Counterfactuals are hard to contemplate. What would the world be like if we never did X? Or, what if we had done Y, instead? In the classic movie, “It’s a Wonderful Life,” the main character, George Bailey, gets a glimpse of how his community would have fared had he never been born. The experience is an eye-opener for him; it shows him his amazing influence and how he is a blessing to those around him. George learns the world is better with him in it than without him.
Is government medical welfare – Medicaid -- like George Bailey? Is Idaho’s world better with Medicaid in it? Let’s do a similar thought experiment. What would Idaho be like if we did not participate in Medicaid -- one of the most expensive and least effective welfare programs ever devised?
We must first recognize that programs (Medicaid) are costly, but people (George Bailey) are productive. Most people produce more than they consume, while the government must feed off the productive sector to survive. The prosperity of a free people creates the capacity–and the incentives–for people to produce and then help their fellow man. The parasitic nature of government lacks the capacity on its own to promote the general welfare and therefore requires compulsory taxation. Thus, government programs, by their nature, are inferior to people.
The Idaho Freedom Foundation has extensively chronicled the beast and the burden that President Johnson’s Great Society program of Medicaid has become for Idaho. As of 2023, 432,804 individuals are on Medicaid rolls, according to the Idaho Department of Health and Welfare, and the Legislature has appropriated a total Medicaid budget of nearly $4.68 billion for the coming fiscal year. We spend more than $10,000 per year for each person on Medicaid. Medicaid is enormous, with coverage exceeding 22% of Idaho’s population and consuming over 32% of government spending. The program has been in place since 1966 and has done nothing to solve long-term poverty issues in the state.
No federal law requires Idaho, or any state for that matter, to administer a Medicaid program. It’s completely optional. The last state to join Medicaid was Arizona, which did so in the 1980s. It’s clear that getting rid of the Medicaid behemoth would save the state (and the nation) billions of dollars from the start. We will hear the cries immediately: “You don’t care about people, about kids. They will be dying in the streets for lack of health insurance assistance and the health care coming with it.” Is this a truly serious concern, though?
For a close comparison, The Washington Post reported in 2012 on how the U.S. might work without Medicare, a separate program for old age health insurance assistance. Remember, the report spoke to the cost of medical insurance for seniors (Medicare), not for the poor (Medicaid).The Post report focused on two concerns. One was that medical care and insurance will become exceedingly expensive for those on fixed incomes. The other was that the elderly, more than other demographic groups, need more health care because of their old age and its related health problems.
The two concerns of seniors — the cost for those on fixed incomes and the increased need for health care — don’t necessarily exist for many in the Medicaid population, who have more work opportunities and who have fewer health problems because of their younger age (and we could still manage to help the disabled and children without requiring the full Medicaid bureaucracy).
Ending Medicaid is much less problematic than ending Medicare. Seniors do have more limitations on their ability to earn income, and they do have more health care needs. Top that with the fact that seniors have paid Medicare taxes their entire lives, and there are compelling philosophical problems with ending Medicare, at least as it applies to people who have been taxed for the program their whole lives. Some seniors do receive indigent support through Medicaid now (about 27,000), but ending Medicaid could include other options for them such as a more robust Medicare system for long term care and/or more family and community care responsibilities for their well-being. In short, there are far fewer obstacles to ending Medicaid.
Prior to 1965, and the advent of state-run health insurance for the poor, medical insurance and care came largely from state policies via public assistance but more directly from communities and churches. There is scant evidence of “people dying in the streets for lack of health insurance or healthcare.” Quite the opposite, America has a history of being one of the most charitable countries on the planet.
According to the Charities Aid Foundation annual report, World Giving Index 2022, the U.S. is the third most charitable country overall. We are in the top ten of all countries in the report’s three main measures of charity: helping a stranger, donating money, and volunteering time. Imagine the charitable waterfalls that would be created if billions of dollars in Idaho were returned to individuals (from government) stoking their proclivities to help others. Churches, medical centers, communities, families, and individual benefactors would be better equipped to exercise their generosity and caring for others. Those private entities existed before Medicaid came into being. Where are they now?
Let’s not forget how government “caring” often crowds out private charity. Knowing a government program exists, can make us complacent in helping others. We don't leave our friends and neighbors to die in the streets. Instead we respond to incentives and to what our resources limit us to. Many of us will probably be more willing and ready to help when we know there isn’t a government safety net — in other words, when the caring responsibilities fall on us rather than a government program.
We can only imagine the love, care and personal sacrifice that would come when the charity falls to the private sector. Health foundations, community care centers, and church affiliated programs already exist. There is human dignity in helping others through voluntary donations and time sacrifice. Those virtues are squelched when government bureaucracies commandeer our private responsibilities, but they are magnified when people are free to rise to the occasion.
It's not hard to imagine the true good for Idaho families that would come from ending or severely cutting the broken Medicaid system. Families could keep more of their tax dollars, shop for the best private insurance and health care, and see lower health care costs. Free from the state burden of Medicaid, Idaho could reduce taxes by more than $1 billion per year. Carefully crafted, that might mean cutting all Idaho property taxes or individual income taxes in half, permanently.It could mean ending corporate income taxes. Or cutting sales taxes as well as eliminating the sales tax on groceries.
With such a boost in disposable income, combined with more economic freedom, families could be more charitable toward their communities and each other in providing personal assistance. In all this, government in Idaho would be limited to its proper role. And, restoring the competitive, private health insurance market will lead to lower costs and better service than the insulated, monopolized, government insurance program.
Those searching for the best healthcare alternatives won’t be shunted into government cookie-cutter programs ill suited-for innovation and choice. Reverting to private health insurance and healthcare, individuals are sure to have more options and more freedom than they would under federal/state health insurance programs.
The Idaho Freedom Foundation sees virtue in private action, in human caring, and in the liberty and dignity coming from personal sacrifice. Impersonal and coercive government programs and bureaus cannot develop virtue, and a government bureau is a poor and expensive substitute for the personal touch of friends caring for friends. The world needs more George Bailey and less Medicaid. Let’s give liberty and love a try for a change.
Ronald M. Nate, senior policy fellow at the Idaho Freedom Foundation, is an economics professor at BYU-Idaho, holds a Ph.D. in economics from the University of Connecticut, and is a former state representative for Idaho Legislative District 34.
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