John Ransom

For two years the federal government under Obama has shipped “enhanced” Medicaid reimbursements to states as high $2.68 for every dollar the state paid in to the healthcare entitlement program designed to help the poor. But, as was laid out in the bailout plan, “enhanced” reimbursements ended in July of this year leaving state budgets worse off then before.

Stimulus dollars consequently have expanded Medicaid and the states’ financial commitment to it and then left state budgets in the lurch as the economy continues at the zero growth trajectory of the Obama presidency.

Like every program designed by Obama, he reckoned we'd all get caught in the snare of government spending and have no choice but to continue it.  

Everyone saw this coming, but no one did anything about it and states now have been left cleaning up the mess.   

“Budget gaps in fiscal 2012 will likely rival the critical shortfalls that states faced before enactment of the new stimulus package,” said Nelson A. Rockefeller Institute of Government in 2009. “Cuts or reductions in growth of spending on education, health care, and other programs, and/or major tax and other revenue increases, will almost certainly be on the table once again.”          

They went on the table for 2011 as a result of Obama's failed economic programs.

As a consequence, states have been forced to take the only recourse they have, which is to cut payments to medical providers in order to balance their budgets.

“South Carolina is hoping to trim provider rates by 3% starting April 4 to help it close a $25 million deficit in its Medicaid department this fiscal year,” said CNN earlier this year.

“Managed care organizations would also see a 12.5% cut in their administrative fees. The move should save $7.5 million.”

And even the New York Times admits that the program has hurt patients and has helped drive healthcare providers out of the Medicaid market.

The Times says that Dr. Saed Sahouri of Flint Michigan quit the Medicaid practice when Michigan reduced payments to physicians thereby making Medicaid uneconomical for him professionally.   “My office manager was telling me to do this for a long time, and I resisted,” Dr. Sahouri told the Times. “But after a while you realize that we’re really losing money on seeing those patients, not even breaking even. We were starting to lose more and more money, month after month.”

John Ransom

John Ransom is the Finance Editor for Townhall Finance, host of Ransom Notes Radio and you can catch more of the best money advice and monetary commentary by him daily 10am PT, 1pm ET at or on Comcast Cable