by Mark Moore
The Republican-dominated Arkansas Senate just voted 24-9 to pass Senate Bill 1020. This bill is an expansion of Medicaid which is a key component, perhaps the most important and costly thing a state legislature can do, to implement Obamacare. Ten Republican Senators voted for the expansion, and nine against (two more did not vote). Naturally, the Democrats voted overwhelmingly in favor of the expansion.
This Medicare Expansion is being done in the hopes that Arkansas can run the Medicare money through a State Insurance Exchange in order to subsidize premiums. In other words, rather than Medicare directly paying providers, Medicare would send money to insurance companies, and they would pay the providers, after taking a cut. This government program is called the “private option”, but of course there is nothing “private” about it. The government money simply passes through an extra set of private hands (Arkansas Insurers who are all for the idea) on the journey to a socialist/fascist mega-state. It’s Obamacare wearing a hat and sunglasses. And the waivers for this “private option” only extend to 2016. After that, there is not even a promise from liars that they won’t take off the hat and sunglasses, leaving Arkansas with the exact same plan these legislators ran against.
Some of those same Republican legislators who ran as “Lions of Liberty” have in a mere six months become “Lap Kittens of Compliance”. These are the people who in the Fall were strutting around to your applause as they denounced Obamacare with forceful language. Oh they still use forceful language, but it is not to declare their opposition to the centerpiece of Obamacare- Medicaid Expansion. Rather, they are now using forceful language on grassroots activists who annoy them by reminding them of what they said six months ago. Their ire seems to be directed toward those who remind them of their own promises.
More about that in a bit, but before I do, let’s address some of the issues surrounding this outrageous betrayal of trust.
First let’s sort through the double-talk on the costs, to Arkansas taxpayers, of the various options. And I would like to thank Nic Horton of the Arkansas Project who has really taken the lead on this issue and helped get this information out. The legislators are keeping information close to their vest. They keep throwing out numbers to make the case they should pass Medicaid Expansion, but from the communications I have seen they don’t source these numbers or put them in context. They just throw a bunch of numbers out there. It’s meaningless except as a tactic to try to baffle a grassroots activist who is trying to remind them of what they promised us they would do six months ago!
Our own state budget office put together numbers which said that traditional Medicaid Expansion would cost more than the mis-named “Private Option”, but much less than the option of “Doing Nothing”. Not that I consider defending taxpayers and the free market “doing nothing”, but that’s what rejecting Obamacare has been called. This is a tactic of the left that the Republican legislators are using against the grassroots, that saying “no” to government expansion is “doing nothing”, and of course “we have to do something.”
Defending freedom, fighting the expansion of a soon doomed-to-fail government program is not “doing nothing”. It is instead, what they ought to be doing. The right thing ought to have a better moniker than “no-thing.” I am going to call it the “Rational De-Linkage option”, because our state should pursue a policy of “rational de-linkage” from a federal government that is acting insane by launching massive new programs when they are borrowing 43 cents of every dollar they spend trying to finance the things they are already doing. We need to get as far away from partnerships with them as possible, so that when they finally go down we don’t go down with them. So I hope you will join me in calling the effort to stay as far away from this soon-to-be massive failure as “the De-Linkage Option”.
I don’t trust the state budget departments numbers though, both because I have had personal experience with them that demonstrates to me that they don’t deserve to be trusted, and if they change their behavior I would be glad to stop writing that particular truth, and because I think they made some assumptions in those numbers about the sort of flexibility that insurance providers would have to cut costs that the Obama administration has not and will not give them. A lot of the final numbers are based on assumptions about what the feds will let us do right out of the gate and what they will continue to do in the future.
I do trust the Heritage Club to give good numbers, and they provide an good graph in this article by Horton which puts the numbers in context. What they show is that for the first two years the state “saves” money (but the taxpayers don’t, the feds would just pick up more of the bills for expanding Medicaid). After that, the state spends more money by expanding Medicaid, and the amount of the increase spending goes up as time goes on. When legislators talk about the “savings” from expansion they are either talking about savings as compared to a fictional universe where they would spend even more money, or they are talking about the next two years only.
