Medicaid Expansion May Cost North Dakota $0.25 For Every Dollar In Federal Money Accepted

The Senate will be addressing HB1362, which includes an expansion of the state Medicaid program as called for by Obamacare, some time this week. It was on the chamber’s calendar for yesterday, but they never brought it up on the floor.

But before the Senators sign off on what the House already voted for, it’s worth remembering that the expansion is hardly a free lunch. Per a study commissioned by the North Dakota Policy Council, the Medicaid expansion already makes one sixth of all state and federal spending in North Dakota and if it’s expanded the cost in both federal dollars and state dollars will increase dramatically:

Bismarck, N.D. – The North Dakota Policy Council has released a study which predicts that North Dakotans can expect their state taxes to increase between $0.221 and $0.274 for each $1 of federal grants that is accepted.

The study, conducted by Columbia Economics, L.L.C., concluded that states which accept federal grants usually encounter three unintended consequences: 1) growing demands on state resources, 2) loss of local control, and 3) expanded bureaucracy. Each of these consequences results in local and state government having to pick up part of the tab when federal grants are accepted.

“Federal funds are generally perceived as a ‘Free Lunch,'” North Dakota Policy Council Executive Director Zack Tiggelaar said. “But this study shows that not only do federal funds end up costing North Dakotans through tax increases, but we also lose that local control which North Dakotans value highly.”

In 2010, North Dakota received $2.17 billion in federal grants which amounted to more than one-third of total state and local expenditures. That totals over $3200 in federal aid per resident, which ranks ND the 6th highest recipient of federal grants in the nation.

Of that total, one-third of it was in the form of Medicaid. The senate is currently mulling over a bill, HB 1362, which would expand Medicaid as directed under the federal Patient Protection and Affordable Care Act.

“It’s clear that accepting these federal dollars is a bad idea,” Tiggelaar said. “Not only will this cost ND in the long run, but we are going to be controlled by federal regulations over on who, how, when, and how much of this money we can spend.”

The bill carrying the expansion of Medicaid has, again, already passed the House. And so far it has received a unanimous do-pass recommendation from the Human Services Committee. It’s passage looks likely in the Senate, but maybe there will be some change of heart that will allow North Dakota to escape this mistake.