Friday, May 28, 2010

EDITORIAL >>State’s budget finds healing

Will the new national health-care law be good for Arkansas? If your concerns are about the state budget, the answer is yes.

We have thought since each house of Congress passed a version of health reform that the final law was nearly certain to be a bonanza for Arkansas. Some 400,000 people will get health insurance at negligible cost to themselves and the state, people on Medicare will get better service and cheaper drugs, the great burden of unreimbursed care at struggling hospitals will be relieved and insurance companies will stop cutting people off insurance when they get sick and denying coverage to people with pre-existing conditions.

But there was the concern, expressed by Gov. Beebe and legislators and trumpeted by Republican critics, that the vast expansion of Medicare coverage for poor grownups might bankrupt the state, which must match federal assistance with state tax funds. It was a vast misunderstanding, created by the complexity and variety of the reform bills and by misinformed accusations, but it played a role in the reaction to passage of the final bill in March.

The Kaiser Family Foundation, which is the best authority on health care in America, produced a study this week of the precise effect of the law on individual states as it is phased in over the next 10 years. The quick picture for Arkansas: Few states will get more benefit, financial and medical, and none will pay less for it.

In fact, rather than jeopardizing the state budget, at least for the next seven years the new health law will relieve the state budget. That is, Arkansas taxpayers will pay less to provide medical attention for the poor under the law than they would have if the law had not passed. Considerably less.

Perhaps the biggest impact of the law in Arkansas will be the expansion of Medicaid to cover adults whose yearly earnings are less than 133 percent of the poverty line. In 2014, they will become eligible for Medicaid. Arkansas does a great job, better than many states, in insuring children but the worst job among the 50 states and the District of Columbia in insuring adults.

To qualify now, a person must have children and income no higher than 18 percent of the poverty line or else be permanently disabled. No state has such a low poverty threshold. Many states already serve adults with incomes up to the poverty line, paying heavily from state tax funds.

In 2014, some 200,000 more Arkansawyers will be eligible for medical assistance, and for three years Washington will pay 100 percent of the cost, the state government zero. In 2017, the state will start paying a small share, which will reach 10 percent in 2020. In the six years starting in 2014, an estimated $10 billion will be pumped into the Arkansas economy providing health care for people with low incomes. That will leave more money in their pocketbooks to spend on goods and services and tens of millions of dollars annually in new state and local tax revenues. Hospitals that now must write off these expenses will be made whole.

It gets better. In 2015, the federal government will pick up nearly 100 percent of the cost of children’s coverage in Arkansas.

That will mean an annual savings of $20 million to $25 million in state appropriations, which can be diverted to schools,
prisons, law enforcement and other priorities.

The right response of Gov. Beebe ought to be: Bring it on.