Even as Gov. Jennifer Granholm and the state Legislature struggle to produce a budget, the Congressional health care bill rushing towards passage in Washington this weekend threatens to blow an even bigger hole in Michigan's ledger. Much of Lansing's budget prescriptions have been short-term bandages (like using federal stimulus dollars to pay for government largesse) but these patches do nothing to fix long-term ills like Medicaid entitlement spending that now gobbles up 25 percent of the state's budget - up from just 5 percent 30 years ago.
Nancy Pelosi's House bill would make the Medicaid cancer worse.
In the name of "universal care," the House will expand Medicaid eligibility to everyone below 150 percent of the poverty level from 100 percent currently, meaning that an estimated 15 million new people nationally will be added to the rolls. That is, in another decade, over a quarter of the population will be on a program originally intended for poor women, children and the disabled.
Pelosi & Co. are aware of the pressure this would put on state budgets given Medicaid's traditional 50 percent state spending match, so the feds will assume 91 percent of the matching rate for Medicaid's expansion under the bill. But that would still force states to take on an extra $34 billion.
Think Michigan's budget is sick now? You ain't seen nothin' yet.