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Medicaid quagmire is costing Idaho dearly

Medicaid quagmire is costing Idaho dearly

Ronald M. Nate, Ph.D.
October 31, 2022

“War is hell,” as the saying goes. Every war comes with costs on and off the battlefield, especially wars fought when there is no intention of ever winning. President Lyndon Johnson’s “war on poverty” is such a war.

It’s a welfare monstrosity with a 57-year history of collateral damage including families it was supposed to help, taxpayers, and states left with budget-busting programs. Medicaid and Medicare were the heavy artillery of Johnson’s war, and Idaho has not been spared the costs of this well-meaning but grossly ill-conceived government welfare policy. 

Flashback to 1965. Johnson signed the Medicare and Medicaid Act, known as the Social Security Amendments of 1965. Idaho Governor Robert Smylie called for an extraordinary legislative session for February of 1966 to revise Idaho’s public assistance laws to incorporate the new medical programs and money coming from the federal government. Even further back, prior to 1965, assistance to the poor for their medical care came largely from state policies via public assistance but more directly from communities and churches. 

Medicaid is an entitlement program available to qualifying low-income individuals and families. Unlike Medicare, which is run by the federal government, Medicaid is administered by state governments under federal guidelines and with much of the costs coming from federal spending. Nonetheless, government spending is government spending, and taxpayers bear the costs regardless of the source. The Medicaid program is designed to make sure the poor and those who become poor because of high medical costs are still able to obtain medical care. 

How has this part of the war on poverty gone? Have we conquered poverty? Let’s look at just Medicaid. Here are a few indicative years along the way to see how Medicaid has grown to become the largest sector of government spending in Idaho today. 

Year appropriations % of all government full time positions enrollment

1984 $61,442,000 6.8% 35 n/a
1999 $492,763,400 15.8% 165 n/a
2011 $1,554,829,900 27.3% 283 220,868
2017 $2,233,804,500 29.4% 209 300,876
2023 $4,044,709,000 31.3% 213 431,044

Medicaid expansion was passed by voter initiative in 2018 and became effective in January of 2020. The Legislature failed to repeal the measure and attempted to implement work requirements for eligibility, but the federal government rejected Idaho’s waiver application. So, part of the jumps in enrollment and cost from 2017 to 2023 are due to expansion of eligibility requirements (up to 133% of the federal poverty threshold) putting over 133,000 more Idahoans to the welfare program. The eligibility increases were estimated to be between 59,000 and 91,000, but those numbers were eclipsed in the first year.  The federal government picks up most of the cost of expansion. Despite this, the cost increases for Idaho from Medicaid expansion are more than double what was estimated before expansion passed. 

 The appropriations for this mammoth program are stunning. This government program purported to help bring an end to poverty has expanded at an alarming rate, taken up larger chunks of our public dollars, and the poverty rate has remained around 12-15% for most of the years we’re looking at. Medicaid is the single largest spending category in Idaho’s budget. The director of Idaho’s Department of Health and Welfare reported to the Legislature how federal guidelines prevent Idaho from removing ineligible recipients from the welfare rolls. He estimates as many as 106,000 Idahoans may not belong on the rolls. We are not winning the war. We are paying more and more and creating new generations of families dependent on government welfare. 

When a business experiences ever increasing costs with no measurable impacts on productivity, the business must abandon the effort, seriously rework its methods, or go out of business altogether. When a government sees increasing costs with no measurable impacts on productivity, it demands more money, expands its programs, and claims success. Medicaid is the poster child for this process. 

President Ronald Reagan famously said, “The closest thing to eternal life on earth is a government program.” He’s not wrong. Medicaid in Idaho is the epitome of a government program promising great outcomes, consistently under-delivering, but always demanding more of the state budget in the hopes that better results are just around the corner. It’s time for Idaho lawmakers to wise up to decades of failure and consider other paths. We can and should repeal Medicaid expansion and begin the process of restoring state sovereignty on welfare issues. Even better, restore the autonomy of families and communities in helping those in need around them. For a path to reform, read the excellent article on repealing Medicaid expansion from Idaho Freedom Foundation analyst, Fred Birnbaum. 

There are individuals and families truly in need in Idaho. And we should find the best means for helping them while guarding against creating dependencies among the able-bodied and otherwise responsible adults. We can and should meet the needs of the least of our neighbors while encouraging work and self-reliance. Our Medicaid system, as it stands in Idaho, does a poor job of meeting needs, while doing a great job of destroying incentives. Remember, our recent liberal Presidents (Clinton, Obama, Biden) have all expressed the desire to create a single-payer, socialist healthcare system in the U.S. Medicaid, including Idaho’s role in it, is well on its way to achieving their disastrous goal. 

Imagine the true good for Idaho families coming from ending or severely cutting the broken Medicaid system and allowing them to keep more of their tax dollars, shop for the best private insurance and healthcare, be more charitable in their communities and families in providing personal assistance, and leave more money available for the limited and proper role of government in Idaho. 

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 state representative for Idaho Legislative District 34.
Ph. 208-403-3609

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