Wall Street Journal Op-ed: Obamacare’s baby elephant

I don’t like posting a Wall Street Journal op-ed more than once a week, let alone two days in a row. Seeing as how Florida’s Governor Scott announced he is joining Ohio Governor Kasich’s reversal on establishing Medicaid exchanges and I am relegated to chicken soup and hot tea for the day; I thought I would share their review and outlook of the situation.

On Wednesday Florida Republican Rick Scott became the latest GOP Governor to volunteer to shoulder some responsibility for ObamaCare, which has liberal sages gloating about a resistance-is-futile shift in the GOP. The media don’t want to discuss the substance, only the politics, so allow us to report how the flippers are justifying their flips.

• Take the money or run. The Governors now expanding Medicaid are candid about their flight from their own fiscal principles: They want to take political credit for taking “free” money from Uncle Sugar and for appeasing the state hospitals lobbying for federal cash. The Health and Human Services Department will pay 100% of the cost of new beneficiaries, later 90%.

Indiana Governor Mike Pence spoke for the 13 Governors so far who reject this seeming windfall when he called it “the classic gift of a baby elephant,” with the feds promising to buy all the hay for only the first few years. So Governors like Mr. Scott and Ohio’s John Kasich are trying to inoculate themselves on the right by creating triggers or “sunsets” that would automatically rescind their participation in new Medicaid if—make that when—Washington reneges on funding.

They’re only conning themselves. HHS can simply impose a blanket “maintenance of effort” rule that prohibits opting out—or any other change.

The cost-shift trick. Then again, why would states want to drop out, when they claim that expanding Medicaid will lower health-care costs for businesses and individuals? So-called uncompensated care “drives up the cost of everybody’s health insurance,” Mr. Kasich said at a recent press conference. “When they visit these emergency rooms and cannot pay, we pay for them.”

Hmmm. This is also the justification President Obama used to impose an individual mandate to buy coverage or else pay a penalty. Does Mr. Kasich now support that too?

And do these Republicans really think that private costs will fall by expanding a government program? Unlikely, since the federal statistics put the total amount of uncompensated care due to the uninsured at $12.8 billion—or less than 0.5% of health-care spending. The Ohio Hospital Association estimates its members provide $3.2 billion in uncompensated care—but $1.3 billion is Medicaid losses, more than bad debt or charity care. Ohio price controls are so onerous that hospitals lose 17 cents for every dollar they spend treating Medicaid patients.

• False flexibility. Mr. Kasich claims the feds are granting him the running room to reform Medicaid, on the basis of a late-night phone call from President Obama’s consigliere. “I want to thank Valerie Jarrett today for being willing to work with us,” he said. “Now I want to be clear to you: We don’t know what the details of this are going to be yet. We don’t know what the cost is going to be.”

When Mr. Kasich is done counting his magic beans, he might look north to Wisconsin for a better Medicaid role model. Last week Scott Walker released an innovative reform that rejects the HHS bribe and will also test the department’s putative “flexibility.”

Under former Democratic Governor Jim Doyle, Wisconsin greatly expanded its BadgerCare Medicaid program, opening it to everyone earning up to two times the poverty line. Enrollment climbed 73% between 2003 and 2012, state spending increased 99% and proved so expensive that Mr. Doyle was forced to cap enrollment and put eligible people on a wait list.

Mr. Walker wants to roll back Medicaid to the poverty line and use the savings to open up new BadgerCare slots so the truly poor can use the safety-net program intended for them. (Imagine that.) Wisconsin would forgo the 100% federal magic money, because ObamaCare mandates that states expand Medicaid to 138% of poverty and also in this case end the waiting list, which would grow the rolls by another 32%.

The Walker plan would dump a lot of people onto ObamaCare’s subsidized insurance “exchanges,” though that would happen anyway. At least he would reduce one entitlement and insulate the Wisconsin budget from Washington uncertainty.

• The counsel of despair. Some Republicans are folding apparently because trying to stop ObamaCare is too hard. Though he “never liked the Affordable Care Act,” said Governor Brian Sandoval, “I am forced to accept it as today’s reality and I have decided to expand Nevada’s Medicaid coverage.” Now there’s a statement of vaulting political ambition.

The reality is that ObamaCare remains deeply unpopular with the public and it will only get worse next year when individuals and small businesses are forced to buy coverage that is 20% or 30% more expensive than what they have. Some younger people will see premium shocks as high as 150% or 200%.

HHS will manage the exchanges in 32 states starting in October but has released only 19 pages of regulatory guidance. ObamaCare is so convoluted, and HHS so incompetent, that the entitlement may explode on the launchpad. Why any Governor would climb on to this ship is a political mystery, but then they have their bad reasons.


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