I’ve written about the (purely coincidental, I’m sure) scare tactics coming from all fronts of the Beebe administration about the dire future of Arkansas’s state budget if the ‘private’ option funding is not re-authorized in the fiscal session. It is becoming increasingly difficult to imagine a scenario in which the program continues, at least in its current form — and the prospect of the end of PO is terrible news, according to state bureaucrats. They say ending the PO could force prison beds to close, state employees to be laid off, and hospitals to shut down. In reality, these claims are essentially what they sound like: hysteria disguised as responsible governance — or, as Dina Tyler of DCC told me, “hypothetical discussions.” Let’s take a look behind the curtain and get a realistic picture of what might happen if the PO is not funded.
Governor Beebe is repeatedly claiming that eliminating the “private” option will create an “$89 million hole” in the Fiscal Year 2015 budget. No one that I’ve talked to — including legislators and health policy nerds — has a clear understanding of where this figure comes from. We can all see where the original Optumas study says the “savings” in Fiscal Year 2015 would be roughly $62 million (page 2 of this report) — even though I think the uncompensated care “savings” are mostly imaginary — but the $89 million? Sort of a mystery. Nonetheless, let’s give the Gov the benefit of the doubt and assume he’s right: taking federal funding for Medicaid expansion will “save” the state $89 million this year.
(Most of us are also smart enough to realize that $89 million from the federal government isn’t free at all — it’s money that’s ultimately coming out of our pockets and the bank accounts of our grandchildren. But this should be so obvious to our readers — if not to Governor Beebe — that we can defer it for another day.)
Beebe’s argument is that, if the PO is ended, these “savings” will vanish, resulting in cuts of $89 million. But let’s put this figure in perspective. $89 million is:
0.33% of the state’s funded budget in this fiscal year ($26.89 billion)
1.6% of the overall Medicaid budget this fiscal year ($5.27 billion, according to DHS)
Just 71% of the taxpayer funds that the legislature gave to Big River Steel
Roughly half the amount of slush-fund money that was awarded to the governor and the legislature as “general improvement” funds ($170 million)
Oh, the horror! Before you know it, there will be rioting in the streets, dogs and cats sleeping together, and a full-scale adoption of cannibalism! The sun will change its orbit; the zombie apocalypse will ensue; and all because of those meddling conservatives!
But seriously: considering the overall budget grew by roughly 10% this fiscal year, does any rational person think that a “cut” that amounts to .33% of the total budget is going to have a catastrophic impact? (Key word: rational.)
And, by the way, I’m yet to see any evidence of any actual cuts that would have to be made. Instead, all I’ve heard is talk of reductions in spending increases. These are, quite obviously, not the same things, but that often does not stop bureaucrats from resorting to tired scare tactics.
As I wrote last week, if I were a state bureaucrat, I would be much more worried about what happens to my budget in Fiscal Year 2017 when federal funding for the new Medicaid population begins to drop below 100%. That’s when the real pain will begin, across the board. For some reason, no one wants to talk about that.