Medicare Trustee Warns Against State Expansion of Medicaid

With the passage of the Affordable Care Act, California is well on its way with the expansion of Medicaid. Gov. Jerry Brown stated in a release June of last year that the Supreme Court ruling “removes the last roadblock to fulfilling President Obama’s historic plan to bring health care to millions of uninsured citizens.” But Californians should be wary of the governor’s open embrace towards expanding Medicaid.

Jason Hart discusses in an excellent article how Charles Blahous, a Medicare Trustee, warned states of the dangers of expanding Medicaid.  Blahous concluded that states “all appear to face one common, powerful incentive arising from the court’s ruling: to decline to cover childless adults at or above the FPL [federal poverty line] under Medicaid.” He makes many of the same arguments that I have been making for quite a while, but his warning, as a Medicare Trustee, may finally cut through the background noise and get some people to actually pay attention. The full report by Mr. Blahous can be found here.

Mr. Blahous reminds me of Wilbur Mills, who was the recognized congressional expert on Social Security during the administration of President Lyndon Johnson in 1964.  Mills initially strongly opposed the expansion of Social Security proposed by Johnson and warned that optimistic cost estimates fell short of realistic expectations. He believed that, in the long run, the cost of such programs could not be contained and would eventually bankrupt Social Security, a program he also felt was not sustainable.

Mills soon bowed to political pressure. As the Chairman of the powerful Ways and Means Committee, Mills eventually delivered the bills expanding Social Security to include Medicare and Medicaid to Johnson.  In a recorded call to President Johnson, Mills, then-House Speaker Carl Albert and Wilbur Cohen (architect of much of Social Security and Medicare legislation) said,

“…I think we’ve got you something that we won’t only run on in ’66, but we’ll run on from hereafter.”

Mills continued to warn about the risks to the economy of the program, but in the end, he rationalized that it would be good for the Democratic Party. He argued that Social Security itself was not sustainable and that the expansions would bankrupt the country.  Mills was correct in his analysis, although his time frame was optimistic.  He projected that Social Security, Medicare and Medicaid would cost only $12 billion by 1979.  But by 1979, the total federal cost of the Social Security Acts (including Medicare and Medicaid) topped $1 trillion (in 2010 dollars). And it is important to note that Medicaid is both a federal and state program, and federal costs represent only about one-half of actual expenditures.

The rest, as they say, is history!

(Thomas W. Loker served as the Chief Operating Officer of Ramsell Holding Corporation. Prior to joining Ramsell, Mr. Loker was the founder and senior partner of Wild Tiger Holding Company and Thomas Loker Consulting. Visit his website at and his blog at


  1. Al Metcalf says

    More rules and more regulations and more Bureaucrats to keep track of all the changes in the rules and regs. That is exactly what we need. The IRS started out with just a few rules, Now the IRS code is some 27,000 pages of idiotic jibber jabber, soon to be followed with many other printed nightmares….. All in the name of ‘we will take care of you’.
    When and how will it end??

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