by Max Brantley
By ERNEST DUMAS
Before suspending our fascination with Arkansas’s rocky love affair with Obamacare and its “private option” for the rest of 2015, may we re-examine a couple of the great propaganda frauds that were perpetuated during the long battles in Arkansas and nationally?
No, no—not death panels again, and not Obamacare’s secret coverage of illegal immigrants, or its exemption for congressmen, or giant Medicare benefit cuts. Nearly everyone by now is on to those flimflams, although a few old folks still fear that President Obama any day is going to take away their Medicare. (My Medicare, by the way, is more generous than it was when I went on the rolls a dozen years ago.)
But two hoary myths from the first days of the insurance reform in 2009 and 2010 were still around when Gov. Hutchinson embraced the Medicaid expansion under Obamacare and persuaded grudging Republican legislators to accept it, a few on the premise that next year it might be altered enough that they could call it something besides Obamacare.
The big myths are that the sweeping insurance reforms, particularly the Medicaid expansion for the poor, are forcing tens of thousands of people onto unemployment rolls while bankrupting the country and wrecking Arkansas’s fragile treasury. Those refrains were still heard in the debate about continuing Arkansas’s version of Medicaid, which by July should be insuring just about all the 250,000 Arkansans who are eligible.
There were never grounds for either claim. The nonpartisan Congressional Budget Office, run by a Republican, concluded that the Affordable Care Act would lower, not raise, federal budget deficits, and after four years it is still doing that. The CBO found no basis for predicting big job losses, although House Republican leaders predicted that 650,000 would lose their jobs.
Two studies of the impact of the Medicaid expansion on the state budget, one by the Arkansas Medicaid staff and the other by economic consultants, concluded that rather than busting the budget the Medicaid expansion, even after the state assumes its full 10 percent share of its costs, will put the state treasury in the black by $630 million over the span of 2013–2021.
It is like Arkansas insured all its poor and levied a tax on New Yorkers and Californians to pay for the state’s share of it. Absurd, but in a way that’s how Obamacare works for Arkansas.
How can that be? After all, the Affordable Care Act is sure enough a big government program that set out to fix everything that was wrong with the country’s health-care system.
But the law was designed to be palatable to the states by making them great beneficiaries with minimal burdens of their own. The states’ matching share for the Affordable Care Act is a small fraction of state costs under all the other Medicaid programs that were established in 1965 and afterward, which states always leaped upon, Arizona partially excepted.
Let’s see exactly how that works so well for Arkansas.
First, let’s deal with the jobs issue. Rather than massive job losses and a recession when Obamacare kicked in 15 months ago, the job market improved stunningly—651,000 jobs the last three months of 2013 when people signed up for Obamacare and many states like Arkansas took the Medicaid expansion, and 3,116,000 new jobs in 2014. The country added an average of 26,000 health-care jobs a month, according to the Bureau of Labor Statistics.
Arkansas’s economy took a similar burst of growth, lowering the unemployment rate a full 2 percent from the day people could sign up for Medicaid and adding 3,000 jobs in health care alone. State tax collections made unusually healthy gains.
That’s what happens when the federal government pumps more than a billion dollars a year into a poor economy, creating new income and jobs and raising income-, sales- and excise-tax payments.
But Republicans ran for legislative seats last year on the warning that when Arkansas started having to pay some of the Medicaid costs (5 percent) in 2017 we would have a fiscal crisis and when it reached 10 percent in 2020 the state would in effect be bankrupt. The governor himself wondered how Arkansas would find $200 million, which he expected Arkansas’s share to be after 2020.
It’s just arithmetic.
This year, the state saves roughly $89 million because Washington permanently picks up Arkansas’s roughly 30 percent share of certain categories of patients, and the savings will continue to rise. State-funded institutions like the medical center and prisons are saving $33 million this year in charity care that taxpayers are no longer paying for. That number will rise, too. Since more than 300,000 people are buying health plans under Obamacare the companies are paying premium taxes to the state. Last year, they added $20 million to the treasury.
Add them up: $89 million + $33 million + $20 million = $142 million. So Obamacare and the private option in effect is adding $142 million to the treasury this year and cost it nothing.
That does not count how much additional income, sales and excise taxes that $1.4 billion in federal payments are producing this year. The state Finance and Administration Department refuses to engage in dynamic scoring, the popular Republican economic model that predicts how many times money turns over in the economy and how much in taxes and jobs it produces.
If the state pays $200 million for the Medicaid expansion in 2021 it means that the federal government would send $1.8 billion to the state. You do the scoring. A consultant’s analysis in 2012 said the private option would produce cumulative net savings for the state of $630 million through 2021. The much-feared fiscal crisis would occur only if the legislature abolished the program.