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Sorry, Virginia, Santa Claus can’t pull money out of his ass to fund Medicaid

Medicaid is a big topic of conversation in my house. That’s not because we’re on it — it’s because my wife’s pediatric practice is up to its eyeballs in patients on AHCCCS, Arizona’s implementation of the program. Encouraged by federal matching dollars, Arizona, over the years, expanded the program to cover a big percentage of the states population. AHCCCS patients now constitute a majority of my wife’s patients.

Like most states in these less-flush times, Arizona is now scrambling to rein-in spending. There are a couple of ways that state legislators can do it, but given the degree to which expenditures have ballooned over the years, they’re all going to hurt. Depending on the choices that legislators make, my wife’s practice could very well go under.

But I’m preparing rather than complaining, because I can’t think of a painless alternative. States are hobbled by the federal government’s rules in the extent to which they can cut Medicaid costs. That means states are looking for federal waivers — and even considering dropping out of Medicaid.

To put things in perspective, here’s a history of Arizona’s tax revenues (PDF) over the past few years.

(All numbers in thousands of dollars)

Preliminary FY 2010
6,061,423.6
-9.2%

Actual FY 2009
6,678,297.5
-20.3%

Actual FY 2008

8,374,397.0
-8.8%

Actual FY 2007
9,186,046.2
3.3%

Tax revenues have been shrinking, consistently, since 2007, though state number crunchers are (optimistically) predicting a small increase for 2011.

Total General Fund revenues are rather higher, given the sugar-daddy relationship of the federal government to the states. Once you add in such line items as “Net revenue enhancements/one-time adj.” — an item that has gone from zero in 2001 to over two billion dollars in 2010 — total General Fund revenues have still dropped from $9,625,786.0 in 2007 to $8,322,087.3 in 2010.

Which is to say, that even heavily subsidized by an itself-broke federal government, Arizona’s state government is … well … a bit tight.

Actual expenditures are way the hell higher, largely because of yet more federal money and because of borrowing. You can see what that means in terms of who cuts the checks in this chart (Source here):

And all that shrinking pool of money is pretty heavily committed to some specific programs.

That’s right. AHCCCS — Arizona’s implementation of Medicaid — consumes 26% of the original FY 2011 budget. It’s been growing steadily for years — from 17% of expenditures in 2007 to 30% of the latest figures (after cuts in other areas of the budget). That’s in budgets based largely on subsidies and fantasy. And a big chunk of those federal subsidies is scheduled to disappear this year. Reports the New York Times, “On July 1, the enhanced federal aid will disappear, causing an overnight increase of between one-fourth and one-third in each state’s share of Medicaid’s costs.”

Oh … Did I make explicit the fact that Arizona’s state government has been spending more than it takes in? Yeah. Except for a few flush years in the middle of the decade (real estate was very good to Arizona, for a while) Arizona has been purchasing red ink by the tanker truck. It’s really pretty impressive.

What makes this even sadder is that most of the people on Medicaid’s rolls are (relatively) blameless. Yes, there are scam artists here and there, but most of these people have limited means, and quite rationally took advantage of a program that offered them medical coverage at little cost to themselves. Few of us stop to look at  the meta picture when we sign up for attractive deals, and so a growing proportion of Arizona’s (and America’s) population has been growing dependent on a government program that has become increasingly economically non-viable.

And the medical practices that serve that population are also dependent on a program that is spending dollars that don’t exist.

Of course, it was easy to expand Medicaid by playing the compassion card, especially when it came to covering children. Who wants children to suffer, no matter what choices their parents have made? Wave a few photos of wide-eyed tots, make a few promises, and …

And millions of people have become dependent on programs that are unsustainable.

Here’s the thing. Forget about arguments over the proper role of government. If politicians and their enablers make promises that lead people to depend on government for things that it can’t possibly continue to provide, those oh-so-caring demagogues are not compassionate, they’re pricks.

I’ll admit that I knew better, and I’ve been sweating the arrival of the day of reckoning ever since learning the extent of my wife’s practice’s AHCCCS-dependency. We’re resilient though, and I expect my family to land on its feet.

But the people who will really suffer are those who have few means, and who could have made other arrangements and planned their lives differently if they hadn’t been led to depend on grandiose and unsustainable promises.

