The Limitations of Block Grants:

Why Medicaid Reform Requires a Revival of Marriage That Medicaid is in crisis, few will dispute. Total Medicaid expenditures reached $373.9 billion in 2009 (15 percent of all national health expenditures), up dramatically from $200.5 billion in 2000, from $73.7 billion in 1990, and from just $26.0 billion in 1980.[1] Even appropriate adjustments for inflation cannot hide the runaway escalation in Medicaid costs. As the nation’s largest mean-tested, state-administered welfare program, Medicaid is now wreaking havoc with federal and even more with state budgets. No wonder that the news media have been filled in recent years with accounts of how the Medicaidcrisis is driving state and local officials “to financial desperation,” compelling them to raising taxes, close libraries, and cut other programs as they struggle to balance their budgets. Some states now see half their revenue going to cover their mandated share of Medicaid expenses. “For us,” lamented one county official in New York, “Medicaid has gone very quickly from a problem, to a big problem, to a disaster.”[2] Moreover, in late 2010, the National Governors Association and the National Association of State Budget Officers issued a Fiscal Survey of States warning that “a combination of lagging revenues, withdrawal of federal stimulus budgetary support and rising Medicaid caseloads” would put states on the edge of a “fiscal cliff” by 2012. And far worse lies in store: as of June 2011, the Centers for Medicare and Medicaid Services forecasts an annual growth rate of 7.9 percent in Medicaid expenditures, well above the inflation rate, through 2019. But ObamaCare will make even this sobering estimate laughably low with its mandates requiring states to expand Medicaid coverage to everyone living in a household with income below 138 percent of the federal poverty level. Consequently, Texas Governor Rick Perry was simply stating the obvious when he declared in 2010 that “the current
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