“Insane Economic Policy”: GOP’s Rejection Of Medicaid Funds Is One More Ideologically Driven Bad Idea
My emotions after the Supreme Court’s ruling on the Affordable Care Act last week went through various stages: confusion (thanks, CNN), shock and finally sheer joy. It was a complete surprise to have the highest court uphold the entire law, including the individual mandate. Liberals rightly celebrated the ruling as a historic step toward ensuring a better quality of life for all Americans.
But in the jubilation hangover, some more sober analysis has taken its place. One important aspect of the Court’s decision gives no reason to celebrate: the ruling that the federal government can’t withdraw all Medicaid funds from governors who refuse to expand Medicaid rolls in their states, essentially making it possible for them to opt out. The Medicaid expansion is meant to give coverage to about 17 million Americans by 2019, accounting for almost half of the 32 million people the bill promised to insure. Yet as Sarah Kliff reported, if states opt out of expanding Medicaid, it could leave some of the poorest Americans stuck in a no-man’s land in which they don’t qualify for Medicaid but also don’t qualify for subsidies to buy insurance. Beyond literally being a matter of life or death for many uninsured Americans, it’s also an economic issue: the White House calculated that expanding the number of Americans with insurance would increase economic well-being by about $100 billion a year, or about two-thirds of a percent of GDP.
It seems foolhardy for governors to reject what is basically free money to help more people in their own states gain health insurance. Josh Barro wrote just after the ruling that while the White House’s stick was taken away, its carrot—the federal government’s picking up 100 percent of the states’ Medicaid expansion tab for the early years, gradually declining to 90 percent after that—would be enough to incite states to participate. And they stand to see other economic benefits. States that already provide coverage and care to people living at 133 percent of the poverty line would no longer shoulder those costs, saving them millions. Even for those that don’t offer such coverage, the bill stands to save all states money by getting rid of the “hidden tax” they pay in higher insurance premiums that account for the cost of covering the uninsured, also potentially saving millions.
Yet Republican governors are already contemplating rejecting the money. The Hill reported this week that fifteen governors are either flat-out planning to reject the Medicaid expansion money or are leaning in that direction. Firm nos have come from Florida, Iowa, Kansas, Louisiana, Nebraska, South Carolina and Wisconsin. Eight more are still undecided yet appear to be following suit: Alabama, Georgia, Indiana, Mississippi, Missouri, Nevada, Texas and Virginia. Yet Brian Beutler reports today that these very states have some of the country’s highest uninsured rates and would stand to see the biggest benefits. Florida ties with Nevada and New Mexico in second to last place in the country at 21 percent uninsured, and South Carolina and Louisiana come in with 19 and 17 percent rates, respectively.
An indignant refusal of federal money in these states may sound familiar. Alabama, Louisiana, Mississippi, South Carolina and Texas were among the handful of states to say they would reject federal stimulus money way back in early 2009. The argument was similar back then: as with the Medicaid expansion money, the states were expected to change some policies to protect more of their residents from economic harm. In the case of the stimulus money, they had to expand unemployment benefits to more people. That’s what made GOP governors too cranky to accept the funds. Eventually all fifty accepted federal funds, although some still turned away the money meant to increase those unemployment benefits. Meanwhile, the last holdout, South Carolina, had the nation’s second-highest unemployment rate at the time that it was contemplating rejecting the funds on ideological grounds.
But other federal money was later rejected outright. After President Obama’s 2010 State of the Union, he called for building a high-speed rail network and pledged $8 billion in stimulus money for rail projects in various states. Yet four Republican governors—New Jersey’s Christie, Wisconsin’s Walker, Ohio’s Kasich and Florida’s Scott—refused to take money for the projects. They would have created tens of thousands of jobs in each state—an estimated 16,000 in Ohio, 10,000 in Wisconsin and 10,000 in Florida.
Meanwhile, as research my colleague Mike Konczal and I conducted showed, ultraconservative Republican governors across the country have been enacting policies that hurt their economies, and therefore the entire economy, in other ways. In the midst of a massive jobs crisis, the eleven states that flipped red after the 2010 midterms and Texas accounted for 70 percent of public sector job losses last year, either laying off or pushing these workers out through attrition. The rest of the states lost only an average of .5 percent of their government workforces. Without these massive waves of job losses, our unemployment rate would likely be closer to 7 percent.
