Yes, the Cost of Medicaid Has Exploded

This week the St. Louis Post-Dispatch penned an article about whether the cost of Missouri’s Medicaid program has “exploded.” The paper dismissed the idea, quoting a constellation of liberal organizations to explain away a pretty staid assertion made by Governor Eric Greitens.

“Despite the fact that Missouri’s economy is growing and we’re in a stronger position than we were last year, what continues to be the greatest challenge in the budget is the explosion in federally mandated and other health care spending,” Greitens said Monday at a news conference in Jefferson City to outline his budget plan.

From there, the paper embarks on a roughly 1500-word odyssey to impress on readers that four- or six-percent rates of growth in the Medicaid program do not a cost “explosion” make. This pronouncement, delivered without providing any context, fails on several fronts, including the fact that both figures are double and triple the rate of inflation, respectively.

But I wouldn’t constrain the question of whether Medicaid costs have exploded to a single year, anyway. Consider the program’s growing impact on Missouri’s budget. According to the National Association of State Budget Officers (NASBO,) Missouri spent 18.4 percent of its FY2000 budget on the Medicaid program. By FY2016, that figure had more than doubled to over 37 percent of the state’s budget. As we’ve argued for years, Medicaid’s cost problems aren’t some artifact of Obamacare alone. The program has long been broken and, like the rest of the health care system, outpaced inflation—eating into public spending priorities just as private health care has grown in our own budgets. Over the last 17 years, Missouri even lowered eligibility thresholds for certain populations, and yet overall costs have continued to rise.

Years of cost increases—even if only of the four- or six-percent variety—add up to an ongoing cost explosion. That is precisely why former President Barack Obama said this back when he was selling Obamacare. (Emphasis mine)

And, finally, the explosion in health care costs has put our federal budget on a disastrous path. This is largely due to what we’re spending on Medicare and Medicaid—entitlement programs whose costs are expected to continue climbing in the years ahead as baby boomers grow older and come to rely more and more on our health care system. That’s why I’ve said repeatedly that getting health care costs under control is essential to reducing budget deficits, restoring fiscal discipline, and putting our economy on a path towards sustainable growth and shared prosperity.

So yes, Medicaid’s costs are exploding. And the sooner we can get to reforming the program, the better.