Arizona a Prime Example of Financial Ruin by Medicaid

"In 1987, ... just over 10 percent of the state's budget was
dedicated to Medicare expenditures. By 1992 that percentage was 17.8,
and by 2006 it was 22.2."

http://www.heartland.org/publications/health%20care/article.html?
articleid=23723

Written By: Matthew Smith Published In: Health Care News Publisher:
The Heartland Institute

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"Medicaid is the primary culprit behind state and local governments'
bleak financial outlook, according to an American Enterprise
Institute (AEI) review of data recently released by the federal
Government Accountability Office (GAO).

The financial security of local governments will "rapidly deteriorate
in less than a decade," said Michael S. Greve, John G. Searle Scholar
at AEI and coauthor of "As Arizona Goes, So Goes the Nation: How
Medicaid Ruins the States' Fiscal Health."

Tripling of Costs

According to the report, released in mid-July, Arizona is facing a
general fund budget shortfall of more than $1.3 billion in its $10.9
billion budget--a predicament largely caused by the state's expansion
of its Medicaid programs, which have grown dramatically as a share of
the state's overall expenditures.

In 1987, the report notes, just over 10 percent of the state's budget
was dedicated to Medicare expenditures. By 1992 that percentage was
17.8, and by 2006 it was 22.2.

In fiscal year 2000, Arizona spent $463 million on Medicaid, and in
FY 2009 that figure is projected to be $1.5 billion. That's "a
threefold increase in less than a decade," the report notes.

Speeding Ticket Money

"To ameliorate the fiscal crisis," the report observes, "the Arizona
legislature enacted modest cuts" and introduced "a stepped-up traffic
enforcement system" that produced $90 million in speeding tickets but
cost $2 billion in new debt to re-equip police and highway patrols
and ramp up the new enforcement program.

Unfortunately, says Greve, "No state can avoid the choice between
more debt or rip-roaring tax hikes, combined in some way. The only
plausible solutions to the states' Medicaid-induced fiscal troubles
are to be found in Washington," the source of the policies governing
this leviathan of a federal program and what states are allowed to do
to cope with its mounting cost.

"However, genuine reform of Medicaid is an unlikely scenario," the
report notes, adding, "Medicaid is designed to be fiscally
unsustainable--but politically self-sustaining."

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Matthew Smith (msmith99@...) writes from Alabama.

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For more information ...

"As Arizona Goes, So Goes the Nation: How Medicaid Ruins the States'
Fiscal Health," Michael S. Greve and Philip Wallach, American
Enterprise Institute, July 17, 2008:

http://www.aei.org/publications/filter.all,pubID.28340/pub_detail.asp