Opinion: Should Missouri participate in a Madoff-type scheme?

First, came the threat. Then, came 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 the cost of the Medicaid expansion, scheduled to begin in 2014, if individual states commit to spending their own money in years to follow.

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 St. Louis 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 Talent stated, Missouri will have to spend money, which it does not have, in order to receive federal money, 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 care plan.

It is easy to write IOUs. As 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, Show-Me Institute resident fellow and senior writer