The more you spend, the more you save.
Heard that one before? That’s the tortured logic some are now using to convince Texas legislators to expand Medicaid coverage to healthy, able-bodied individuals. Sound fishy? You’re right.
They point to a recent study that uses a lot of wishful thinking and dubious assumptions to suggest that spending hundreds of millions more on a broken government program will somehow save Texas money.
But that’s not the experience in states that have expanded Medicaid.
New York, one of the earliest and most earnest adopters of Medicaid expansion, has seen Medicaid enrollment explode in the last decade and is now dealing with a $6 billion budget shortfall.
In California, lawmakers cut money from education just to stay afloat as they addressed an astonishing $54 billion deficit. The new demands of Medicaid expansion placed on the state’s budget mean either more cuts to critical programs or ballooning deficits.
Enrollment of able-bodied adults in the California program ended up 278% over official projections, with actual cost hitting nearly $44 billion instead of a projected $11.6 billion over a two-and-a-half year period. One out of every three people in California are now on Medicaid.
It’s not just big blue states. Ohio, thanks to Medicaid expansion, now allots a full 38 percent of its state budget to Medicaid spending. It was just 21 percent prior to expansion in 2009.
This is true in Indiana as well, where the share of the state budget eaten up by Medicaid has doubled from 18 percent to 35 percent since 2000. On average, states that expanded were about 50 percent over enrollment and spending projections.
States see dramatic increases in spending whenever Medicaid is expanded. This problem is even worse now because there is a federal prohibition against removing any enrollees from the program — in place until the COVID-19 emergency expires. States are handcuffed indefinitely.
Texas can’t ignore these outcomes.
Medicaid expansion steers critical resources away from the most vulnerable and the truly needy to healthier, able-bodied adults. Many thousands have died waiting for services. And Texas has some of the most significant wait lists for individuals with intellectual and developmental disabilities in the country.
Expansion also eats into the budgets for other important priorities, such as public safety, schools, and roads. Largely as a result of expansion, Medicaid spending is now 50 percent higher than education spending nationwide, and 30 states spend more than a quarter of their budgets on Medicaid.
Unless Texas plans to install a tax structure similar to those in California and New York, whose residents are fleeing those punitive conditions, policymakers will be pushed into the excruciating decision of which critical priorities to cut.
Further, Medicaid expansion would force about 400,000 people off their private insurance into Medicaid — they wouldn’t be given a choice.
If Texas were to expand Medicaid, state spending would increase by nearly $1.3 billion every single year. Another 2.8 million able-bodied adult Texans would be added to welfare. Texas hospitals would see roughly $720 million in new Medicaid shortfalls, the equivalent of nearly 12,000 lost hospital jobs.
As we all know: The more you spend, the more you spend. Texans should not be tricked into fiscally irresponsible decisions with silly slogans and wishful thinking.