| August 20, 2013

Propaganda: It’s our money. Fact: No it’s not

Proponents of Obamacare’s Medicaid expansion, whether via premium assistance or via traditional Medicaid, are using desperate and dishonest arguments to try to persuade Oklahoma policymakers and citizens to expand Medicaid.

One of the chief falsehoods is that “if Oklahoma doesn’t act, our tax dollars will be sent to other states.” This argument demonstrates a complete lack of understanding of the federal/state welfare program known as Medicaid.

Medicaid is a fiscally uncapped entitlement program, generally available to anyone who meets eligibility requirements, which is funded by the federal government based on revenue collected by the federal government (from numerous sources) or debt issued by the federal government. Unlike funding for transportation, which is funded significantly by state and federal excise taxes on gasoline on a user basis, Medicaid spending has no such significant or predominant dedicated funding source. Furthermore, transportation does have a component of state earmarking, unlike Medicaid. States only receive reimbursement for Medicaid based specifically on the individuals in the state that use it. So, particularly as it relates to Obamacare, states don’t receive more or less funding for their Medicaid enrollees because another state’s enrollment increases or declines. There is no dedicated pot of money for Medicaid to be “divvied up” or earmarked between the states based on their participation in the Medicaid expansion. Obamacare funds were based initially on approximately 20 different tax hikes (some of these sources are being delayed, repealed, or are failing to generate the promised revenue) whose burdens particularly fall on more-populated states or higher-income demographics — Oklahoma ranks low in both.

Part of this untruth is the effort by some to insinuate that Oklahoma is somehow a “donor state” (a “donor state” is one whose taxpayers send more dollars to the federal government than the amount of federal funds used by the state). Make no mistake, Oklahoma is not a donor state, and its use of federal funds has grown over the years. Based on an analysis using 2010 census data, Oklahoma uses far more federal funds than its taxpayers send to the federal government. For every dollar Oklahoma “sends” to the federal government, it “receives” $1.30.

The Congressional Budget Office and the Pew Charitable Trusts have pointed out that for every state that does not expand Medicaid through either premium assistance or traditional Medicaid financing, it results in less spending by the federal government. As of May, Pew research estimated the federal government would avoid spending $511 billion based on the current number of states who had chosen not to expand.

The “it’s our money” argument also has another dangerous flaw. It’s as if proponents of the Medicaid expansion don’t realize that our federal government has debt over $16 trillion and mounting. Growth in Medicaid will continue to add to our nation’s debt, which shackles future generations. It can’t be “our money” when the federal government is mortgaging our children’s future by borrowing 16 percent or more just to operate annually. The “it’s our money” argument is a willfully misleading one, and its proponents should have the decency to stop using it. Until such decency is found, lawmakers and citizens should give this argument and its proponents no more credence than they would the foolish notion that the earth is flat.

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