Medisnare Meet Obamasnare

John Ransom
Posted: Oct 22, 2011 12:01 AM

For two years the federal government under Obama has shipped “enhanced” Medicaid reimbursements to states as high $2.68 for every dollar the state paid in to the healthcare entitlement program designed to help the poor. But, as was laid out in the bailout plan, “enhanced” reimbursements ended in July of this year leaving state budgets worse off then before.

Stimulus dollars consequently have expanded Medicaid and the states’ financial commitment to it and then left state budgets in the lurch as the economy continues at the zero growth trajectory of the Obama presidency.

Like every program designed by Obama, he reckoned we'd all get caught in the snare of government spending and have no choice but to continue it.  

Everyone saw this coming, but no one did anything about it and states now have been left cleaning up the mess.   

“Budget gaps in fiscal 2012 will likely rival the critical shortfalls that states faced before enactment of the new stimulus package,” said Nelson A. Rockefeller Institute of Government in 2009. “Cuts or reductions in growth of spending on education, health care, and other programs, and/or major tax and other revenue increases, will almost certainly be on the table once again.”          

They went on the table for 2011 as a result of Obama's failed economic programs.

As a consequence, states have been forced to take the only recourse they have, which is to cut payments to medical providers in order to balance their budgets.

“South Carolina is hoping to trim provider rates by 3% starting April 4 to help it close a $25 million deficit in its Medicaid department this fiscal year,” said CNN earlier this year.

“Managed care organizations would also see a 12.5% cut in their administrative fees. The move should save $7.5 million.”

And even the New York Times admits that the program has hurt patients and has helped drive healthcare providers out of the Medicaid market.

The Times says that Dr. Saed Sahouri of Flint Michigan quit the Medicaid practice when Michigan reduced payments to physicians thereby making Medicaid uneconomical for him professionally.   “My office manager was telling me to do this for a long time, and I resisted,” Dr. Sahouri told the Times. “But after a while you realize that we’re really losing money on seeing those patients, not even breaking even. We were starting to lose more and more money, month after month.”

One of the complicating factors of the this Obama-induced  crisis is a willful blindness that has government conveniently over-estimating tax revenues during recessions, in addition to over-estimating rates of return at all other times.

“During the 1990-92 revenue crisis, 25 percent of all state forecasts fell short by 5 percent or more,” finds the Rockeller Institute report States’ Revenue Estimating: Cracks in the Crystal Ball. “During the 2001-03 downturn, 45 percent of all state forecasts were off by 5 percent or more. In 2009, 70 percent of all forecasts overestimated revenues by 5 percent or more.” 

If Bernie Madoff had used such sloppy account methods as state governments do in estimating pension liabilities and revenues, no doubt his house of cards would have collapsed more quickly.

If anything, government accounting methods are hurting those people who liberals claim to care so much about, low-income workers, by creating huge entitlement deficits that require cuts in benefits which will hurt those who will have the hardest time making ends meet.    

One only needs to look at what government math has done to pension liabilities to understand the difficulties the country faces if it does not repeal Obamacare soon. The longer we leave it, the greater temptation politicians from both parties will have to start using it like a checkbook, as they have other entitlement programs. 

In fact, if governments used the same math that private pensions are mandated under the law to use to figure their liabilities, experts say the entitlement shortfalls in states’ pension systems is two-to-three times larger than has been widely reported.

Tinkering around the edges of our demographics won’t help that much if politicians aren’t willing to come clean as to the size of the problem that faces us in the future.  Neither party has shown a real willingness to tackle healthcare and entitlement reform yet, although some on the GOP side of the aisle have shown flashed that they have understand the scope of the problem and the potential difficulties.  

“Is this a political weapon we are handing our adversaries? Of course it is,” GOP budget chair Rep. Paul Ryan said in March when putting forth some proposals for reform. “I think everybody knows that we are walking into I guess what you would call a political trap that arguably we are setting for ourselves ... but we can’t wait. This needs leadership."

That passes the verbal portion of the test. Now it they could just pass the math portion of the test, we'd be fine.