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Business Observer Friday, Jun. 5, 2015 3 years ago

READ AND COMMENT | More Medicaid: Federal ransom

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The call of media editorialists, state senators and altruists for expanding Obamacare's Medicaid program in Florida remains a cacophonous drumbeat of pots and pans.
by: Matt Walsh Editor

The call of media editorialists, state senators and altruists for expanding Obamacare's Medicaid program in Florida remains a cacophonous drumbeat of pots and pans.

The clanging — aimed most at the Florida House leadership and Gov. Rick Scott — will not stop. The letters to editors — where the most vocal altruists speak up — are just as noisy. From one we saw last month, typical of most:

“Out of compassion, I believe most Floridians would gladly see their federal tax dollars provide health care for 800,000 Floridians too poor to buy health insurance.”

That's always the argument in favor of Medicaid expansion: We're already sending our tax dollars to Washington, so we deserve and are entitled to get that money back to provide health insurance and medical care to 800,000 uninsured Floridians.

As an aside, we can't help but wonder about those 800,000 uninsured Floridians. They are always depicted as being unable to afford health insurance.

Really? Or is it a choice? How many of those 800,000 Floridians have consciously chosen not to purchase health insurance instead of something else? How many are paying multiple cellphone charges? Cable TV? Payments on a late-model car? All those are choices.

But that's a topic for another time.

Let's go back to that compassionate Floridian who, gladly, would like to see the federal tax dollars Floridians pay come back to Florida to insure those 800,000 uninsured.

For starters, we've come across a few sources that show Florida is a net receiver of federal tax dollars, not a net donor (wallethub.com and ritholtz.com; you should take a look). Contrary to what many believe, we apparently are already getting more than our share.

At the same time, Florida TaxWatch, also a credible source, has produced annual reports about how Florida consistently is not getting its share. Florida ranks near the bottom among states in the amount of federal grants per capita it receives each year. TaxWatch always argues that we should demand our due.

But these federal grants, e.g. Medicaid is one of them, are a form of federal bribery and extortion that are ruining a crucial part of the amazing government system the Founders created and tearing apart the fabric of our republic of states.

That crucial part being destroyed: fiscal federalism.

Two researchers at George Mason University, Veronique De Rugy and Stefanie Haeffele-Balch, explain fiscal federalism as “the idea that, acting under some federal constraints, states should set their own economic policies rather than follow directives from the central government.” In short, fiscal federalism increases competition between states.

“If states differentiate themselves on the basis of taxes, spending and regulation, Americans have more freedom to decide the rules under which they live,” explain De Rugy and Haeffele-Balch. “If citizens are dissatisfied with the state in which they reside, they can register their discontent by voting with their feet and moving to another jurisdiction. This competition for residents helps keep lawmakers in check, giving them an incentive to keep taxes, regulations and other intrusions modest.”

But over the past four decades, federal lawmakers increasingly have eroded this competition, mostly through the federal grants-in-aid system. This is when the federal government centralizes control over the states by taking your tax dollars and then telling your state that it will give your state's money back — but only if the state follows the central government's rules.

As Christopher Conover, a research scholar at the Center for Health Policy and Inequalities Research at Duke University, wrote last January, “This is terrible politics and terrible fiscal policy.”

And that is exactly what expanding Medicaid is all about. Conover described it perfectly in a 2,800-word essay under the title: “Mr. President, if you believe in fairness, why did you make Medicaid expansion so unfair?”

Conover made three conclusions about the expanion of Medicaid and Obamacare. One of them was: “Obamacare favors states that put self-interest ahead of the national interest.”
Conover summarizes the results perfectly when he writes about whether states should or should not expand Medicaid:

“... If other states proceed with expansion and we do not, it makes us look like suckers left holding the bag while everyone else snags the goodies tossed around by Uncle Sam.

“Encouraging the citizenry to pick each other's pockets certainly is not going to enhance the odds of more civil discourse. Quite the contrary: It's going to result in a race to the bottom as every state is incentivized to make very certain it gets its 'fair' share of the spoils. Thus, whether you characterize the offer as a bribe (to do Uncle Sam's bidding) or ransom (Uncle Sam has your money, so come get it or lose it), this movie is not going to have a happy ending.”

Not at all.

Nonetheless, all of the “compassionate” Americans advocating the expansion of Medicaid nationwide remain unconcerned that those federal Medicaid dollars that come back to the states will pile on top of an already unsustainable social welfare system and are increasing the national debt every year, every day, every minute. As the accompanying graph shows, all federal entitlements and the interest on the nation's long-term debt consume 75% of ever dollar spent.

What's more, the federal government already is borrowing 14 cents of every dollar it spends. And then the Congressional Budget Office is forecasting the nation's interest payments will double in five years — from $251 billion a year to $746 billion. That's on top of the growth that will come from expanding Medicaid, offering subsidies on health insurance through federal exchanges and the explosion in Social Security and Medicare that is coming from aging baby boomers.

All of that money must come from somewhere. If you were a 25-year-old and cared about your future standard of living and the taxes you will be paying to cover today's generations entitlement benefits with your future earnings, it would be difficult to think the future looks anything but bleak.

This is the argument against Florida — and every state — succumbing to Washington's strong-arm tactics to expand Medicaid. When put in the context of our duty to leave our nation better off than we had it, expanding Medicaid is morally wrong.

And we didn't even go into the human side of the issue. In Conover's analysis of Medicaid expansion, his research concluded two other points:

“Obamacare favors able-bodied adults over pregnant women, infants, children and those who are elderly or disabled.

“Obamacare gives the most vulnerable the lousiest coverage.”

We'll save those for another day. Suffice it to say the evidence is ample that Big Brother's Affordable Care Act is not the answer to America's health care-sytem ailments. In the good old days, the Founding Fathers would have left that to the states to address. That's what the Florida House leadership is trying to do.

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