Posted in Spending

5 Comments

  • Yes, the statistics are quite stomach-turning, no matter what side of the argument for or against Medicare/Medicaid you might be on. My daughter is a medical assistant for a regional clinic here in Tucson, the overwhelming majority of the patients of which are on AHCCCS. Making matters worse, the “management” of this clinic (if you can call them that with a straight face) has for years been adamantly refusing to enforce consistent collection of co-payments, which for most patients are no more than $5.00 per office visit. Yet this same “management” is now befuddled and alarmed at the fact that their clinic is deep in the red and may lose a significant amount of federal funding – which of course has always accounted for a huge percentage of its operating budget. For this reason they are consolidating facilities to reduce operating costs, thereby letting go a large number of staff, which certainly has my daughter on edge. (Despite what many people from out of state believe, jobs in the medical field in Southeastern Arizona are neither plentiful nor remunerative).

    What truly boggles my mind is the fact that while Arizona’s ruling class has been making great show over the last couple of years of telling the fedgov to go fornicate with itself, it continues to demand and rely upon funding from the very hand it insists on biting. Perhaps someone needs to tell these brainless creatures (and those equally brainless sheeple who insist on sending them back to office every couple of years) that Arizona can do one of two things, but not both. It can assert its autonomy, in consonance with the provisions of the Ten Amendment to the Constitution; or, it can roll over, capitulate, and become a vassal of Rome-on-the-Potomac in exchange for the privilege of remaining on the federal dole. There is no middle ground. Quite frankly, given both the lack of a viable long-term economy in this state and the obstacles to the development of one that are routinely thrown up by the PTB, I don’t see how the former is possible.

  • It astounds me that more funding for Arizona spending comes from the feds than comes from local sources. How state officials plan to assert any independence, having allowed that to come to pass, boggles the mind. The way things stand, they should just let the feds appoint a Viceroy and be done with the pretense of local rule.

  • The way things stand, they should just let the feds appoint a Viceroy and be done with the pretense of local rule.

    I’m sure our illustrious ex-governor-turned-DHS-commissarina would gladly take the job.

  • I would recommend that they drop pursuing the $5 co-pay entirely. Hunting down patients after the fact is much more expensive than simply upping the fees to cover the co-pay.

    The cost of having that employee, who comes with administration costs, payroll taxes, wages, cost of patient tracking software, equipment, electricity and building maintenance must be at least $50/hour. I’m low-balling that–it’s probably in the range of $75-$120 per hour. My guess is that the employees who nag patients aren’t specialists in that one area, so there are also costs incurred because additional labor must be compensated so that time can be wasted pursuing a co-pay amount that is merely symbolic.

  • Hunting down patients after the fact is much more expensive than simply upping the fees to cover the co-pay.

    Of course the problem with that strategy is that the shortfalls incurred by NOT pursuing these fees, however “symbolic” they might be, are passed on in the form of higher co-payments to other patients who have alternative (read: commercial) health insurance plans. Simply stated, those few patients who aren’t on the public dole are being forced to further subsidize, through what amounts to another layer of taxation, the care of those many patients who are. In other words, we have a textbook example of socialized medicine in action. Should ObamunistCare ever fully come to pass, this will become the norm everywhere.

    While the clinic to which I referred in my first post did, at one time, serve a relatively large number of non-AHCCCS patients, nearly all of these have stopped patronizing this clinic in the last couple of years and have moved on to private providers. (Most patronized it in the first place only because it was geographically convenient to their homes.) They simply became sick and tired not only of receiving what became increasingly sub-standard care, but also of being plundered in order to support the “care” of people who mysteriously never seemed able to cough up five bucks for necessary health care, but who could be counted on to have fully-stocked liquor cabinets or fridges full of beer at home and who, while under “pain management” contracts, routinely tested positive for bloodstreams full of methamphetamine, cocaine, and every other “controlled” substance imaginable.

    This, I submit, is one of the primary reasons why AHCCCS, an unsustainable program from Day One, is now finally facing its well-past-due fiscal Day of Reckoning: a state full of people on the dole who have been allowed to live at the expense of the few people left in the state who still work for a living. Consider this a prime example of democracy in action, as well as socialized medicine.

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