Medicaid: The growing drag on progress for you and me

by Ryan Streeter on November 29, 2011. Follow Ryan on Twitter.

At Public Sector Inc. Daniel DiSalvo cites a new NGA and NASBO report shadowing just what a headache Medicaid is becoming. The report says that:

Spending on Medicaid is expected to consume an increasing share of state budgets and grow much more rapidly than state revenue growth, resulting in slow or no growth in education, transportation or public safety.

States on average increased their spending on Medicaid 29 percent just this year. Not good. A couple thoughts:

    • Spending on Medicaid has virtually no positive impact on economic growth. Education and infrastructure, on the other hand, do influence growth positively (if done right). As Medicaid eats up budgets, states’ role in fostering growth necessarily declines.
    • At the national level Medicare is the biggest public threat to sustained growth because of its violent contribution to our growing debt. But at the state level, it’s Medicaid that is exacting the greatest violence. This is not only because of skyrocketing costs, but because – like Medicare – Medicaid is a top-down, Washington-driven monstrosity. States have virtually no room to experiment with alternatives.

I don’t care what political party you’re a part of, if you’re a governor right now and you oppose giving states more flexibility in running Medicaid – you’re insane. Radicalizing Medicaid by giving it to 50 laboratories of experimentation is the best thing the federal government could do to help restore growth to struggling states right now.