Think College Is Expensive Now? Wait Until ObamaCare

By JOHN MERLINE,
Posted 08:02 AM ET

INVESTOR'S BUSINESS DAILY:

Parents and students facing sky-high sate-run college tuitions aren't likely to be thinking about ObamaCare. But perhaps they should, since if left in place ObamaCare will likely end up making college still more expensive.

Why? Because ObamaCare relies heavily on Medicaid — the federal/state program that provides health insurance for the poor — to expand coverage.

But Medicaid is already swallowing up state budgets, forcing states to cut back on everything else, especially support for two- and four-year public colleges.

"The two biggest items of every state budget are Medicaid and education," Senate Minority Leader Mitch McConnell, R-Ky., told IBD recently. "As the Medicaid mandate rises, the educational funding declines. That is passed on to universities and they raise tuition in order to make up for it."

A report from the State Budget Crisis Task Force found that even before ObamaCare kicks in, Medicaid costs have been growing "faster than the economy" and "faster than state revenue." As a result, Medicaid now consumes 24% of state funds, and its ongoing growth "can no longer be absorbed without significant cuts to other essential state programs like education."

It's a problem President Obama should have known about when designing ObamaCare, since his own budget director at the time — Peter Orszag — had co-authored a 2003 paper for the Brookings Institution looking at this issue.

Orszag concluded that "primarily due to rising state Medicaid obligations, parents and students have been asked to pay an increasingly large share of the costs in public higher education."

Medicaid Vs. College

According to the Budget Crisis Task Force, over the past decade, Medicaid costs have climbed an average 7.2%, nearly double the growth rate of tax revenues.

At the same time, states have steadily shifted the burden for college onto students and parents. Today, tuition accounts for about 40% of the costs, up from 23% in 1985.

And as a result, the cost to attend a public four-year school climbed 46% in real terms in the past decade, compared with 30% for private four-year schools, according to the National Center for Education Statistics.

States have tried to rein in their Medicaid costs — 13 states are imposing various cuts this year — but costs continue to outstrip state budgets, and states complain that federal mandates make it too hard to effectively reform their Medicaid programs.

For most states, ObamaCare will make it still harder.

As the National Conference of State Legislatures explained, under ObamaCare "many states will find the cost of their Medicaid programs will be higher."

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