What ties all of these conservative state-level actions together? An adherence to ideology over what’s best for the economy—even their own state economies. The belief that government spending should be shrunk at all costs has steamrolled over policies that shouldn’t be about party affiliation. Taking federal money for much-needed updates to our infrastructure that would also create thousands of jobs is clearly the right choice. Throwing government workers out of their jobs at a time of sky-high unemployment is clearly the wrong choice. And now these conservative states are threatening to keep millions of Americans out of health insurance policies because they worry about higher state spending in the long run. This despite the fact that their residents and their budgets stand to see huge benefits now. The Republican Party’s abhorrence of government is driving bad economic decision-making—and that’s hurting all of us.
By: Bryce Covert, The Nation, July 5, 2012
“It’s A Tax! It’s A Penalty!”: It’s A Stupid Argument Over Semantics
The press assumes people are stupid, thereby making them no less stupid.
Since not much campaign news happens over the July 4th holiday, Mitt Romney took the opportunity to change his campaign’s tune on whether the penalty in the Affordable Care Act for those who can afford health insurance but refuse to get it is a “tax.”
To review, the Supreme Court said the government has the authority under its taxing power to penalize those who refuse to get insurance, leading Republicans to cry, “Tax! Tax! Tax!” with all of their usual policy nuance and rhetorical subtlety. The only problem this poses for Romney is that calling it a tax means that Romney imposed a tax with his health-care plan in Massachusetts, which means admitting that Romney sinned against the tax gods. First his spokesman came out and said that no, it’s really just a penalty, but then Romney came out and said, well, if the Supreme Court said it’s a tax then it’s a tax, but it wasn’t a tax when I did it, because the Supreme Court didn’t call it that.
What does all this arguing over semantics tell us? It tells us that the press and public are both complicit in creating the hurricane of stupidity into which all presidential campaigns devolve.
As for the press, they could treat this as the inconsequential semantic quibble it is. The fact is it doesn’t matter whether you call it a “tax,” a “penalty,” a “freedom fee,” or a “Lenin levy.” It’s the same thing. And for the record, according to the Urban Institute, only 2 percent of Americans will be subject to the tax/penalty. And the whole idea is that most of them will be motivated by the tax/penalty to get health insurance, so the whole idea of the tax/penalty is that almost no one will end up paying it.
But the press has treated the question of what Mitt Romney will call the fee as though it matters. Because of some weird nostalgia, I get the dead-tree editions of both The New York Times and The Washington Post, and when I went outside into the 150-degree heat to get my papers this morning (note to self: get time machine, go back and convince George Washington to put the nation’s capital in someplace cold and rainy like Seattle), I found that both front pages had stories about this virtually meaningless issue.
That’s partly because it’s a slow news day, but also because the press knows just how dumb the electorate is. If all voters were at least reasonably informed about things, stuff like this would matter far less. No one who actually knows even the first thing about the Affordable Care Act could possibly have their opinion altered by what we decide to call the penalty for not carrying insurance. No one who thinks it’s a necessary measure will say, “Gee, now that people are calling it a ‘tax,’ that really changes how I think about it.” And if you didn’t like it before, you won’t like it any more or less if we put a different name on it.
But the press operates on the unspoken assumption that meaningful numbers of people actually will react that way. In other words, they assume the public is stupid, and that assumption leads them to make decisions that do nothing to make the public any less stupid. At the same time, if the public knew more about the actual consequences of the election, reporters would certainly pick up on it and alter their coverage accordingly. But since only 55 percent of the public even knows what the result of the most important Supreme Court decision on a policy issue in decades even was, reporters will stick to assuming the public is clueless, and they’ll largely be right.
By: Paul Waldman, Contributing Editor, The American Prospect, July 5, 2012
“Facing The Reality Of Politics”: Will Red State Governors Opt Out Of Medicaid Expansion?
While supporters of Obamacare are cheering the Supreme Court’s ruling upholding the constitutionality of the law, the celebration may
be short-lived as focus begins to shift to the one key aspect of the Affordable Care Act that was limited by the decision – the expansion of Medicaid to bring health insurance to approximately 17 million previously uninsured Americans.
As originally drafted and passed into law, states that failed to adopt the expansion and offer Medicaid coverage to anyone earning less than 133 percent of the Federal Poverty Level risked losing 100 percent of the money they receive from the federal government towards their state run Medicaid programs, even as currently offered.
In the ruling handed down on Thursday, the court held that such a penalty was unconstitutional and that the federal government is not permitted to punish the states in such a manner, leaving it to the states to decide if they want to stand pat with the Medicaid programs they currently operate or accept the expansion —and the federal largesse that comes with it.
