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Wednesday, November 13, 2019

Medicaid Expansion Coming to Wyoming


See I told you so. Medicaid Expansion passed the Revenue Committee and is now heading for the 2020 legislative session. The Committee motivates its case for Medicaid Expansion with, well, common-core math...

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Never bark at the Big Dog. The Big Dog is always right.

I have said, over and over again, that the Joint Revenue Committee in Wyoming will not give up on its efforts to pass every economically destructive bill they can get their hands on. If they can't do it the first time they try, they will try and try again. And again.

I said this about the corporate income tax. Many people doubted me. I was even told by a leading legislator - in an email - that "that ship has sailed", it is not coming back.

I predicted it would. It did. And now...

Lawmakers will again consider whether to clear the way for Wyoming to expand Medicaid after the Joint Revenue Committee approved a bill Tuesday that allows Gov. Mark Gordon to direct state agencies to move forward with expansion. The lawmakers on the committee voted 8 to 5 — with one excused absence — to move forward the bill. 
In a statement that can only be a tribute to common-core math, Committee Chairmen Cale Case, a Ph.D. economist, and Dan Zwonitzer, a graduate of Georgetown University, have defended Medicaid Expansion as a way to boost revenue for the state:
"When we think of significant things that could make up for the huge decline of coal, it's either a very large tax increase or something like Medicaid Expansion," said Zwonitzer, who chairs the House Revenue Committee.
Yes, he actually thinks that Medicaid Expansion is some kind revenue boost for the state government. He really believes that the state won't have to spend the money to get it. 
Sen. Cale Case, R-Lander, who chairs the Senate Revenue Committee, echoed Zwonitzer's point that Wyoming needs to look at other ways to boost its revenue streams. "This is a very serious long-term financial situation we need to deal with, and Wyoming does not have the tax structure to do that," said Case, who supports the bill.
I will not repeat my analysis of Medicaid Expansion, just reference my article about the failure of Expansion to benefit the Montana economy. I would also like to point out that Earth is not flat, and that if government spends $100 to get $90 in revenue, it has not improved its bottom line.

Montana is not the only state where Medicaid Expansion has been a debacle. In New Mexico, a state that has taken a bad fiscal beating thanks to its Medicaid Expansion, there are essentially as many non-retirees on Medicaid Expansion as there are on employer-based insurance. Before the Trump tax cuts and the economic growth that followed, Medicaid was actually en route to become the top choice for health care in the Enchantment State. 

There are about 50 percent more kids on Medicaid than under employer-based plans in New Mexico. 

Then, of course, there is Kentucky...
The Medicaid program that pays for almost one in four Kentuckians’ health insurance has an estimated $296 million budget shortfall over the next two years, state officials said Thursday. Adam Meier, the Secretary of the Cabinet for Health and Family Services, said ... the administration could eliminate Kentucky’s expanded Medicaid program, potentially taking away benefits from more than 482,000 people.
So first the state expanded Medicaid and promised to provide health insurance to a lot of people. Employers understandably drop insurance coverage and dump their employees into Medicaid; why should they pay for health benefits when their tax dollars already do that? Then, when the bill comes due, the state of Kentucky realizes that the program actually - gasp - cost them money. No matter what common-core math said, Medicaid Expansion was not a source of net revenue for the state.

When the state is faced with a bill it didn't realize was coming, they considered dropping the expanded part of Medicaid.

And the Kentucky article is actually a year old. This experience from the Bluegrass State was high and loud available to Senator Case, Representative Zwonitzer and the six others on the Revenue Committee here in Wyoming who voted in favor of Medicaid Expansion.

In my estimate of the costs of Medicaid Expansion in Wyoming I pointed to a worst-case scenario of more than $139 million. This is the extra bill that Wyoming taxpayers would have to pick up. Again, it is a worst-case scenario, but there are two reasons to take it seriously:

1. Medicaid Expansion has exceeded the worst-case scenarios in several other states, Kentucky and New Mexico being just two of them;
2. Our lawmakers do not even bother to present any scenarios or numbers on Medicaid Expansion - all they do is assume that they can pocket the federal funds as some kind of net addition to the state coffers.

It is now up to them to counter my scenario and present their own. Until they do, I will repeat my point: in the worst case, the state budget deficit in Wyoming could increase by more than $139 million thanks to Medicaid Expansion.

There is more to this, though. With up to 47,000 people in Wyoming becoming eligible for Medicaid Expansion, government is effectively destroying the remaining base for private health insurance in our state. Taxpayers already pay for the health insurance of approximately 212,000 people in Wyoming:

  • Medicare has 88,000 enrollees (who are not also covered by Medicaid);
  • Medicaid has 58,000 enrollees; and
  • There are 66,000 federal, state and local government employees in our state.

If we isolate the working-age population, plus their children, the share of the population on tax-paid insurance is almost 26 percent. With my scenario for Medicaid Expansion that share shoots north of 35 percent.

Employers who are not ERISA exempt - in other words offer one and the same plan for all employees in the country - will very likely dump their health insurance plans. First of all, many of them can barely afford them as it is today, thanks for the most part to Obamacare; secondly, there is no point in paying taxes for health insurance and then pay for health insurance on top of that. 

In other words, Medicaid Expansion is a perfect incentive for employers in Wyoming to dump insurance altogether.

This will inevitably send people out without coverage, who do not qualify for Medicaid Expansion. As I pointed to in my article on Medicaid Expansion in Montana, the number of uninsured people dropped for years - until the state expanded Medicaid.

Then, all of a sudden, the number of uninsured started rising again.

As I just explained, this is perfectly logical. Government creates incentives and disincentives, then, when the private sector responds, politicians react with surprise and confusion.

If the legislature passes Medicaid Expansion in 2020, and Governor Gordon signs it, we can safely predict that the tax hikes we are now faced with are only going to be the appetizer. The corporate income tax, which the Revenue Committee passed at its last meeting, is now joined by a bill allowing counties to make permanent their 1-percent optional sales tax:
Counties across Wyoming could soon vote to make their optional 1-percent sales tax — also known as the “fifth penny“ — a permanent part of their budgets, offering some budgetary certainty for local governments seeking reliable revenue streams in the face of another financial downturn. The bill passed Monday by the Joint Committee on Revenue marks a compromise over a previous version of the bill that would have made the fifth penny permanent for all county governments statewide — an option that would have taken all power away from voters.
Let me predict: in counties where voters reject making this tax permanent, the county will put it on the ballot every year until voters realize how to vote on it.

The massive increase in property taxes, from 9.5 percent to 11.5 percent in taxable value, did not pass the Committee. This time. Some people have sighed with relief over it, but don't fall for Revenue's tactics: they are getting one big item passed at each one of their meetings. Last meeting they got the income tax; this meeting they got Medicaid Expansion. The property tax will be back as the big item on their agenda next time they meet.

And don't forget the other items that have been on their agenda: the sales tax on services, the sales tax on food, the nine-milling increase in the property tax... Watch for all of them to make a comeback.

Those who doubt me should go back and look at Medicaid Expansion and the corporate income tax. In the past, they have also died in committees and legislative chambers. People have sighed with relief and said "that bill is dead, it is not coming back". 

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