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Obamacare and the states — 5 Comments

  1. Given that the federal budget is about 40% borrowed, It’s easy to believe that our representatives in Washington don’t really understand the difficulty balancing a state government budget during a time of declining revenues. Most states must balance budgets every year by law.

    In my state the Medicaid match is 80%. The state puts in 20%. On the face of it it looks like free money. The state puts in $1 and the feds put in $4. However, the $4 doesn’t go to the state. It goes to health care providers. To break even the state would have to recoup one of those federal dollars (25%) via taxation. With a top marginal income tax rate of 5% and a sales tax of 7%, that’s not going to happen.

    Bottom line, Medicaid is a big loser for states, and it gets worse during a downturn as demand increases. In a recession, states must balance budgets with real cuts. That means schools, prisons, public safety, mental hospitals, roads, and such. Getting hit with a huge Medicaid expansion at such a time is devastating. That’s one reason all those state AG’s are suing the feds over the health care bill.

  2. Without the 17th amendment (providing direct election of Senators) there would be no National Health Care. No one in 1913 ever expected the expansion of the Federal Government, so there did not seem much risk to the states in voting to approve the Constitutional amendment.

    I bet they wish they had that vote back.

  3. I bet they wish they had that vote back. That would be a great selling-point to the state legislatures for a demand to convoke a constitutional convention.

  4. Mr. Frank, states and cities need to go thru bankruptcy and THEN cut gold-plated pensions to gov’t workers.

    Because only in bankruptcy can the prior agreements be broken. And only in cutting excessive gov’t pensions can states & cities, and the Feds?, cut spending.

    Gov’t workers need to get as much, but only as much, as similar peaceful private workers on Social Security.
    Which, itself, should be reformed to be more sustainable.

    First the future needs to be corrected, so we’re on a sustainable path (most folks paying almost everything for themselves, required savings/ accounts, etc.); then the past obligations need to be paid off in a one-time paper printing exercise which will be followed by some time of higher than optimal inflation.

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