Obama Takes Medicaid Cuts Off the Table

President Obama claims we need a "balanced approach" to solve our nation's budget mess, but it's hard to get there when he keeps taking spending cuts off the table. Late yesterday, the White House announced that it no longer supported cutting Medicaid by $100 billion over the next ten years. It was a spending cut Obama had offered earlier in deficit negotiations. 

The Obama administration backed away Monday from roughly $100 billion in Medicaid savings it had proposed during deficit-reduction talks earlier this year.

The move comes as liberals have pressed the White House to take Medicaid off the table in negotiations surrounding the "fiscal cliff" — and it will make any agreement on entitlement spending about $100 billion harder to reach.

The Health and Human Services Department (HHS) said the Obama administration no longer supports a plan to combine the various calculations used to determine the federal government's share of Medicaid spending. 

Even the $100 billion originally offered was a paltry cut. The Feds currently spend around $300 billion a year on Medicaid. Over the next decade we will spend close to $4 Trillion on the program, perhaps quite a bit more given Medicaid's spending trends. $100 billion is a 2.5% cut...over a decade. If even that amount is too much for Obama and the left, then there really is no way to solve our budget problem. 

The cuts originally proposed by the Obama Administration would have made small changes in the way feds reimburse the states for running the Medicaid program. For years, the states have treated the Medicaid program as their own ATM. The feds and the states share in the cost of Medicaid, but it is a very unequal share. 

The amount the feds contribute to state Medicaid programs varies, depending on the relative wealth of the state and other factors. The least amount the feds provide is $1.50 for every $1 a state spends. In Mississippi, the feds pay $1.80 for every $1 the state spends, the highest match in the country. This creates a perverse incentive for states to increase Medicaid spending. If, for example, a state spent $1 million on Medicaid, the feds would give them $1.5 million. If they increased spending to $2 million, they would collect $3 million from the feds. 

Long story short, this should have been a very easy cut to make and one that would be recommended as an improved policy. But, even that is apparently too much for Obama and the left. Until they get serious, the "fiscal cliff" negotiations currently dominating the news will go into permanent re-run syndication. 

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