February 5 2013
Jan Brewer, say it ain’t so.
The Arizona governor has recently flipped and signed up for the Medicaid expansion available under Obamacare.
Arizona was one of the states that claimed that the Medicaid mandate in Obamacare was unconstitutional, a contention upheld by the Supreme Court. In a letter to President Obama, Brewer called Obamacare "a vast new entitlement program that our country does not have the resources to support."
So Brewer’s embrace of Obamacare’s Medicaid expansion option comes as something of a surprise. What happened? According to the Wall Street Journal, Brewer’s switcheroo is indicative of “perverse ObamaCare incentives:”
The recent and spectacular flip-flop of Arizona Governor Jan Brewer is a case study in the political pressure and fiscal gimmicks designed to get states to succumb. It's also a study in the arcane and perverse ObamaCare incentives that are intended to gather ever more health-care spending under federal control.
For Brewer, the pressure was the cost of Arizona’s Medicaid program, which is well-run, according to the Journal, by the (low) standards of Medicaid but nevertheless unsustainable: one in every two births in Arizona is now paid for by Medicaid; two out of three days spent by elderly patients in nursing homes are now paid for by the Medicaid. Spending was $9 billion last year.
With her embrace of the Obamacare extension, Brewer will be able to send 67 percent of the bill for Arizona’s existing Medicaid patients to the feds. The feds will pay for almost all of the new Medicaid patients. Arizona will then be able to spend far less in 2014 and will indeed bank an extra $1.6 billion from Washington. The Journal explains how Arizona’s hat trick works:
How can the state conjure such money from nothing? The answer is that Ms. Brewer and Arizona hospitals have cooked up a spending scheme to rip off national taxpayers to avoid even the $154 million the state would at first pay. The hospital lobby first floated this scheme in 2011 "for the specific purpose of generating matching federal Medicaid funds."
Here's how it works: Arizona will tax hospitals and insurers for the $154 million. Then it will return $154 million to the health industry via more Medicaid business that will cover the cost of the tax and then some. The money needs to make a round trip from providers to the state and back to providers to game that 67% federal matching rate.
So Arizona takes (say) $3 from a hospital and then turns around and pays the $3 back, using one of the hospital's own dollars that Arizona converted to "revenue" plus two dollars courtesy of Washington for its 67% federal share of the $3 payment. Arizona can then use the hospital's remaining $2 of the original $3 to pay for another $6 of Medicaid expansion.
The Journal notes that the “subsidy honeypot” won’t go on indefinitely, and then states will be left with huge bills. Brewer undoubtedly knows this, but the health industry is a powerful lobby and they are greedy for the federal money. It’s going to take a while for this system to come tumbling down, but when it does, look out. Just noticed that Ohio Governor John Kasich has also caved. It is really hard to resist the blandishments of big government.
Meanwhile, the Obama administration has attempted to pacify religious groups by offering yet another phony “compromise” regarding its contraception mandate. The “compromise” only pretends to provide relief for religiously-based employers and gives nothing to secular employers who don’t want to violate their consciences for religious reasons.