Though Statesman govern for the next generation, politicians only see to the next election. They only see to the next budget. All of these guys have something they want to get through. They have some bill they want to pass. These bills either increase spending or reduce taxes. If something they want causes the state to be short somewhere, they have to find a way to make up for it somewhere else. They have to make the budget balance over a two year period with their pet project worked in. What I think is happening is that Beebe and the Republican Establishment are telling some of these legislators “that bill you want costs money. We can’t find a way to fit it in unless we take the Medicaid Expansion. If we do that, we spend $60 million a year less over the next two years, and there is room for us to support passing your bill.”
It is analogous to a person opting for a deferred payment plan that costs the far more in the long run just because the lower initial payments allow them to do something they really want to do now. Only the analogy fails because as an individual, you are the one who has to worry about the higher future payments when your plan doesn’t work anymore. As a legislator, they may not be there in 2016 when the wheels really start to come off this thing. Is it short sighted? Yes. Is it vain-glorious of a legislator to ram through a program that in the long-run costs us much more just so they can get a pet project passed with their name on it? Of course. This is one of life’s character tests, and there are some of them that I am really pulling for to pass it.
There are conflicting claims of how much the “Private Option” (since this name is not accurate I am going to call it the “Crony Option” because it is a perfect example of Crony Capitalism, government working with business interests to tilt the market and defraud taxpayers) will cost. The conflicting claims are often the result of differing underlying assumptions. If we see which assumptions are the most probably, we can determine which cost outcomes are the most probable.
The potential “cost savings” can only come from allowing insurers in the exchanges to offer the Medicaid group, those up to 138% of the poverty level, to structure plans in the ways that insurers use to control costs. These include things like variable co-pays and measures to keep people “in network” with the lowest cost providers who allow audits to minimize fraud. But it is clear from yet another fine article by Horton that the insurance offered to the Medicaid folks will be of a different sort than that offered to those that get the regular exchange subsidies. They won’t be offered the regular exchange plans, but a special class of plans cobbled onto the exchange system. In the Medicaid subsidy plans the companies can’t do any of those cost saving measures the now use, all they can do is stand in the middle and take a cut of a plan that has the same features that Medicaid now has.
With this understanding, the Crony Option can only cost more than the Public Option. And remember, you can’t trust the feds, but even they won’t commit in writing to extending the Crony Option beyond 2016. The feds don’t want to pay the state cronies, this is just what they are holding out to get the state to vote it in. Therefore the feds have an incentive to keep the rules inflexible so that the cronies cost the state more. That way it will seem like a relief in three years when they take the hat and sunglasses off of this thing and end the waivers for the Crony Option, leaving us with not even a fake mustache to hide the fact that this is all Obamacare. The De-Linkage Option is the only course of action which can protect us from this outcome.
All of these numbers assume that the federal government will continue to keep its promises to the states. I take issue with that assumption, and so should you. Instead of the numbers factoring in a zero percent chance that the feds will default on their obligations, factoring in a 100% chance that they will do so seems much more probable. Any shifting of costs to the state will make the numbers for the Crony Option look much much worse compared to the De-Linkage option. And remember, savings to the state is one thing, but savings to the taxpayers is another. In no year does the Crony option cost you as a total taxpayer cost you less than the De-Linkage option. It is just that for the first few years your federal tax bill goes up more than your state tax bill goes down. After that, both bills go up.
Some legislators are throwing around the “woodwork effect” as a reason they feel like they can break their word to the voters. That is, the Feds are going to start an exchange whether we do or not. They are going to provide subsidies for those over the poverty level to buy insurance on this exchange. Even if we don’t come up with something for those under the poverty level, we already have something for those at 17% of poverty level or below. Not everyone eligible for benefits right now (that is, under 17% of the poverty level) are enrolled in Medicaid now, but the publicity and activity surrounding the implementation of Obamacare will bring them out of the woodwork. Therefore, we will have more people on Medicaid afterward, even if we don’t increase coverage. The feds pay about 70% of Medicaid now for those under 17% of poverty level, but if we take Obamacare they will pay 100% for the first three years and 90% thereafter if we cover the whole population under the poverty level. That’s the thinking.
I suggest to you that the reason those poor people that are eligible for Medicaid have not taken it is because they are healthy, so they don’t need to bother with it, or they are so crazy that they won’t know how to even crawl out of the woodwork. I further submit to you that far more will crawl out of the woodwork in that bottom 17% if we give coverage to everyone under the poverty level than if we leave it where it is now. One may argue that the feds will pick up more of that tab, but 1) for how long, and 2) it will be a much larger tab. The “woodwork” problem will be a much bigger problem in the long run if we expand the number of people under the wood.
