Medicaid-ing red states

In last week’s midterm elections, three more red states voted to expand Medicaid, demonstrating that Americans are making their peace with meager healthcare.

When President Barack Obama signed the Affordable Care Act in 2010, Republicans protested the cost and the retreat from free market principles. But as years passed and no viable alternatives appeared, more became willing to accept federal funding that will swell the ranks of Medicaid recipients.

“Is that a good solution? No, but it’s the path of least resistance,” American Enterprise Institute (AEI) scholar Tom Miller told me.

Idaho, Utah, and Nebraska passed ballot initiatives last week to expand Medicaid coverage to 363,000 low-income Americans. These states must enact the changes in the next 90 days.

In Idaho and Nebraska, the measures did not specify how to finance the increased coverage. Nebraska Gov. Pete Ricketts said he would respect the people’s wishes but would resist increasing taxes to fund the expansion. In 2017, Maine residents voted in favor of expanding Medicaid, but the Republican Gov. Paul LePage refused to comply. But Democratic Gov.-elect Janet Mills has vowed to follow through with Medicaid expansion as soon as she takes office in early January.

Tony Evers and Laura Kelly, the Democratic governors-elect of Wisconsin and Kansas, respectively, also campaigned on the promise of expanding Medicaid. Both face opposition from Republican legislatures, but the momentum from passed ballot measures in other states could buy them GOP cooperation.

The Affordable Care Act mandated that states allow more low-income Americans and people with disabilities to enroll in Medicaid, a program introduced in 1965 that supplies free or inexpensive healthcare to the needy. Initially, the federal government covers most of the cost, but gradually states assume more of the fiscal responsibility. Medicaid pays notoriously low reimbursements to doctors, patients face long waits to see medical providers that accept the insurance, and since 2003, the Government Accountability Office has designated it as a high-risk program for fraud, abuse, and waste.

In 2012, the Supreme Court upheld Obamacare but ruled that states could decide for themselves whether or not to expand Medicaid. In the years that followed, 33 states and the District of Columbia did just that, including Idaho, Utah, and Nebraska last week.

“It’s been five years since these decisions have been on the table,” Miller said. “Over time they’re not seeing alternatives for expanding insurance coverage, and the argument is being made, ‘All this money [could be] coming from outside your state. Why not take it?’”

A better solution, argued Ryan Streeter, AEI’s director of domestic policies, would be to apply welfare reform principles to Medicaid that help people move out of poverty.

Work requirements, health savings accounts, and using federal dollars to pay private insurance premiums are all possible solutions, Streeter wrote. But Congress has lacked the will to legislate those changes. After a dramatic debate over healthcare reform in 2017, the best change Congress could muster was to weaken Obamacare’s individual health insurance mandate as part of a tax reform bill.

“Congressional Republicans turned the debate over Medicaid into a technical discussion about per capita funding levels and block grants,” Streeter said. “They never articulated why these reforms would be beneficial for low-income people.”

For states, the federal dollars offered to expand Medicaid are becoming too tempting to resist. “Something paid by someone else is better,” Miller said.

Medicaid expansion funding will shrink eventually. Currently, the federal government funds just a little more than 90 percent of most states’ programs, and that will continue to drop. But Republicans resistance to Medicaid expansion is dropping faster.

Taxing the rich to house the poor

San Francisco voters last week approved a business tax increase on the city’s most profitable companies to swell budget resources for its homelessness crisis. The tax could bring in up to $300 million for the city each year, doubling the money currently budgeted for homelessness and a 30 percent bump in overall tax revenue.

At issue now is whether tax increases proposed at the grassroots level, like this one, require a two-thirds voter majority, as would be the case if city officials had proposed it. Since the measure, known as Proposition C, did not win a two-thirds majority, the City Attorney’s office has asked the Superior Court of California in San Francisco to weigh in.

Salesforce CEO Marc Benioff said he believes voters will fight any challenge to the initiative. His company forked over $5 million to support the tax campaign on top of his own personal $2 million gift. Twitter and Square CEO Jack Dorsey campaigned against the tax.

Support hinged on the view that big companies and their highly paid workers in the Bay Area are partly to blame for increasing poverty and homelessness. LinkedIn software engineer Evan Owski shamed himself for his salary and “privilege” in a video posted by KQED radio. Owski, who was wearing a Democratic Socialists of America T-shirt in the video, said rich tech people treat San Francisco like a “playground.”

San Francisco Mayor London Breed said she opposed Proposition C but “addressing the homelessness crisis on our streets is my top priority.” She said she first wanted to audit what the city is already spending on homelessness before generating more revenue.

The city’s own Office of Economic Analysis stated that the new tax would likely slow San Francisco’s job growth and cost the city $200 million to $240 million in gross domestic product annually.

San Francisco is the latest boomtown to blame and tax the rich to help the poor. Earlier this year, the Seattle City Council passed—and later, under pressure, repealed—a poll tax on companies grossing $20 million or more. —Rob Holmes

Struggling renters

Renters fare worse than homeowners when it comes to covering their basic needs, according to an Urban Institute study released this month. The study found half of all renters experienced at least one event during the past year that caused “material hardship,” compared to only one-third of homeowners. And since median renter income has risen by far less than median rents (5 percent vs. 61 percent, adjusted for inflation) between 1960 and 2016, purchasing a home is an even greater financial challenge for renters.

“Renters seem to be worse off” among the cost-burdened, said Corianne Scally, an Urban Institute senior research associate and co-author of the study. A quarter of renters said they would be hard-pressed to survive even a $400 emergency, while the same was true for 18 percent of owners. —R.H.