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Editorial: Idaho should reconsider Medicaid expansion

Wed., Nov. 20, 2013

A broad-based business organization has made a compelling pro-commerce, low-tax argument for Idaho to accept the expansion of Medicaid under the Affordable Care Act. Now the state’s political leaders need to revisit a decision that hurt a variety of its own citizens.

Before getting into the case made by the Idaho Association of Commerce and Industry in a recent letter to Gov. Butch Otter, an explanation of how the state handles a great deal of indigent care is necessary, because it is unique. Local property tax dollars are sent to the state’s general fund, and money is sent back to local governments to cover bills in catastrophic health care cases. IACI says the system is inefficient and flawed.

Under federal reform, many of the people the state subsidizes would be shifted to Medicaid, which would relieve pressure on property taxes and expand care to an estimated 100,000 people. Plus, the feds would pick up the full cost for three years, with the share eventually dropping to 90 percent.

Last year, the state commissioned reports from the Leavitt Group and Milliman. Both consultants reported significant savings if the state took the federal deal. The governor’s commission overseeing the issue voted unanimously in favor of expansion. Milliman stated that over a 10-year span it would be the difference between spending $284 million and saving $6.5 million. The Idaho Hospital Association reported $407.4 million in savings. Plus, it would present an opportunity for property tax cuts.

Nonetheless, state legislators declined, so the business group is trying a different approach by touting an alternative method being tried in Arkansas. There, the Republican-controlled legislature also turned down expansion, saying only a “private option” would be acceptable. So the Democratic governor came up with a “premium support” solution that passed muster, and the feds gave it a green light.

In its letter to Otter, IACI suggested doing the same. Under this approach, low-income households would be given aid to purchase insurance in the marketplace exchange. Those subsidies would come from Medicaid expansion money. A potential advantage to this approach is that people could keep their provider if their income increases and they lose Medicaid coverage.

IACI also highlighted another expansion benefit. Businesses with 50 or more employees face a 2015 deadline for providing health care plans, or paying penalties. Some of that expense could be avoided if low-wage workers were eligible for expanded Medicaid, or a state’s version of it. In a state where 1 in 13 workers earns minimum wage, this could add up to significant savings for businesses.

The Arkansas alternative may offer elected leaders political cover while helping businesses, property owners and uninsured citizens. Being stubborn is too costly.