Expanding Medicaid would require borrowing more money, drastically expanding our deficit.
The Florida House did the nation a solid by refusing to expand subsidized health insurance to 1 million low-income Floridians, argues Speaker Will Weatherford. Weatherford was instrumental in blocking a proposal favored by the Florida Senate and Gov. Rick Scott that would have used $51 billion in federal Medicaid dollars over 10 years to provide private health insurance to people below 138 percent of the federal poverty level. In 2013, that is $15,865 for an individual and $32,499 for a family of four. People arguing in favor of Florida expanding Medicaid, one of the biggest facets of President Barack Obama’s health care law, argued it is paid for by taxes Floridians already sent to Washington. Weatherford tried to diffuse that, saying he could not support widening the program because more federal spending by an unreliable government will escalate the country’s debt woes. "Congress has not passed a budget in four years, and each year the federal government spends over a trillion dollars more than it has, leading to a national debt approaching $17 trillion," he wrote in a May 9 column. "Expanding Medicaid would require borrowing more money, drastically expanding our deficit." Does the Medicaid expansion drastically raise the deficit? We wanted to check it out. The deficit is not the same thing as the debt. The deficit is how much the government spends in a year versus what it has on hand to pay what is owes. The debt, at $16.8 trillion and climbing, is the sum of annual deficits. Weatherford spokesman Ryan Duffy responded to our inquiry with a document that includes a Wall Street Journal op-ed by Christina Corieri, a health care policy analyst at the Goldwater Institute, a free-market research group that opposes the expansion of Medicaid. Her column does not say that expanding Medicaid as outlined in the health care law will drastically increase the deficit. Instead Corieri says the Supreme Court ruling presents fiscally conservative states with a "the unique opportunity to veto hundreds of billions of dollars in new federal spending." She said that the nearly 30 states that have either opted out or are considering it could save the government $609 billion over the next eight years. "The more than $609 billion in total savings from these 30 states would represent over 50 percent of the expected federal spending on the Medicaid expansion," she wrote. "A drop in the bucket? That's more than seven times the $85 billion in 2013 sequester cuts and more than half the projected federal deficit for this fiscal year." We sought our own answers, starting with the nonpartisan research arm of Congress, the Congressional Budget Office. CBO has not assessed our specific inquiry about how the Medicaid component of the law influences the deficit, but the office has evaluated the short- and long-term cost of the whole health care law a few times. In short, what CBO determined is the law as a whole reduces the deficit, and repealing the law would increase the deficit. That's because the includes a host of new taxes on high earners and the health care industry. U.S. Rep. Paul Ryan, R-Wis., requested the CBO perform a new analysis for the cost of repealing the health care law, but the CBO director said they essentially did not have time to do it, as "there are hundreds of provisions in the ACA and those provisions are already in various stages of implementation," CBO director Douglas Elmendorf wrote May 15. He referred Ryan to a July 2012 analysis completed for Speaker John Boehner for pretty much the same thing. On balance, the CBO and the Joint Committee on Taxation estimated then that repealing the law would result "in a net increase in budget deficits of $109 billion over the 2013–2022 period." "Although CBO and JCT have not updated that estimate to reflect the most recent baseline projections, we anticipate a similar result were we to do so," Elmendorf wrote. So basically what the government will pay out to subsidize health insurance for the uninsured, such as through tax credits to go on health exchanges or Medicaid, is more than offset by new revenues coming from reduced payments to Medicare providers and insurers as well as new taxes on high-income earners and the health care industry, said Edwin Park, vice president for health policy at the left-leaning Center for Budget and Policy Priorities. While Park considers the CBO estimate of the health care law key to our research, a couple other experts questioned its relevance and pointed out it relies on a lot of assumptions. Corieri, for instance, said CBO has not factored in how removing some unpopular taxes from the law, such as a tax on medical devices, would affect the law's fiscal impact. She also questioned CBO including time before the law takes effect in 2014 into its analysis. Overall, she agrees with Weatherford's point. "Obviously if they're not spending that money, then the deficit will be smaller," she said. Marc Goldwein, senior policy director of the Center for a Responsible Federal Budget, said CBO’s analysis does not factor in which specific states will expand coverage, so it’s impossible to know whether Texas and Florida were included in its post-Supreme Court analysis. The researchers assumed 70 percent of beneficiaries would be in states that opted to expand. "Any decision in isolation to expand or not expand Medicaid could result in higher or lower overall deficits than if the decision went the other way," he wrote by email. "The fact that the bill as a whole reduces the deficit doesn’t change that." "The best we can say is that expanding Medicaid will require borrowing more money than not expanding Medicaid," he said. The deficit, he added, will be modestly higher if a state elects to expand Medicaid. CBO assumes all laws will be enacted exactly as written, included the component that reduces Medicare cuts to physician payments, "which we all know never happens," said Gail Wilensky, a health care analyst who ran the Medicare program under President George H.W. Bush. "What is clear is that some of Florida’s poorest uninsured people could have had Medicaid coverage at no direct cost to Florida for at least the first three years," she said, adding that Weatherford’s logic is "hanging on a theoretical and abstract principle." As for Weatherford’s statement, Goldwein says it’s accurate to say expanding Medicaid would require borrowing more money "so long as you qualify that means more money than would otherwise be borrowed." Goldwein said it’s hard to assess the "expanding the deficit" part of Weatherford’s statement. "That really raises the question – compared to what?" Goldwein said. Steve Ellis, vice president of Taxpayers for Common Sense, took a broader read of Weatherford’s claim, saying the health care law is too complicated to tease out the budgetary impacts of any one policy without noting the impacts elsewhere. "The speaker talked about it as if expanding Medicaid was the only policy change instead of being coupled with many others in a package that had net deficit reduction and wouldn’t require borrowing more money or expanding the deficit," Ellis said. Our ruling Weatherford defended his key role in blocking federal money to help insure more low-income Floridians by pointing to the effect of all that extra health care spending on the country’s national deficit and debt. "Expanding Medicaid would require borrowing more money, drastically expanding our deficit," Weatherford said. There’s no doubting the federal Medicaid expansion is a lot of dough, with the government slating about $900 billion over 10 years for each state to expand the program, according to the Kaiser Family Foundation. Ramping up federal spending for Medicaid, one of the biggest long-term deficit-drivers, will not be cheap. Weatherford’s commentary, however, is vague. He ignores nonpartisan research showing the cost of expanding Medicaid coverage is offset by other parts of the health care law. And yes, states that decide not to expand Medicaid can prevent more federal spending, but it would just further reduce the deficit -- by how much is unknown -- on top of its already slated contraction. Saying Medicaid expansion will "drastically" enhance the deficit is unproven. Weatherford’s claim hits a note about federal spending but omits key information. We rate it Half True.
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