March 29, 2018

IT’S THE SPENDING, STUPID: Why Are States So Strapped for Cash? There Are Two Big Reasons. “The proportion of state and local tax revenues dedicated to Medicaid and public pensions is the highest since the 1960s.”

And of course there wasn’t even any Medicaid until the 1960s.


The only speaker standing between state budget officers and the opening cocktail hour at a Washington conference was the U.S. Secretary of Health and Human Services. What he said left no one in a celebratory mood.

Medicaid costs, said then-Secretary Michael Leavitt, were projected to grow so fast that within 10 years they would “crowd out virtually every other category of spending.” State spending on higher education, infrastructure and safety, he predicted, would all get squeezed.

Nearly 10 years after that October 2008 speech, Mr. Leavitt’s prediction—part of HHS’s first-ever annual projection of Medicaid’s costs—is looking prescient.

As state and local officials prepare their next budgets, many are finding that spending decisions have already been made for them by two must-fund line items that barely mattered when baby boomers such as Mr. Leavitt were growing up: Medicaid, the state-federal health insurance program for the poor and disabled, and public-employee health and retirement costs.

Some of us have been sounding this warning since long before 2008, but lawmakers have kicked the entitlement reform can about as far as it can go, leaving us with nothing but the cold comfort of Stein’s Law.

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