Here’s some news that should cheer Gov. Hutchinson and the Republican lawmakers who designed the private-option plan for implementing the Medicaid portion of Obamacare, but it will not please their friends in any of our surrounding states. The Kaiser Family Foundation, the national health-care research group, reported that state spending on all Medicaid programs increased twice as fast in the 21 states that did not expand Medicaid to poor adults as it did in the other 29 states, including Arkansas, that did.
Let’s rephrase that. State budgets were better off in the 29 Obamacare states than in the 21 non-Obamacare states. State spending on Medicaid (not counting federal aid) rose an average of 6.9 percent in the just-concluded fiscal year in the states that chose not to expand insurance to poor adults while rising only 3.4 percent in the expansion states.
That is precisely the opposite of what opponents of the private option in Arkansas and opponents of the expansion in the 21 states argued. They said the Obamacare expansion of insurance to the poor would bust state budgets when the states have to start picking up a part of the costs—5 percent in 2017 and rising to 10 percent in 2021. Then taxpayers everywhere, they said, would rue the day they insured poor childless adults against sickness and accidents.
Exactly why state spending on Medicaid grew so much faster in the non-expansion states may be explained partly by the fact that the Obamacare law picked up 100 percent of a state’s existing share of Medicaid in some areas. In Arkansas that proved to be a bonanza, relieving the state of tens of millions of dollars annually of Medicaid costs.
Legislators who led the fight to stop the expansion in other states and the unsuccessful fight to stop it in Arkansas said states could not afford the expansion when they had to start pitching in their 5 to 10 percent share.
But we already knew better in Arkansas. State health officials who ran the numbers predicted that Obamacare and the private option would continue to save the state money for many years. Hogwash, the opponents said. So the legislators hired a business-consulting firm in Massachusetts, The Stephen Group, to do an analysis and recommend ways to change the program to lower the state costs.
This month the firm handed the state its voluminous report. It concluded that during the 2017-2021 period when Arkansas is phasing in its share of the costs the state will save $438 million in addition to the hundreds of millions it will have already saved since the program began in 2014. That means that if the legislature this winter halts the private option at the end of the fiscal year the state budget would be $438 million further in the hole by the end of 2021.
That is why Gov. Hutchinson is jumping through every political hoop to get three-fourths of each house of the legislature to go along with continuing the program. He’s trying to make enough cosmetic changes to the program that he can say it really is not the private option and it really is not Obamacare, which have become toxic words in many quarters.
We mentioned that the governor and the Republican legislators who thought up the private option—poor people enroll in one of Obamacare’s private insurance plans rather than sign up for the government-insured Medicaid medical care—should be pleased with the news. The private plans are much more expensive for the government because they pay higher compensation to doctors and hospitals, but they also produce $20 million a year in additional tax receipts for the state through premium taxes. As a purely fiscal matter, the state cannot afford to end the program, not after it has cut taxes because of the Medicaid relief.
Originally, Obamacare required all states to expand Medicaid to cover poor childless adults as well as offer private insurance plans to everyone else, with federal tax credits subsidizing families whose annual incomes fall below 400 percent of the poverty line. That is the level at which people are assumed to be able to buy insurance without help. But the U.S. Supreme Court ruled 5-4 that the law had to give states the option to expand Medicaid or not. Twenty-nine states—Arkansas and Kentucky are the only ones in the South—chose to do it. Two more are starting it in 2016. Legislatures in the other 21 have balked.
The other people who should be pleased with the Kaiser Foundation report are the approximately 250,000 Arkansans who have qualified for health insurance, nearly all of them for the first time. Now they only have to hope that research and facts prevail over political fancy with enough Arkansas legislators to keep the program going. As Gov. Hutchinson can attest, it’s a very close call but, whether you are a bleeding-heart liberal or a fiscal conservative, it is very important.
