AS ARIZONA GOES, SO GOES THE NATION: HOW MEDICAID RUINED THE STATES' FISCAL HEALTH

The Government Accountability Office (GAO) has issued a bleak report on the long-term financial prospects of state and local governments. Their fiscal balances, GAO's simulations show, will rapidly deteriorate in less than a decade. GAO identifies Medicaid as the primary culprit for these bleak trends, In some states, the crisis has already arrived.

Arizona provides an early and stark illustration of Medicaid's ruinous effects. Arizona's fiscal crisis is due chiefly to the state's expansion of its Medicaid programs. Unsurprisingly, Medicaid expenditures constitute an ever-growing share of state expenditures:

• In 1987, that share amounted to slightly more than 10 percent.
• By 1992, the number was 17.8 percent; in 2006, it was 22.2 percent.
• Arizona general fund spending on Medicaid was $463 million in 2000.
• That figure is projected to grow to $1.5 billion in FY 2009, representing a threefold increase in less than a decade.

No state can avoid the choice between more debt or rip-roaring tax hikes, combined in some way. However, genuine reform of Medicaid must take place in Washington and so is an unlikely scenario.

Medicaid is designed to be fiscally unsustainable -- but politically self-sustaining.

[scary? just wait until our health care system is Nationalized]

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