IDEA suggested that if states took federal funds, and the mandates that go with them, they would receive roughly 45 percent of their special education costs. Here in New Hampshire, with more than 20 years' experience with the program, the federal reimbursement has never exceeded 20 percent. It was a classic Washington bait and switch.
This example of broken promises that hands state taxpayers the bill for big government spending initiatives becomes an important lesson as the folks in D.C. plan to push another soon-to-be unfunded mandate onto the Granite State. The issue in play now is Medicaid expansion, and thanks to a Supreme Court ruling on Obamacare, states now have a chance to make their own choice before walking into the budgetary buzzsaw that comes with this program.
Just like IDEA, the federal government has promised large amounts of upfront money to states that bite on the lure of "free" federal money. The political expediency of covering numerous working and middle class residents with government-funded health care to reduce the number of uninsured makes it seem like an irresistible opportunity for New Hampshire to do "good" without initially requiring any state taxpayer money, as if federal taxpayer funds don't come out of the wallets of our very same residents.
While IDEA gives us insight into how the federal government treats its "partners" in providing services, there is a template for Medicaid expansion, and it's right next door. In Massachusetts, the Legislature expanded Medicaid in 2006, and like in Obamacare, they also required all residents to have health insurance or be penalized, so the Bay State should show us how Medicaid expansion would work out here.
To suggest that Medicaid expansion has been a financial disaster in Massachusetts might be an understatement. In 2006, when the law was implemented, Medicaid represented 25 percent of the state's budget. Now, thanks to this "reform" effort, that figure has grown to a staggering 41 percent, with little chance of relief in sight. That is despite slashing Medicaid reimbursement rates to providers over the past few years to balance an already fragile budget, which in turn means that hospitals, doctors and clinics then have to jack up the rates charged to private health insurance plans, making Massachusetts' already high premiums skyrocket even further.
In part to cover this massive growth in Medicaid spending, Gov. Deval Patrick has proposed a $1.9 billion tax hike, including a 19 percent increase in the state's income tax. However, what should not be lost in this history is that if Medicaid spending has increased its share of the state budget in Massachusetts by 16 percent, other areas have suffered as a result.
A review of that state's budget shows this stark reality. In inflation-adjusted dollars, spending on highways, public safety and education has dropped over the past six years. Setting a budget is about choices, and Massachusetts has chosen to spend its resources on Medicaid and not other priorities.
New Hampshire faces a similar policy question. We must choose whether we want to provide government health care for middle class residents; fund our schools, road and police or keep our taxes low. As a policy matter, we get to pick only two of the three, and if Massachusetts is a lesson, if we expand Medicaid, that could be to the detriment of both other options.
Some state leaders, like Gov. Maggie Hassan and Speaker Terie Norelli, have said they want to implement this part of Obamacare. Unsurprisingly, both in the past have advocated for an income tax in New Hampshire. Expanding the state's Medicaid program would give them a chance to get both of their wishes.
I hope that during this important session New Hampshire's Legislature will block the state from following Massachusetts' ill-fated path to expand Medicaid. We'll be glad to take their tax refugees and businesses that can no longer afford to stay there. The real answer for lowering our health care costs is not expanding a government- run program, but providing for real competition and true cost transparency, and giving consumers meaningful choices.
John Stephen is managing partner of the Stephen Group, a business consulting and government solutions firm in Manchester. A former commissioner of the state Department of Health and Human Services, he was the 2010 Republican nominee for governor.