LOGIN NOT A MEMBER? REGISTER

FOR PRESS CONTACT US  SUPPORT

The Maryland Public Policy Institute

• RESEARCH
• Criminal Justice
• Economic & Fiscal Policy
• Education
• Environment
• Gas Tax
• Government Transparency
• Health Care
• Transportation
• Welfare
• EXPERTS
• EVENTS
• MPPI PRESS
• ABOUT US
• POLICY BLOG

Health care reform demands new strategies

Originally published in the Daily Record

Economic & Fiscal Policy, Health Care

by Marc Kilmer

OP-EDS

We are barely a month away from another session of the Maryland General Assembly. As government spending continues to exceed revenue, once again Maryland policymakers will debate how to close a deficit of billions of dollars.

The state's spending problems will get even worse, however, if health care "reform" is enacted in Washington, D.C. The legislation currently under consideration in Washington will be bad news for Maryland's taxpayers.

One of the reasons Maryland faces a continuing deficit is the growth in the state's medical assistance programs, such as Medicaid and the Maryland Children's Health Program. The federal government picks up a portion of these programs' cost, but state taxpayers still foot much of the bill.

Over the last nine years, the amount of money Maryland taxpayers have spent on these programs has grown by 64 percent.

Expanded eligibility and benefits

This increased spending is partly a result of worsening economic conditions. Much of the new spending, though, results from the state's continual expansion of people who are eligible for the programs and what services the programs cover.

This approach may seem like a good idea when the economy is good, but when recession hits, tax revenue dries up and more people want government coverage.

In Washington, the rationale behind health care reform legislation is that it will help control the growth in health care spending. But provisions of legislation being considered by both the House and Senate would only increase states' Medicaid spending.

These bills mandate expanding Medicaid services to childless adults, a move that could bring hundreds of thousands onto Maryland's Medicaid rolls.

A new influx of Medicaid recipients could mean a significant new burden on the state's taxpayers. Just how much is unknown. The proposed federal legislation says the federal government will pick up most of the cost, but it does not specify for how long.

The drive to reduce the legislation's price tag likely means this federal cost-sharing will be significantly reduced.

A bipartisan group of governors has sounded the alarm over this potentially budget-busting Medicaid expansion. Gov. Martin O'Malley, however, has continued to be a cheerleader for these federal efforts.

Tough choices lie ahead

In dealing with previous years' deficits, O'Malley and legislators have used all the budget tricks and accounting gimmicks available. There is a looming deficit next year, potentially reaching $3 billion. Adding a federally mandated Medicaid expansion on top of this will mean Annapolis must choose between real spending cuts or even higher taxes.

If our legislators decided to try and cut the budget, another provision in the federal legislation mandates that states cannot reduce Medicaid eligibility or services. That would put 17 percent of the state's budget off-limits during efforts to close a deficit.

Couple that with the political and legal impracticality of cutting education spending and there is not much left in the budget to trim. You don't need to be a psychic to see new taxes for Marylanders in the future.

Maryland's taxpayers are already reeling under record-setting tax hikes from the 2007 special session that were supposed to solve the state deficit. Politicians in Annapolis continue to spend, however, and politicians in Washington are on the verge of adding to the state's budget troubles.

If politicians expand government health care programs, someone will have to pay for it. The state's taxpayers are once again a very convenient target.

Marc Kilmer is a senior fellow at the Maryland Public Policy Institute, a public policy think tank based in Rockville. He can be reached at mkilmer@mdpolicy.org.