The Washington Examiner

The Medicaid Pac-Man is Devouring State Budgets

Nic Horton, Founder & CEO
January 11, 2020

When Medicaid was created in the mid-1960s, it was intended to provide medical care for people who truly had nowhere else to turn—namely, individuals with disabilities and the elderly. But over time, the program has ballooned, now serving 76 million people.

Even worse, nearly 40% of enrollees are now able-bodied adults. There are close to twice as many able-bodied adults in Medicaid today as there are elderly and individuals with disabilities combined.

Medicaid’s rapid growth is no secret, and it’s cause for concern across the country. Those who work with state policymakers see it firsthand—state leaders realize how consuming Medicaid has become. From Maine to Montana, the overwhelming growth of the program is often at the top of their minds.

That’s because it quite literally dictates state budgets: Medicaid gets paid first. Everything else (including education, infrastructure, and public safety) gets the scraps.

While this is a major problem in Obamacare expansion states such as Pennsylvania, Indiana, and Louisiana, Medicaid’s budget-busting growth doesn’t discriminate—even states that have resisted expansion are facing problems.

At a recent legislative hearing on Medicaid in Missouri, a state that has rightly held out against expansion, it was revealed that 39% of the state’s budget goes to Medicaid.

That’s without expanding Medicaid to able-bodied, childless adults through Obamacare.

A good way to think about this phenomenon is as “The Medicaid Pac-Man.” As Medicaid continues to grow, it devours every other budget priority. Much like Pac-Man from the arcade game, Medicaid will continue to eat everything in its sight, from funds for public safety to money needed to improve schools.

The takeaway at the Missouri hearing was simple: Don’t expand Medicaid to childless, able-bodied adults and make this problem even worse. Unfortunately, Missouri isn’t the only state grappling with this reality.

A new report from the Foundation for Government Accountability reveals just how much the Medicaid Pac-Man has devoured in the last couple of decades across the entire country: Medicaid spending has more than tripled since 2000 alone, now consuming nearly one out of every three dollars that states spend.

Thirty-two states now devote more than a quarter of their budgets to Medicaid, up from just five states a few years ago.

Here’s why it’s so dangerous, and something everyone should be deeply concerned about: As Medicaid grows bigger and bigger and tries to be “all things to all people,” it increasingly fails to give the truly needy all the help and attention they deserve.

The Medicaid waiting lists are a prime yet unfortunate example of this reality. Today, more than 700,000 individuals remain trapped on Medicaid waiting lists across the country, waiting for additional services that they need.

These lists have been growing in recent years, in large part because Medicaid enrollment and spending has grown so much. There aren’t extra dollars laying around to help pay down waiting lists; instead, existing Medicaid commitments are devouring every extra dollar.

Medicaid has been stretched to the brim and, too often, states have adopted policies that have made the problem worse. The reality is, the more money that states invest into Medicaid, the less money is available for other needs—and when these needs include critical line items such as education, public safety, and infrastructure, policymakers need to take a hard look at how they’re spending tax dollars.

There’s no denying that the Medicaid Pac-Man is out of control. It’s devouring limited dollars and putting states in a budget pinch. States do have some options to restrain the program and refocus it on the truly needy, such as work requirements for able-bodied adults.

But one thing is sure: States need to act quickly before the Medicaid Pac-Man completely devours them.


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