Corzine Underestimated Cost To Expand State Coverage To Uninsured

Remember when Jon Corzine was running for Governor he claimed he had a plan to insure 776,000 people in the state for $15 million? We wrote a number of posts on the subject explaining the absurdity of the claim, as did a number of New Jersey bloggers. At the time, Corzine attempted to defend this ridiculous $15 million campaign promise with a Corzine Connection post - Corzine's Health Care Plan: Why It Saves Money and Doesn't Tax NJ Citizens.

One year later, Governor Corzine’s proposed budget for 2007 is looking to add 50,000 children to the NJ FamilyCare program for a cost to state taxpayers of $5 million. That’s just six percent of those he claimed could be covered for $15 million. His cost estimate has jumped from $19.33 to $100 per person per year, but remains every bit as preposterous as his original claim, even when federal funding offsets are included in the calculation.

NJ Fiscal Folly brings our attention to an analysis of the proposed FamilyCare expansion completed by the Office of Legislative Services. (pages 44-45) The OLS report concludes the incremental first year cost of the expansion would be approximately $40-45 million and at least $67 million* the year after. That’s under the best case scenario.

OLS assumes coverage per child under NJ FamilyCare at $1,340, considerably less than the $1,788 it will cost New Jersey for each child enrolled in the state’s Medicaid program. Using the Medicaid rate, the total cost for covering an additional 50,000 would be $89.4 million. Whichever rate is chosen, Corzine’s expansion of NJ FamilyCare is going to cost millions more than he has budgeted - even after all federal funding has been taken into consideration.

The OLS report states that New Jersey is already receiving $140 million in federal funding for NJ FamilyCare - $50 million above the federal cap of $90 million. This largess has occurred because the federal government has reallocated unused funds from other states to New Jersey. But this pool of unexpended federal funds has been declining over the years as other states have expanded their own programs. Therefore, Corzine expansion plan might very well have to be funded entirely by state taxpayers to a tune of $67 - $89 million.

The second caution here is that once the coverage has been expanded, there’s no cutting back. It becomes what Corzine refers to as a “built-in cost” that can’t be touched. This is exactly how New Jersey got into the fiscal mess we’re in today – programs are added and expanded without regard for the long-term financial consequences for taxpayers.

The Governor has already stated that New Jersey will have a $1.5 billion budget shortfall next year if his tax and spending plan is approved this year. It makes you wonder what the actual budget gap will be considering all of Corzine’s new and increased spending plans. The Governor talks of fiscal restraint and but the reality is business as usual, spend more today, worry about paying for it tomorrow.

* As Paul points out, the difference between the estimated cost for the first year and the next is due to the time required to enroll 50,000 people, not all will be covered on day one of the budget year. Enrollment will increase month by moth until the goal of 50,000 is achieved - the second budget year will reflect the full cost of coverage for the additional 50,000 for an entire year.