BuckeyeBlog

I was quoted in an AP story today talking about how Medicaid plays into Ohio’s projected budget deficit. As I point out in the article, when economic slowdowns hit Medicaid spending goes up. This is usually coupled with a declining amount of revenue to the state, so you have Medicaid taking up an increasingly large share of a declining amount of available revenue. We are already seeing that in Ohio. Late last year there were reports that Medicaid was increasing more than expected.

In public policy, the role of hindsight bias looms large. In effect, after something happened then analysts will go back and say, “hey, it’s pretty clear that x,y, and z caused it.” The problem is, you rarely see something from the same analysts before the problem predicting it. Not to toot my own horn, but last year when both the Republicans and Democrats in Columbus almost unanimously passed legislation expanding Medicaid I wrote this:

Expanding Medicaid can lead to large increases in Medicaid spending when states can least afford it – during recessions. Ohio saw this earlier this decade when Medicaid spending increased dramatically during the recent recession. Spending grew at 11 percent annually during 2001 and 2004, squeezing other budget priorities at a time when the state was seeing reduced revenue. Expanding Medicaid now will only repeat this cycle during the next recession.

I’m no genius since this is a pretty well known fact to anyone who looks at state budgets. Unfortunately, the Governor and members of the General Assembly don’t seem to have any historical knowledge about how Medicaid and state budgets work.

An aside: looking at how this AP story was picked up throughout Ohio, it seems there are some news sources just want to stress the tax angle. For instance, the Cincinnati Enquirer, WLWT, and others only ran the first half of the story, the part dealing with how a liberal group blames tax increases for the deficit. It left out any discussion of whether increased spending played a role. Perhaps this is a reflection of space limitations, but it seems a little fishy to me.

This entry was posted on Friday, January 25th, 2008 at 11:36 am and is filed under General. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.