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“Free Medicaid” – Federal Coercion of States and Taxpayers

Democracy and Power 101: Government is power

The essence of Government is power; and power, lodged as it must be in human hands, will ever be liable to abuse. —James Madison, Speech in the Virginia State Convention of 1829-1830

“Free Medicaid” – Federal Coercion of States and Taxpayers

ObamaCare – the federal law - intentionally forced the states to expand Medicaid (health services for low-income people). Technically, State governments had a choice.  ObamaCare allowed the States to  abide by all the rules and regulations of new law or not.  However, the ObamaCare law, duly passed by the House and Senate and signed by President Obama, cut off all the existing federal Medicaid funding (millions of federal dollars sent to the states every year  - approximately 30% of every states budget).  Essentially, the ObamaCare law demanded States to comply with the expansion of Medicaid and all Federal rules and regulations, or the States forfeited all of their on-going federal Medicaid grants.  However, the Supreme Court of the United States reasoned this coercion was a step too far and declared this portion of ObamaCare unconstitutional.

Case closed?  No.  Invariably, government has back-up coercive powers. ObamaCare's additional powers are as follows: 

If a state accepts ObamaCare and all the rules and regulations, the Federal government pays for 100% of the expansion for three years and 90% for the following three years.  Normally, and generally, the states and the Federal government split the cost of Medicaid 50-50.  So, if a State refuses to expand Medicaid in accordance with ObamaCare, the State loses “free Medicaid” money.  Therefore, over 10 years billions of dollars will be denied the State. 

What about the taxpayer from the State that refuses?  They keep paying federal taxes.  And the tax payer's money goes to the expansion of ObamaCare in the compliant states. Welcome to Federal  power and coercion 101.   Now, for a real example:

Governor Rick Scott of Florida, a former health-care executive and very knowledgeable on the fiscal issues surrounding healthcare, was a leading opponent to ObamaCare, and strongly supported the lawsuit to have the law declared unconstitutional.  Now, he supports the expansion and the federal mandates.  Why?  The “free federal money.”  Florida will receive approximately $66 billion in the next 10 years.  It is estimated that Florida will pay $5.3 billion (there are lower estimates  of $5.1 billion received and $3.5 billion spent by Florida). 

The real politick outcome is that bycomplying with the mandates of ObamaCare, Florida gets a boat-load of money, which will be paid by every American taxpayer.  Worse, the taxpayers in the states which refuse to expand ObamaCare's Medicaid scheme will still be paying and their money will be servicing compliant states.

Additional thoughts on  real politicks:  

The federal taxpayer, without his or her agreement, will be coerced into paying for Medicaid expansion – if their state does or does not expand Medicaid.  This is “taxation by stealth.”

This Medicaid expansion is a small – but very costly – example of  federal money and mandated rules in exchange for state compliance.  Welfare, unemployment, highway speeds, education and much more are mandated to the states and their citizens with “free” federal dollars.

Presently, the Florida legislature (as opposed to Governor Scott) and many states are very leery of accepting federal money in exchange for expanding Medicaid.  Having been burdened with federal rules, bureaucracies, and burdensome debt, many governors and legislators are very leery of the allure of “free” federal money.  Stay tuned and see what Florida, Texas, Louisianan and more states decide on this critical issue.

Finally, this “free” federal money has eroded, if not demolished, the sovereign power of the states. America's federalism – the sovereign power of the states versus the enumerated and restricted powers of the federal government – has been usurped by the federal government.  This is a most important discussion for America, democracy and freedom.  As was recently stated by Justice Kennedy of the Supreme Court:  “State sovereignty is not just an end in itself:  'Rather, federalism secures to citizens the liberties that derive from the diffusion of sovereign power.'”