The Problems with ‘Free Stuff’

South Dakota voters approved Medicaid expansion in Tuesday’s election, leaving just 11 states that have not expanded their Medicaid programs to include middle-class able-bodied childless adults making almost $40,000 a year.  I hope the remaining states hold the line because they will be in a world of hurt if they don’t.

The first problem is voters demanding free stuff with nary a thought of how to pay for it.  Missouri voters previously demanded Medicaid expansion, but the state couldn’t figure out a sustainable way to pay for it.  Expansion would cost the state hundreds of millions of dollars a year, but nobody knew what the funding mechanism would be.  The same thing happened in Idaho and Oklahoma – Medicaid expansion occurred without a stable permanent funding source.   Since Medicaid is now such a huge part of state budgets, every expansion state faces fights in the legislature about raising taxes or pulling money from other priorities like education to fund more government-sponsored healthcare.

That’s just for openers.  Expansion states face a raft of other problems.  Enrollment always exceeds expectations and many states have hit the wall in terms of being able to afford their programs.  I haven’t seen any more reports of this lately, but extra federal COVID money has postponed the day of financial reckoning.   I would argue the reason we still have a federal COVID emergency, though the medical facts no longer justify it, is to keep the states – especially expansion states – from going bust over their Medicaid expenses.  A world of hurt is coming because the fiction of a COVID emergency can’t be maintained forever.

Other problems with Medicaid expansion include

• middle class dependency on government – a tragedy, not a triumph as the Left would have you believe, and completely unsustainable
• billions of dollars spent on people who aren’t eligible
• new inequities like traditional enrollees – low-income children, pregnant women, and the disabled – getting sent to the back of the line as childless able-bodied adults enter the system
• substandard care – women already on Medicaid account for the majority of pregnancy-related deaths
• longer wait times for ambulances and medical services
• worse health outcomes than private insurance as more doctors refuse to take Medicaid patients because of the low pay and paperwork burdens
• more drug overdoses and lower life expectancy in expansion states
• lower labor force participation, and
• special interests like large hospitals and managed care companies benefitting more than enrollees

Speaking of special interests, they are busy agitating for Government Healthcare 2.0.  It’s not enough that one in four Americans is now on Medicaid, we have to expand the range of services and the amount of government money spent on them for them to become healthy, or so the pretext goes.  The theory is called Social Determinants of Health (SDOH).  I call it naked redistribution, with calls growing for, and localities dabbling in, providing Medicaid recipients with free housing, transportation, food aid, education, job programs, guaranteed income, and other social services galore.  The theory has been around for a while but it is gaining traction, inducing mission creep in the Medicaid program.  Proponents claim the theory saves money, but their analysis fails to account for the magnet effect of free stuff from the government drawing ever-larger numbers of people into government dependency.  Once again, the Left points to immediate gains and fails to think systemically.

If you think the nation is too far in debt now, and states are biting off more than they can chew with Medicaid expansion, just wait.   Insolvency 2.0 is the inevitable outcome of social determinants of health.  Insolvency is what you get when no claim on public funds can be resisted and the government tries to put a soft pillow under absolutely everybody for absolutely everything.  Ultimately, it won’t work.

©Christopher Wright. All rights reserved.

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