January 22, 2016 Print

Government welfare can seem compassionate at first glance, granting aid to people with few financial resources. Its long-term effects are debilitating, though, harming the people it aims to help by keeping them trapped in a cycle of dependency that leaves them unable to improve their own lives. Obamacare is one of the biggest welfare expansions since the New Deal of the 1930s, and one of its most costly provisions has been the growth of Medicaid, which promises to give states federal compensation in exchange for opting in to the expansion.

Funding from the federal government can seem like “free money” to state officials who don’t have to take a personal role in levying higher taxes to hand out extra services to their constituents, but the Foundation for Government Accountability (FGA) has spent the past five years educating taxpayers and state governments about the high cost it entails — not only in terms of dollars taken from taxpayers, but also the budget it siphons away from the elderly and disabled beneficiaries of Medicare.

Sacrificing care for truly needy patients

“Obamacare’s Medicaid expansion is funded by $716 billion in Medicare cuts,” wrote FGA’s CEO Tarren Bragdon for Forbes. “Think about this. Medicaid expansion is designed to break the Medicare promise of adequate care for grandma in order to give a Medicaid card to the 28-year-old living in her basement. Medicaid expansion also uses a perverse funding formula that prioritizes coverage of able-bodied, working-age adults over care for disabled, children, and parents.”

Bragdon explained that these are not just faceless statistics shifted around in a budget tug-of-war, but real people whose age or debilitating medical problems often prevent them from joining the workforce at all. The more able-bodied adults that wind up on Medicaid rolls, the more funds are diverted away from people who are truly needy and aren’t capable of working.

“States are already having to make choices that sacrifice patient care because of costs,” Bragdon continued. “Chloe Jones, a 14-year old from Arkansas, had been denied care by state officials because their ballooning Medicaid program was too strapped to pay for her desperately-needed cystic fibrosis treatment. New tax dollars are instead going to the thousands of working-age adults Arkansas added to Medicaid under their multi-billion dollar expansion program. Sadly, hundreds of thousands with developmental disabilities around the country languish on Medicaid waiting lists. But Washington wants states to move work-ready adults to the front of the line and push aside the truly needy.”

Accumulating unsustainable federal debt

When states acquiesce to new federal mandates like the Medicaid expansion, they often do so with the promise of lavish federal funding that will cover a large portion of the expense. Money from the federal government isn’t free, though. Ultimately, it comes from taxpayers in all states — both today and for future generations, which will be stuck with the ballooning debt that these expensive entitlement programs create.

“The federal government is already more than $18 trillion in debt,” wrote FGA Research Director Jonathan Ingram and Policy Impact Specialist Nic Horton. “The Congressional Budget Office projects that this debt will rise to more than $27 trillion by 2025. This is hardly surprising considering the federal government has run annual deficits exceeding $1 trillion for four of the last six years. Federal taxpayers can expect to pay $588 billion for Medicaid alone by 2025. For comparison, federal taxpayers paid $251 billion for Medicaid welfare benefits in 2012. During the next decade, Medicaid spending is projected to grow significantly faster than either federal revenue or the U.S. economy, eating into other core government priorities.”

States that have agreed to participate in the Medicaid expansion have seen their enrollment far surpass initial projections, draining their budgets and diverting funds from other programs.

“The scariest thing for state leaders and taxpayers alike should be the high amount of uncertainty and risk associated with expanding Medicaid,” Bragdon wrote. “FGA studied every expansion state with reliable data and found every one of them exceeded their enrollment projections by an average of 91 percent. That means states wound up enrolling almost double the number of people they expected, driving up taxpayer costs astronomically.”

Trapped in a cycle of poverty

The more that able-bodied adults remain dependent on financial assistance from government programs like Medicaid, the longer they tend to stay out of the workforce, reducing long-term employment prospects and leaving families trapped in a cycle of poverty — diminishing their opportunities to enjoy economic prosperity in the future.

“The incentives for people on Medicaid may encourage an additional 2.2 million adults from looking for gainful employment,” wrote FGA Senior Coalitions Director Kristina Ribali. “Is that the America we want? Is that what those people deserve? Do they deserve to be thrown into a system that creates valleys of opportunity and deprives them of a rope in order to climb out? ... There is nothing compassionate about robbing someone of their ability and desire to make a better way for themselves or their family.”

FGA’s work, however, has resulted in 19 states refusing to embrace the federal government’s “fully funded” Medicaid expansion, saving 7.7 million Americans from welfare dependence and saving taxpayers nearly $400 billion over the next decade. Its campaign against the Medicaid expansion has proven so effective that FGA was nominated as one of eight finalists for Atlas Network’s prestigious 2014 Templeton Freedom Award.

Building an infrastructure of future policy change

FGA’s work in combating the tremendous fiscal and regulatory burdens of Obamacare is only the beginning of the organization’s ambitious plans to hold government officials accountable to taxpayers. FGA has built close relationships with state think tanks throughout the United States, working in tandem with them on developing state-specific policy proposals, as well as educating and mobilizing grassroots activists and local leaders through social media and town hall–style events. This, along with FGA’s track record of engaging influential donors who can make connections with key legislators and policy influencers, has led to a strong infrastructure that can be leveraged for any number of policy battles in the future.

As Nobel laurate economist Milton Friedman famously pointed out, spending other people’s money leads to irresponsible fiscal choices — an effect that is only magnified when government bureaucrats are involved, a step further removed from any incentive to economize or conserve resources. By helping states resist the Medicaid expansion, establish work requirements, and reform countless other aspects of a broken welfare system, FGA not only saves taxpayer dollars — it helps people build a better future for themselves and their families rather than remaining stuck in generations of endemic poverty.