Under the law, the federal government will pick up 100 percent of the cost of expansion for three years, 95 percent for the two years that follow and 90 percent of the costs thereafter. The expansion will allow the states to provide the benefit to many more low income Americans without taxing their state budgets at all for three years and then only slightly in the years that follow.
Currently, the federal government picks up the tab for about 55 percent of the costs of a state Medicaid program.
Those governors who are strong objectors to Obamacare will, no doubt, feel a strong ideological urge to reject the expansion and leave things as they are. But is that really going to fly? After all, conscientious objection to Obamacare is one thing but the reality of politics is something else entirely.
So far, there have only been angry ‘rumblings’ from Republican governors like Sam Brownback of Kansas and Bobby Jindal of Louisiana who say they will continue their objection to the ACA by refusing to begin organizing a healthcare exchange in their respective states and wait for the outcome of the November election. Other governors, such as Texas’ Rick Perry, who has refused federal money in the past, are staying a bit quiet on the subject, saying only that they will look into the matter and make a decision at a later time.
While it is to be expected that GOP governors—particularly those who refused to implement the requirements of Obamacare until they heard from the Supreme Court—would engage in a bit of sabre rattling, we can expect few, if any, to be foolish enough to pass up the opportunity to expand their Medicaid programs when Washington is offering such an exception deal for them to do so.
As National Journal’s Ron Brownstein points out, the 26 states that sued to block the Medicaid expansion contain over half of the nation’s unemployed and an even greater percentage of the nation’s uninsured population. Texas—one of the plaintiff states in the healthcare lawsuit—alone accounts for slightly over 6 million of the uninsured, 2 million of whom would gain coverage under the Medicaid expansion.
Additionally, because the federal government picks up virtually all of the costs attached to covering more people through expanded Medicaid, the program represents a massive transfer of money to those red states that tend to have less generous Medicaid programs already in existence. As a result, a state like Texas, with a rather sparse program, is going to get an enormous sum of federal cash where Massachusetts, which already has a generous program, will get very little in federal funding.
Are these red state governors really going to sit by and watch the taxes their citizens pay to the federal government flow to the benefit of their neighboring states as the recalcitrant governors allow their own residents to miss the benefit of that money?
I don’t think so. Ideological opposition is one thing—denying access to health care to voters who could certainly use it when, to do so, would cost the state a relatively tiny amount of money, is just dumb politics.
The pressure will not come only from the voters.
If there is one lobby that is highly supportive of the Medicaid expansion it is the nation’s hospitals. For them, covering millions of low income Americans means dramatically less free medical services being doled out to people who cannot pay. With more of those who have depended on free emergency room care as their sole means of getting health care now eligible to have Medicaid coverage, hospital balance sheets can be expected to look a lot better in the coming years.
Expect lots of huffing and puffing on this topic in the coming days.
Expect GOP governors to continue pressing the case that a Romney victory means saving their states from the further economic distress that these politicians will claim to be the fate of expanded Medicaid.
But remember that this Medicaid expansion is the bargain of the century for each and every state in the union that does not already offer generous Medicaid programs—especially the red states—and that beneath the inevitable bluster, there isn’t a Republican or Democratic governor in the country who doesn’t understand that passing up a sweet deal like this will bring unhappy political results.
My prediction?
Medicaid expansion, as written in the Affordable Care Act, will take place in every single state in the nation, without exception.
By: Rick Ungar, Contributor, Forbes, June 30. 2012
“A Deal Too Good To Pass”: Why It’s Still In States’ Interests To Expand Medicaid
For supporters of the Affordable Care Act, it was hard to hear—over the cheering—anything besides the fact that the Supreme Court today kept the law almost entirely intact. But the Court did make a slight change to a crucial part of the ACA: Medicaid expansion. Under the law, by 2014, states are supposed to extend their Medicaid programs to cover people under 65 with incomes up to 133 percent of the federal poverty line. An analysis from the Center on Budget and Policy Priorities shows that means 17 million more people would have access to health care over the next 10 years. Before today, it looked like states didn’t have much choice in the matter. If they didn’t make the necessary expansion, they would lose all federal Medicaid dollars. In their brief, states argued that wasn’t much of a choice—federal Medicaid grants simply constitute too much money to lose. Back in February, Timothy Jost had a very helpful explanation of the states’ argument on this point in Health Affairs. As he wrote:
A state that refuses to expand its Medicaid program will under the ACA lose all Medicaid funding. Medicaid is the single largest source of federal funding to the states, accounting for 40 percent of all federal money dispersed to the states. States do not really have a choice to walk away from federal Medicaid funding, they argue. The states do not, therefore, really have a choice to refuse to participate in the Medicaid expansions. This coercion, the states contend, is unconstitutional.
