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Saturday, March 07, 2015

LBJ destroyed your state's budget

As state legislatures throughout America struggle with requirements to balance their state budgets, let us pause to remember that one-quarter of the budget is dictated by Lyndon Baines Johnson, whose damage to state budgets lives on 42 years after his death.

As president, LBJ pushed for Medicaid -- free health insurance for poor people. This was a boon to the medical industry, particularly hospitals, doctors, sellers of wheelchairs, and nursing homes.

But Medicaid comes at the expense of schools, highways, prisons and others state services because it requires states to pony up some of the money in this federally mandated program.

Medicaid now takes $1 of every $4 states spend. And under Obamacare, those costs are rising as previously qualified people who did not sign up must now sign up -- and they are now using their free coverage.

From the National Association of State Budget Officers:
Medicaid, the largest component of total state spending, is estimated to account for a greater share of expenditures in fiscal 2014, representing 25.8 percent of total state expenditures, up from 24.5 percent in fiscal 2013. Meanwhile, elementary and secondary education declined slightly, representing 19.5 percent of total state expenditures in fiscal 2014, compared to 19.8 percent in fiscal 2013. 
So how did we get into this mess?

In 1965, being retired meant poverty. The Census Bureau reported the poverty rate for people 65 and older was 30% -- far higher than 18 and younger (22%) and people 18 to 64 (10%).

Congress determined that giving people 65 and older subsidized health insurance would help and Medicare was born. The medical industry appreciated the effort, as did the elderly, whose poverty rate is 9.1% some 50 years later.

But President Johnson and his Democratic Party added the single-payer, socialistic Medicaid system to pay the health bills of the poor. States had been offering public health services to the poor but Johnson wanted to dignify poverty and allow the poor to be treated by regular doctors. And of course, the regular doctors wanted the revenue stream.

The federal government offered to pay most of the bills (it pays 57% today) with the states paying the rest and running the programs. The federal government had a basic plan, but also allowed states to add extras -- eye care, for example -- and the medical industry lobbied in good times to add the extras. But once added, good luck trimming the extras. The medical industry will act as if you hate children if you trim any service. Of course, the medical industry could offer these services pro bono, but let's not get crazy about it.

I wish I had an answer for how we get out of this mess. Maybe we need Amendment 28: Congress shall make no law regarding health care -- ever.


  1. I wonder what an average state spends on health care for an IV drug user who cannot pay for his own health care.

  2. Or make Congress live under the same laws as the rest of us. No pensions for them. Social Security only. It's ridiculous for someone who works a job for only a few years to get a luxurious pension like these bozos get. Give 'em a 401-K plan. Make them use Obummercare instead of the Cadillac plan that they get. Congresscritter was not supposed to be a profession. Congress was supposed to be made up of citizen legislators who served for a few years and then returned to real jobs. We have created a political class that thinks they should live like and be treated like royalty. Isn't it amazing how so many of them somehow wind up as millionaires? Over half of them should be thrown in jail when they leave office.

  3. I believe the "Medicaid expansion" was a primary goal of Obamacare. Democrats hate it when people who can don't go on welfare.

  4. LBJ "accomplished" a great number of Big Government bills due to the JFK assassination and a shell-shocked, guilty nation. Despised by the sophisticated JFK crowd as a backwoods cowboy conservative, LBJ turned out to be more socialist/liberal than JFK by half and then some.

  5. Although I'm a conservative, I don't object to having state governments pay for the health care of people who are truly poor through misfortune. However, unlike Fauxcohontas of the Massachusetts Harvard Tribe, I don't believe that the great majority of poverty in this country is the result of the cost of modern health care. Rather, it's likely the other way around: for many (but importantly not all) people, debilitating poor health is often the result of the same conditions that end up making such people poor, namely, very unwise life decisions. That said, it is unfortunately the case that once a normal person's health goes into a deep tail spin, poverty is only a step behind. For such people, I do not begrudge them a helping hand through my taxes. It's a social compact thing.