One may say that the De-Linkage option will leave us with a system where the very poorest get Medicaid, but once they get to the poverty level ($16,000 for a single person, about double that for a family of four) they will have federal subsidies available. The real problem is the interventions, and their long term affordability not the gap. It sounds like a person will have even more incentive to lift themselves out of poverty if they know they can get subsidies if they can just manage to earn enough to that mark. And there is a good chance they will have more opportunity to do that if we pursue the De-Linkage option. If Michael Cannon of the Cato institute is correct, states that refuse to set up an exchange are exempt from the employer mandate and the individual tax penalty.
What that will do, is allow our economy to bloom, especially with jobs on the lower end, compared to states which form an exchange. We will not have to bribe employers to come here anymore, they will come here to escape the mandates they face in other states. It will suddenly make our business climate very friendly compared to Obamacare states. Yes, people need healthcare, but most of them would rather have a job that allows them to get healthcare, and the best way we do that is pursue the De-Linkage option. That way, when the exchanges cost more to run than was assumed, we don’t bear the cost, when the feds run out of money for the subsidies, they can’t shake it out of the state.
Once you figure all the costs and benefits, not just health care dollars but also the potential benefits to the economy if Cato has it right, pursing De-Linkage is a huge win. If we go with Obamacare and the Crony Option, states like Oklahoma will look even more attractive to employers relative to Arkansas.
Now I would like to finish talking about the Republicans and their strong support for this plan now that one of their lobbies, the insurance lobby, gets cut in for a while. House Speaker Davy Carter was never one of the more strident campaigners against Obamacare, so one can’t fault him much for a change of course. Where one can fault him is for his claim that “A vote for the private option is a vote against Obamacare.” If I used any word less strong than a “lie” to describe this statement, then I would not be leveling with you. I would be sugar coating it in deference to the powerful man who told the lie, thereby disrespecting the people who honor me by taking time out of their lives to read what I write. I refuse to do this. His statement is a lie. The Crony Option is Obamacare, thinly disguised and with the disguise set to come off in 2016.
I would like to give Speaker Carter the benefit of a doubt, but a man in his position ought to know better. This is not just a difference of opinion. This is a deliberate mis-statement of fact, which is a pretty good definition of a lie. A difference of opinion is something like whether or not Larry Bird was a better basketball player than LeBron James. It is verifiable and clear that the Crony Option falls under the umbrella of Obamacare. If you want to continue to be lied to by politicians, continue to make excuses for them and sugar coat it when they lie to you. If you want them to keep it up, keep letting them get away with it. Personally, I’ve had enough.
Carter may not have expressed loud objections to Obamacare in the campaign, but plenty did. The same people who six months ago when they were running for office were strident in their opposition to Obamacare are now throwing out all kinds of excuses, smoke screens, and mis-information in an effort to explain away their craven collapse on the central campaign issue of the recent election. If this sort of thing was a unique event we might be able to shrug it off, but it is not unique, but rather it is the pattern. It is the most spectacularly outrageous example of the behavior we have seen from Republican politicians at all levels for decades.
It is time for activists to take a good hard look in the mirror and ask themselves how much longer they are going to continue to outsource the job of protecting their liberties and representing their interests to a political party headquartered in Washington D.C. that has consistently betrayed them. Why do we, at the state legislative level, have to route all of our candidates through this foreign, alien, and sometimes overtly hostile entity known as the Republican party? Why can’t the grassroots groups find and back to the hilt qualified independent candidates to oppose state legislators who quickly abandon their promises to the grassroots once they fall under the influence of, and feel they have the protection of, a political party?
It may be that they will reverse course and stand firm. But right now, I would say if this does not convince you to quit putting 100% of your political investment eggs in the GOP basket then you can’t be convinced. It’s way past time for a free people to “go rogue’ from this corrupt system.
******* Mark Moore is a long-time writer and activist with an extensive political resume. He is an advocate of Localism, as described in the e-book “Localism, a Philosophy of Government”
Ebook from Amazon for the Kindle reader: http://www.amazon.com/Localism-A-Philosophy-Government-ebook/dp/B00B0GACAQ/ref=pd_rhf_pe_p_t_2_GB3H
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