Terry Corbell, The Biz Coach
By Terry Corbell
Business Consultant

Taxes – What Should Washington State Do about Medicaid?

 

Updated Feb. 27, 2014

 

ObamaCare has enlarged Medicaid programs across the country. What does this mean for Washington state?

Published reports indicate that as many 500,000 Washington residents would be eligible for Medicaid. So far, 85 percent of the people inquiring about ObamaCare in Washington are getting Medicaid.

Are you sitting down? That would be in addition to the 1.2 million already receiving Medicaid among just 6.82 million Washingtonians. Enrollment has skyrocketed since the early 1990s – at a growth rate that’s 50 percent faster than the population.

Under ObamaCare, adults who make less than 138 percent of the federal poverty level would qualify. But you might recall that the U.S. Supreme Court ruled that individual states can’t be forced to expand their Medicaid programs.

What’s helping to fuel talk about Medicaid expansion in Washington is the supposed federal funding for the first three years, but would then change. It would drop from 100 to 90 percent.

Gov. Inslee

As expected, liberal Gov. Inslee adamantly supported an expansion. He confirmed his support at a gathering of healthcare providers, insurance companies, and policy analysts. But he acknowledges the high cost.

“Governors in the next several years are going to succeed or fail, largely dependent on their ability to be successful in advancing healthcare reform,” he asserted. “And the reason is, is that these budgets are going to be extreme pressure and that their ability to solve this mystery of health care reform in a way that’s cost effective and improves health is absolutely pivotal to the success of any governor in any state.”

Originally, Medicaid was launched in 1965 to help poverty-stricken families.  As you might expect with all federal and state programs, Medicaid coverage been amended periodically to provide additional benefits such as for disabled and long-term care patients.

Ten percent of U.S. citizens received Medicaid benefits 37 years ago. In 2012, 20 percent of Americans were enrolled in Medicaid.

Unfair burden to business owners

Currently, costs are split evenly between federal and state taxpayers. So in Washington, mostly as a result of business and occupation taxes, this means business including mom-and-pops to medium-size business owners pay 100 percent of Medicaid costs.

At a cost of $6.2 billion annually, Medicaid is the second-highest Washington state expense – right behind education. As it is, Washington is one of the top 10 states in making cuts to higher education – a 22.4 percent cut from 2008 to 2013, according to the Grapevine Project at Illinois State University.

No one wants an unhealthy populace. But there are fiscal limitations.

Washington typically has a lot of red ink. Other states’ programs, including the Oregon Health Plan, have found it necessary to put a freeze on Medicaid enrollments.

So, what should Washington state do about Medicaid?

The state’s leading think tank, Washington Policy Center (WPC), provides an analysis in “Washington State Should Not Expand Its Medicaid Program,” by Roger Stark, an MD and WPC’s healthcare policy analyst at www.washingtonpolicy.org.

Dr. Stark points out state taxpayers will face more taxes.

“Even with the federal government paying 100 percent of the health care costs for three years, our state will still need to pay immediately for the administrative costs of the expansion,” the WPC analyst writes. “Then, when the 90-10 match occurs, state taxpayers have to pay $2.4 billion over the first 10 years.”

Underestimated ObamaCare costs

He makes an eye-opening assertion.

“Worse, the federal government has grossly underestimated the cost of ObamaCare,” writes Dr. Stark.  “If states are forced to pay a ‘blended’ rate close to the existing 50-50 match, the cost to Washington state taxpayers would jump to at least $12 billion over the first 10 years.”

Again, that would be in a addition to what business owners pay in federal taxes.

Dr. Stark argues that Medicaid expansion will prevent low-income workers from getting employer-paid health coverage.

“Employers with fewer than 50 workers will make a logical financial decision and drop employee coverage,” he explains. “Under ObamaCare’s individual mandate, these workers will then be forced into the expanded entitlement program against their will.”

He points out that the state’s already-high Medicaid costs will skyrocket if the program is expanded.

“…virtually every policymaker predicts a ‘coming out of the woodwork’ or ‘welcome mat’ effect, by which people who qualify but haven’t enrolled in the existing Medicaid program will do so,” Dr. Stark explains. “The Urban Institute estimates 545,000 Washington residents fall into this group. These people would only be eligible for the existing Medicaid plan and would add $14 billion in state taxpayer costs for the first 10 years.”

Questionable value

He also questions the value of Medicaid for patients.

“Except for very specific populations such as HIV/AIDS patients, there is no solid scientific evidence that Medicaid provides better health outcomes for patients than having no insurance at all,” he writes.

“Also, Medicaid pays providers on average only 40 percent of what private insurance pays,” he asserts. This shifts the financial burden to private insurance companies and reduces the number of providers financially able to see Medicaid patients. Each year access to health care for our existing Medicaid patients gets worse.”

After five decades, he believes that Medicaid has become a too “costly, inefficient, centrally planned government health insurance program” necessitating a complete overhaul.

“Simply adding hundreds of thousands more Washingtonians to Medicaid will not improve their health, but it will limit choices for those patients, and will be a huge burden on state taxpayers,” he concludes.

Agreed.

From the Coach’s Corner, see these related articles:

Health Expert Refutes ObamaCare Claims by Washington Insurance Commissioner — ObamaCare continues to fail in Washington state despite claims by the state’s insurance commissioner, Mike Kreidler. That’s the conclusion from an expert analyst – a doctor – at the authoritative think tank, the Washington Policy Center (WPC), www.washingtonpolicy.org.

Worry-Free Health Insurance Is Possible in Washington State — Feb. 19, 2014 –  The health-care nightmare of 290,000 uninsured residents might soon be over now that two bills have been introduced in the Washington State Legislature.

It’s not hard to meet expenses … they’re everywhere.

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Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.

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Seattle business consultant Terry Corbell provides high-performance management services and strategies.