Nine Problems With Senator Holland's Latest Mailer

Senator Bruce Holland recently sent out a campaign mailer, defending his support of the Arkansas Obamacare “private” option. Here’s a look:
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Unfortunately, almost every claim in this mailer is so flimsy that it begs to be refuted. Here’s where Holland gets it wrong:
1. Obamacare “forces the expansion of a broken system.” This is wrong. In its ruling on Obamacare, the Supreme Court gave each state an opportunity to reject Medicaid expansion. Every other state in the South took that opportunity and rejected Obamacare’s massive expansion of Medicaid, a program designed to serve the truly needy. Arkansas, thanks in part to Senator Holland, failed to reject the expansion and passed on an opportunity to enact real Medicaid reform.
2. Obamacare “raises taxes by $38 million on small businesses.” Wrong. This talking point has long been paraded by the state Chamber of Commerce and other advocates of crony capitalism, but the fact is that the employer mandate that the estimate is based on — the source of these $38 million taxes — has never gone into effect. So Holland’s argument amounts to this: he saved Arkansans from taxes that don’t exist by spending $20 billion over the next ten years and creating a new entitlement class! Not a particularly strong argument.
3. The private option Medicaid reforms “push back against Washington, DC and President Obama.” Nope. First of all, the “private” option is not Medicaid reform at all. It is a program that creates new entitlements for 250,000 Arkansans. The PO left the existing Medicaid program virtually untouched, and the terms of the PO expansion were agreed upon by Kathleen Sebelius, President Obama, and the powers that be in Washington, DC. Hillary Clinton even referred to Arkansas Obamacare as “a brilliant approach.” The PO doesn’t push back against DC at all. It gives DC exactly what DC wants — a foothold for Obamacare in the South.
4. The private option “stops the taxes on businesses that hurt job growth.” Wrong again. The PO doesn’t stop any taxes. Instead, it creates a huge incentive for private businesses to ditch their health plans and/or not provide health plans, so as to throw more Arkansans into taxpayer-funded health care plans. Holland’s claim here is yet another reference to the mandates that were never enacted – and it conveniently evades the discussion of increased expenses to taxpayers that are projected to be $2 billion annually. Guess where that funding will come from? That’s right: taxes, on businesses and Arkansans.
5. The private option “helps keep our local hospitals open and under our control.” Not really, no. AAI research has shown that nonprofit hospitals are, on average, making money without the PO, and that expanding Medicaid — through the PO or any other means — will worsen the financial outlook for hospitals.
6. The private option “rewards work and economic mobility.” Still wrong. Jonathan Ingram covered this topic extensively in his paper on the empty promises of the PO. The fact is that, like most entitlement programs, the PO creates a powerful disincentive to work:

Instead of the sliding scale of cost-sharing its architects envisioned, there are two major tax cliffs within the Private Option. The first cliff occurs when an individual moves from just below the poverty line to just above it. An individual below the poverty line pays no premiums and no cost-sharing in the Private Option. But if the same individual earns one dollar more, he or she is suddenly subject to cost-sharing requirements that can add up to $604 per year.

That’s a disincentive to work if I’ve ever seen one.
7. The private option “saves the state money by decreasing traditional Medicaid rolls.” Partly incorrect, partly possibly correct in some technical and hypothetical sense at some point in the future. For now, wrong. The PO will not save the state money in the long term. In fact, by 2021, the state’s own estimates show that any “savings” from the PO will be gone and will begin to cost the state money, if not sooner, due to the explosion in enrollments and faulty assumptions in the state’s original projections. And of course the program is currently costing federal taxpayers hundreds of millions.
As for the question of decreasing traditional Medicaid rolls: Holland’s use of the word “traditional” is quite clever and it could prove to be true at some point in the future, as the state plans to move some populations from “old Medicaid” to “new Medicaid.” But currently, old Medicaid is growing. In fact, the state projects that 10% of newly eligible individuals will be put in old Medicaid, not on “new,” prettier Medicaid. Regardless of where the enrollees ultimately go, the important thing for taxpayers to remember is (1) they’re still in Medicaid and (2) you’re still paying for it.
8. The PO “privatizes key Medicaid services and functions.” Wrong once more. The PO doesn’t affect existing “key Medicaid services and functions” at all. In fact, the PO expands government by creating a new entitlement for a new class of enrollees that provides Medicaid-like services while leaving old Medicaid virtually untouched. It is flatly incorrect to say that the PO privatizes anything about traditional Medicaid. Traditional Medicaid remains intact and untouched, while the legislature has created a new entitlement class.
9. Holland “sponsored the private option Medicaid reforms.” According to the legislative website, this is wrong too. I have no idea why Holland would even want to make this claim, given the unpopularity of this issue with GOP voters, but that’s a political decision that Holland is certainly free to make. However, after a look through Holland’s legislative profile from last session, I don’t see him listed as a sponsor or cosponsor on any policy bills that are even loosely related to Medicaid.
Call me crazy, but I think it’s important that lawmakers speak accurately about the Obamacare plan they’ve imposed on Arkansas taxpayers. It’s true: the “private” option did accomplish a lot of things. Senator Holland is right about that. Unfortunately, however, the consequences of those accomplishments are quite different than Holland claims.

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