The Other Shoe on So-Called “Private Option” costs

by Mark Moore

We have been told that about 155,000 people have signed up for the so-called “Private Option”, which is an expansion of government subsidized medical coverage via the Medicaid program.  Since poor children and very poor adults were already covered under various Medicaid programs, once you follow the money and take away all the window dressing this is essentially government health care for adults who earn over 17% of the federal poverty level but less than 138% of it (about $16,500 a year for an individual).

The “Private Option” is a Medicaid program.   It is not private at all except that it combines the worst features of crony-capitalism with the worst features of socialism all in one ultimately un-affordable package.  Much has been made of the fact that this new Medicaid program is already, three months in, experiencing 11% cost over-runs, called wrap-around costs.

Some legislators have come to so identify with the state government and so un-identify with the taxpayers that they act like if the state does not have to pay for it then it is free.  It is not free to the citizens, just the state government.  American taxpayers are on the hook for all costs of the so-called “Private Option”.  Right now as both state and federal taxpayers we are on the hook for 100% of the regular costs as federal tax payers and 100% of the wrap-around costs as state taxpayers.  Forbes has estimated that these wrap around costs will obligate state taxpayers to around ten to fourteen million extra dollars in 2014, and an increasing amount thereafter.

Starting in 2017 we will be responsible for a decreasing percentage of regular costs as federal taxpayers and an increasing percentage as state tax payers until we are responsible for 90% of the regular costs as federal tax payers and 10% of the regular costs and 100% of the wrap-around costs as state tax payers.  Since our state does not have its own printing press and thus the ability to “borrow” vast quantities of funds at essentially no interest, the increasing cost coming to the state will bring immediate pressure to increase taxes.

What is amazing is that these costs have been so high even though the lawmakers responsible for the scheme tried to rig the pool of “private option” enrollees by segregating out the 10% least-healthy and sending them to the traditional Medicaid program.  The next time a private-option legislator tries to claim they did not vote to expand Medicaid you might point out to them that even if you were to accept their flat-out delusion that the “private option” is not a Medicaid program, which it is, there is still the fact that 1/10th of “private” option enrollees were always meant to be sent to traditional Medicaid roles.  So yes, its an expansion of Medicaid, both in the form of the new program and the traditional one.

What is more amazing to me is how little discussion there has been about the addition costs coming from the 10% most sickly among poor and semi-poor adults who are being added to the state’s traditional Medicaid rolls due to the Medicaid expansion. If 155,000 have been signed up for the “private” option then I suppose about 15,500 have been added to traditional Medicaid rolls.

It is true that the federal government is paying all the costs this year, but us citizens are federal taxpayers too.  Because they are financing this expansion of government with debt we may not have to pay increased taxes for it right away, but either we or our children will have to pay for it eventually.  And starting in 2017 we will begin paying for a share of that group too.  After a few years, we will pay for 10% of those increased costs, and that’s if the federal government keeps all of its promises about how much of this it will fund (hint, in the long run they won’t and they can’t).

So how much will we have to pay each year for the expansion of traditional Medicaid under the “private” option program?   I don’t know, but these are the sickest slice of a sub-population which tends to be sicker than average.   How many have health issues related to meth addiction?  How many have AIDS from homosexual relations?  How many need new livers from alcoholism?   How many are simply eating and slouching their way into a million dollars worth of medical bills?

I can easily see the cost of these patients being $10,000 or even $20,000 per year.  Even if it is only the former figure, that means we taxpayers are on the hook for 15,500 X $10,000 equals 155 million dollars in additional government health care expenditures.  15.5 million of that will be as Arkansas taxpayers and the rest as federal taxpayers, if FEDGOV keeps all of its promises about this program.   I expect my numbers are very conservative.

Look, I am not saying that the meth addict, the promiscuous homosexual who picked up AIDS, or the alcoholic who needs a new liver don’t deserve medical care.  I am not saying that at all.  I am saying that I don’t want my children to be sent the bill for all of it, which is what is presently happening.  All of these promises are being paid for by debt.  It is not being done on a pay-go basis at all.

So everyone is looking at the immediate benefits but ignoring the long term costs, since they are not paying them.  I just think my kids should have a say in the decision on whether or not their earnings should be used to give one million dollars worth of medical treatment to prolong the life of an AIDS victim for another three years, or if instead they should someday be able to buy a house. Like it or not those are the kind of hard choices people have to make in the real world where money does not exist in infinite quantities.  Right now, because of the “private” option, your kids and mine have no say in the matter.  The money they haven’t made yet, the money they will need to have the kind of decent life most of us have enjoyed, is being spent on adults whose own choices have ruined their health.   Its automatic now.

‘The government’ does not really have any money.  They are just giving those pieces of paper they hand out value by borrowing against the earnings of the next generation.  Your children’s future earnings are the collateral for all the loans FEDGOV is getting to pay for all of this.   Voting for those who support this program is not the “nice” thing to do, it is not the “compassionate” thing to do.  It is just more immediately gratifying than doing the right thing.  It is just choosing to relieve ones self of the stress of telling people “no” now at the expense of the next generation.  Whether or not our children end up blessing us or cursing us will depend in part on our willingness to make the hard choices and pursue a just morality over a shallow, feel-good-about-ourselves-today pseudo-morality on questions just such as this one.

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