Should Missouri Participate In A Bernie Madoff-Type Scheme?
First came the threat. Then the bribe, or the offer that sounds
almost too good to be true. Now it is the moment of truth.
On June 28, U.S. Supreme Court Chief Justice John Roberts
rendered the majority opinion in a 5-4 vote upholding the
constitutionality of the Affordable Care Act. However, with a 7-2
margin, the Court struck down a key part of the law that would have
stopped the flow of all federal funds for Medicaid to states that did
not expand access to this program, as the law intended.
“The financial ‘inducement’ Congress has chosen is much
more than ‘relatively mild encouragement’ to expand Medicaid,”
Roberts wrote. “It is a gun to the head.”
Because the federal government originally could have
withheld all of the state’s Medicaid funding if it did not expand its
program, Missouri would have faced a massive and essentially
mandatory increase in its Medicaid costs if this part of the law had
been upheld in its original form.
Unable to coerce state governments to spend more of their tax
money on Medicaid, the federal government is offering a grace
period of several years in which it will pick up essentially all of the
cost of the Medicaid expansion, scheduled to begin in 2014, if
individual states commit to spending money of their own in years to
Over a 10-year period, Missouri would need to commit to
spending about $430 million in order to qualify for $8.4 billion in
additional Medicaid grants from the federal government.
If that looks and sounds almost too good to be true, it is
because it literally is too good to be true.
Where is the money supposed to come from to pay for a huge
increase in this entitlement program? Do we just pretend that the
money is there when we know very well that it is not?
Our state government is already over-leveraged. And the
federal government – with a string of trillion-dollar deficits – is now
borrowing about 40 cents for every dollar it spends. Imagine adding
$400 of credit card debt for every $1,000 you spend. How long do you
think that would work?
As Show-Me Institute Executive Director Brenda Talent
explained in a recent appearance on public television, the federal
government is engaged in a Bernie Madoff kind of scheme. Our state is
already in arrears in trying to meet its current commitments. As Brenda
stated on Donnybrook on KETC-Channel 9 in Saint Louis on July 5,
Missouri will have to spend money, which it does not have, in order to
receive money from the federal government, which it does not have,
while making promises to people that it will not be able to keep.
Nebraska Gov. Dave Heineman and Iowa Gov. Terry Branstad
are already on record opposing the Medicaid expansion. Let us hope
that Missouri joins them in opting out of this part of the federal health
It is easy to write IOUs. As Bernie Madoff did, you can – for a
while anyway – write new IOUs to replace old IOUs. But it is morally
as well as fiscally reprehensible to make promises that you cannot keep.
That is why Missouri should say “No” to the Medicaid expansion plan.
Andrew B. Wilson is a resident fellow and senior writer at the Show-Me
Institute, which promotes market solutions for Missouri public policy.