Nuclear Option

With state budgets crumbling under the massive pressures of economic downturn and the endlessly escalating costs of entitlement programs, some states are beginning to consider a nuclear option — ending their participation in the Medicaid program that funds health care for the poorest people.

Contrary to the standard partisan memes, this isn’t just a case of evil horrible McCheneyBushHitler Republicans who hate the poor.  Federal dollars come with massive strings, such as the requirement that Medicaid accept all applicants who qualify, give unlimited care, and be exempt from most of the budget-trimming measures that states apply to other programs.  Since the federal government only covers a little over half the cost, some states are running the numbers to see whether they could enact a narrower and cheaper program without all the Washington, D.C. mandates.

The question this raises, however, is whether the federal government would really let the states opt out or whether it would instead convert Medicaid into a mandatory program by threatening to withhold all federal funds from states that chose not to participate in this one program.  Congress has the constitutional power to do this, though the incoming Republican Congress would probably be reluctant.  Supporters of boundless entitlements could also ask the courts to intervene against states trying to balance their budgets, as has happened in several states already.

The most likely result is nothing . . . for now.  No states are likely to take the drastic political and financial step of opting out of the federal government’s signature social welfare programs.  But the fact that some are even starting to ask the question highlights the impossibly unsustainable financial condition of the country.  We simply do not have the revenue to pay for all the entitlements that more than half the country thinks they are, well, entitled to.  The summary of the times is “give me what’s mine and give that other guy the bill.”  But there is no other guy to actually pay that bill any more.


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