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Madness of Medi-Cal Dependency; Follies of Fiscal Federalism – Pacific Research Institute

Madness of Medi-Cal Dependency; Follies of Fiscal Federalism

California’s politicians have run our state into a $17 billion deficit. For months, the governor and legislature have been wrangling over how they’ll soak us to fill the hole. Although there’s little hope that they’ll shrink government spending in the long run, they had to stop the bleeding in the short term or they wouldn’t be able to pay the bills.

So, the legislature ok’d a temporary 10 percent cut to Medi-Cal (Medicaid) providers starting July 1. Needless to say, the providers are screaming bloody murder. So, they went to a federal judge, who ordered a stop to the rollback. (Today’s San Francisco Chronicle features the saga.) By what right does a federal judge command the California Department of Health Care Services to spend state money against the will of the legislature?

Well, we haven’t repealed the long-standing constitutional mantra of “no taxation without representation,” but we’ve put a dent in it by allowing Congress to tax us and transfer money to the states – strings attached – to operate Medicaid. Many self-styled health care “advocates” call for states to expand Medicaid without limit, arguing that it pulls down about $1.12 of federal money for every dollar the state pulls in.

This addiction to federal dollars is the primary reason why states are unable to kick the habit of making more and more of their citizens dependent on government health care, as I’ve discussed before.

Now the Congressional strings are strangling California taxpayers. According to Judge Snyder, federal Medicaid law requires states to keep spending once they’ve received federal dollars – no matter that the state is bankrupt.

I haven’t heard any apologies from the advocates of ever-expanding Medicaid for supporting this farcical fiscal federalism, which motivates a “race to the bottom” of the taxpayers’ wallets.

But I’m pretty disappointed that health care providers haven’t diagnosed the disease: their dependence on government, which is as bad as Medi-Cal patients’ is. And it’s hurting them both.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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