According to SCOTUS Blog, the Supreme Court basically agreed: The feds can’t cut all Medicaid funding for states that refuse to expand. Now, states that choose not to extend benefits will forgo the money they would have received for doing so—but they won’t lose the money they’re already getting for current Medicaid services. But while states can now avoid the extension more easily, there’s still no practical reason to go down that path. “It’s still an incredibly good deal for the states,” says Edwin Park, vice president for health policy at the Center on Budget and Policy Priorities. Already the federal government pays, on average, 57 percent of Medicaid costs. But the ACA gives states much higher levels of funding when it comes to extending benefits. As a CBPP report in March noted, the feds will pay a whopping 93 percent of the costs of expansion over the next nine years:
Specifically, the federal government will assume 100 percent of the Medicaid costs of covering newly eligible individuals for the first three years that the expansion is in effect (2014-2016). Federal support will then phase down slightly over the following several years, and by 2020 (and for all subsequent years), the federal government will pay 90 percent of the costs of covering these individuals. According to CBO, between 2014 and 2022, the federal government will pay $931 billion of the cost of the Medicaid expansion, while states will pay roughly $73 billion, or 7 percent.
That means, all in all, states will only see a 2.8 percent increase in what they would have spent on Medicaid if there was no health-care bill. The expansion is also in the interests of health-care providers. The ACA was meant to vastly decrease the amount of health care hospitals have to provide with little or no compensation. It was for that reason, Park says, that providers agreed to reductions in Medicaid and Medicare rates. But without the Medicaid expansion, working adults who are too poor to afford health care but not poor enough to qualify for Medicaid could still be left without coverage in some states. “Now there’s going to be a donut hole in the middle if the state doesn’t proceed,” says Park. That’s bad business for hospitals. There’s another factor that states will have to consider: the savings they will realize as populations begin to get healthier. According to the CBPP report, there will be 33 million fewer uninsured people by 2022. Uninsured people are expensive; they often rely on expensive emergency-room care, rather than getting preventative and early treatment which is ultimately cheaper and more effective. The Urban Institute reports that in 2008, $10.6 billion in state and local dollars went toward hospital care for the uninsured—20 percent of the total costs. The percentage is even higher when it comes to mental-health services. With the expansion, those costs will likely go down dramatically. States may have the option now to forgo the Medicaid expansion. But the results won’t be pretty.
By: Abby Rapoport, The American Prospect, June 28, 2012
“A Lie Designed To Mislead”: Don’t Buy The GOP Narrative That Obamacare Is A Tax On Middle Class
Majority Leader Mitch McConnell wasted no time getting to the floor of the Senate to argue
that today’s Supreme Court ruling clarifies that Obamacare is nothing more than a tax on the middle class which—according to McConnell—is precisely what the Administration and Congressional Democrats promised it was not.
Leader McConnell, and his fellow Republicans, should read the Majority ruling before they embarrasses themselves further.
In the opening paragraphs of Chief Justice Roberts’ opinion, he clarifies that the law specifically does not involve a tax. If it did, Roberts clarifies, the Court would have had no choice but to reject the case for lack of jurisdiction as a tax case cannot be brought until someone is actually forced to pay the tax. This is, as we know, not the case.
The fact that the Court found that the mandate was constitutional under the taxing authority granted Congress by the Constitution is an entirely different matter. This finding does not reduce the individual mandate to the status of a tax—it merely says that as the penalty for failing to purchase health insurance will fall to the Internal Revenue Service for collection was something Congress could provide for under it’s Constitutional authority.
While I grant you that this gets a bit into the weeds, the effort that is being made by the GOP to use the Court’s basis for decision as a weapon fails on its face and is completely disingenuous. There is a difference between the levying of a tax and the Court finding Constitutional authority for Congress under the taxing authority. But then, anything that is more complicated than your basic “See Spot Run” first grade reading primer has always been fair game and fodder for the GOP message machine which would prefer to base their arguments on misstatements than educating and enlightening its base.
By: Rick Ungar, Contributor, Forbes, June 28, 2012
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