulty.

So, 10 million new Medicaid enrollees will find themselves in the middle of a controversy in which the funds will not exist to pay for what they were promised.

Republicans will probably attempt to fix the fiscal crisis by addressing economic eligibility for Medicaid. Democrats will probably blame Republicans for wanting to eliminate these new benefits for the new Medicaid enrollees. Democrats will likely forget that they were the ones who imposed these unsustainable costs on the federal and state governments.

I have little hope that there will be meaningful dialogue on these matters during the remainder of the Obama administration. But, to end on a positive note, I refer you to a prior blog "People Do What You Incent Them To Do", October 9, 2014, where it remains my view that we have sufficient funding for healthcare in our country, but we have not addressed the difficult issues that will allow us to use the funds more effectively for appropriate care and appropriate utilization.

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