Can We Trust Medicaid Expansion Advocates?

What the Native Americans can teach us about the U.S. government and healthcare

The federal government of the United States has treated native American Indians abysmally throughout much of the nation's history. Recently, it has been adding another sad chapter to the anthology of abuse. Virginians should pay attention, because the story has important implications for the debate over expanding Medicaid.

The Washington Post reported the tale shortly before Christmas. D.C. has contracted with hundreds of Indian tribes to provide medical services on reservations across the country. But then, claiming to be constrained by tight budgets, the Bureau of Indian Affairs and the Indian Health Service soon began to refuse to pay what they owed. They reneged on the deal not once, but repeatedly—year after year.

The consequences have sometimes been grim: In Nevada, for instance, the downgrading of a hospital to a sometimes-closed health clinic meant "pregnant women were sent off by ambulance, at times giving birth along the side of the road. Elders died before they even reached" other hospitals several hours away. The emergency room closed. Funds for specialized treatment now go for triage.

The tribes sued for breach of contract, and the Supreme Court said they were right: "The government is responsible to the contractor for the full amount due under the contract," the high court ruled. "This principle safeguards both the expectations of government contractors and the long-term fiscal interests of the United States."

After the ruling, the agencies repaid some of the money owed. But then, reports the Post, "agency officials began questioning the accuracy of their own calculations of what they owed the tribes." And they still claim they simply don't have the funds to keep their word: "There is not enough money to go around," an Indian Affairs functionary told Congress in November. The Obama administration sides with the agencies, not the tribes.

The implications for Virginia are obvious. Thousands of federal contractors call the state home, reaping tens of billions of dollars' worth of business a year—second only to California in the value of federal government contracts. If Washington makes it a practice to renege on payments, the consequences for the private sector here would be enormous.

Then there's Medicaid.

The Supreme Court's 2012 ruling on Obamacare gave states a choice about whether to go along with expansion. Virginia continues to deliberate over the question. Gov.-elect Terry McAuliffe has been stumping for expansion; the Republican-controlled House of Delegates seems unlikely to go along.

A chief selling point for expansion advocates is the lure of ostensibly free money: Washington would pay 100 percent of the cost for the first three years, after which reimbursements would step down until reaching a 90 percent plateau in 2020.

Expansion skeptics warn that Washington might not keep that promise. Right now, there is no way to tell. But we do know this much: Nine out of 10 times, new government programs end up costing far more than original estimates projected. Current estimates say the federal government's share of the tab for Medicaid expansion from 2014 through 2022 will come to $931 billion. If the cost is lowballed to even a small degree, then the feds will see more than $1 trillion in new expenses over the next decade.

By contrast, the federal government owes Indian tribes a comparatively paltry $2 billion or so. And that obligation is not merely statutory, but contractual. Yet even after Supreme Court intervention, Washington refuses to cough up the dough.

Shifting more of the cost of Medicaid expansion to the states would be well in keeping with Washington's long-standing practice of taking all the credit for something—but little or none of the responsibility. A Congressional Research Service report says the cost of unfunded federal mandates imposed from 1983 to 1990 alone cost state and local governments at least $8.9 billion. Mandates the next year added at least $2.2 billion more.

By 1995, that problem had grown so acute that Congress, prodded by outrage from the hinterlands, tried to stop itself by passing the Unfunded Mandates Reform Act. Yet according to the National Conference of State Legislatures, Washington has passed numerous measures that flatly violate UMRA's restrictions. As a result, from 2003 to 2008 "Congress … shifted at least $131 billion in costs to states," it says.

If the federal government can ignore its contractual obligations, its own statutes and its own Supreme Court, then it certainly can ignore its own funding formulas, too. This doesn't necessarily clinch the case against Medicaid expansion; it's just one point among many. But it does suggest those hawking the promise of free federal money epitomize Samuel Johnson's definition of second marriages: "the triumph of hope over experience."

This column originally appeared in the Richmond Times-Dispatch.