Governors across the country have begun screaming at Congress, “Hold on a minute. Time out on this health care reform thing.”
Truth has begun to set in, that as a result of federal health care reform, every state faces a plethora of unfunded mandates that will drown them in dilemmas and red ink. Once it passes (or, if) the hidden costs of federal health reform will immediately become clearer. As a result, states and local governments will increasingly find it impossible to fund their most vital services – education, police, fire, water, energy, roads and bridges.
Governors have warned for years that the cost of Medicaid threatens their state budgets. They had hoped Congress would fix the problem, not exacerbate it. Congress, instead, has been showing it is deaf to governors and to citizens.
But the increased billions to be spent on Medicaid is just the tip of the iceberg.
This is a partial list of the increased cost and loss of state revenue faced by states, and their residents. I am certain you can add many thoughts to these.
1. By raising Medicaid eligibility to 133 percent of the Federal Poverty Level, millions more Americans will qualify for the program. The federal government will pay this cost for a period of time, but eventually, states will be forced to spend more on Medicaid, not less. Nebraska Gov. Dave Heineman says this will cost his state $2.5 billion. Other governors are making the same case.
2. Every current state-level health care and insurance statute, rule, and regulation will have to undergo scrutiny to ensure it complies with new federal law. When changes are required, they will be subject to statutorily-required bureaucratic and legislative review at a cost that the best economists could never predict. This effort will take bureaucrats away from their assigned tasks, meaning current programs will suffer; or states will hire more bureaucrats to fulfill their mission.
3. While everything is under review and being rewritten, state programs will be in limbo. Federal law will require states to conform to new mandates for which there will be no guidelines. States will spin their bureaucratic wheels while trying to conform to vapor regulations, and face the potential of lost federal revenue for non-compliance.
4. Today, even before adding millions more to the Medicaid roles, 40 percent of practicing physicians refuse to accept Medicaid patients. This results from low Medicaid reimbursements (and yet, even at this, Medicaid bleeds money from states’ Medicaid program cost). So much for access to health care. States will be forced to step in, but no one knows how or the cost of solving this unintended result.
5. Attorneys, accountants, and benefit consultants will make a fortune as they advise employers on the overwhelming changes – and penalties – associated with new federal law. Employers will be forced to divert funds to compliance, even if they choose to drop the health insurance benefit. (Depending on which version of reform that might pass, employers could be faced with new mandated insurance benefit costs.) Productive capital, that otherwise would be invested in expansion and increased employment, would be spent on compliance. This will cost state and federal treasuries billions of dollars in lost tax revenue.
6. Individuals, faced with the mandate to purchase insurance, will be forced to divert income from self-initiated purchases to insurance premiums. The reduction in purchasing power will further depress the moribund economy, and ripple out to the economy’s edges. Some experts predict that individual health insurance premium cost will double in the next 10 years as a result of federal reform. That money must be diverted from other spending, savings, or debt reduction.
7. States would lose tax revenue, as the increased cost of health care would reduce business profits and individual net income. Sales and income tax revenues would plunge, as more money is diverted to federally-mandated health insurance cost.
8. The cost of apprehending and prosecuting violators of the insurance mandate would add billions to the IRS’ enforcement budget, as well as expanding the cost of federal law enforcement and federal courts. This will rob necessary programs of their revenues, and will drive taxes upward. Every dollar spent on taxes will be diverted from the productive economy.
Perhaps the most serious unknown cost of federal health care oversight is the loss of what we used to call the American Spirit. This is the idea that individuals are free to pursue their own destinies, with government kept as far-removed from daily lives as possible. The American Spirit celebrates life, rather than regulates it. The American Spirit is a spirit of individualism and even nonconformance, not communalism and compliance.
The hidden costs of federal health care reform are incalculable, not too mention incomprehensible. This is a bad idea that grows worse each day. Now that leftwing activists are realizing it, too, it’s time for a pause…a long pause.
