Guest writer

Toss private option

Law, reasoning behind it flawed

With legislators poised to defund the Arkansas “private option,” it seems Obamacare proponents are pulling out all of the stops to save a horrendously flawed law.

Last year, the Arkansas Legislature passed a law popularly known as the private option-essentially an expansion of Medicaid eligibility, under the auspices of Obamacare, to any Arkansan under 65 years old who is at or below 138 percent of the federal poverty level.

This year, the funding for the private option is up for a vote, and despite the disastrous Obamacare rollout, spending interests are pulling out all of the stops to protect their sacred cow.

By now, every legislator and political observer in Little Rock is aware of the Arkansas State Chamber of Commerce’s study-prepared by tax-prep company Jackson Hewitt-detailing how a defunding of the private option would amount to a tax increase on businesses.

However, the chamber-Jackson Hewitt study is little more than a flawed exercise in fearmongering.

The crux of the study’s argument is that a vote to defund the private option is a vote for a $27 million to $40 million tax increase on Arkansas businesses. There is one glaring problem with this line of logic-it is patently false.

The study assumes that affected employers will not provide insurance coverage. It makes no argument as to why this is a better assumption than, say, assuming 100 percent of employers will provide coverage. The study is based off an arbitrary premise that businesses that employ workers who fall into the Medicaid-coverage gap will refuse to cover those employees, opting instead to pay the federal tax penalty.

The Arkansas State Chamber of Commerce and Jackson Hewitt must also believe that legislators can be taken for fools. The study assumes the implementation of the employer mandate in 2015. This is simply naïve. President Barack Obama has already delayed the employer mandate once, and now the administration has delayed the mandate for businesses under 100 employees until 2016.

Even if we were to take all of the assumptions of the study as fact-something the chamber apparently wants us to do-the federal tax penalty would only affect 20 percent of Arkansas businesses (50 full-time or full-time-equivalent employees). By a butchered definition, it is a federal tax on big business, a tax supported by both U.S. Sen. Mark Pryor and gubernatorial candidate Mike Ross.

The Arkansas State Chamber of Commerce can peddle the misnomer that the opponents of the private option are supporting a tax increase, but in reality, it is the chamber’s stance that sets up a future tax rise. Congressman Paul Ryan, the House Budget Committee chairman, has noted, “The fastest thing that’s going to go when we’re cutting spending in Washington is a 100 or 90 percent match rate for Medicaid. There’s no way. It doesn’t matter if Republicans are running Congress or Democrats are running Congress. There’s no way we’re going to keep those match rates like that.”

That is a dire warning from Congressman Ryan, especially for Arkansas.

The cost of the private option, according to the Arkansas Department of Human Services and Optumas Consulting, is set to balloon after 2017 and continue to increase exponentially. The program, estimated to cost just over $100 million in 2017, will reach an estimated cost of nearly $400 million by 2023.

If the 90/10 federal match rate is cut back, legislators in Arkansas will either have to make drastic cuts to other state programs, cut the private option or, more likely, raise taxes on Arkansas taxpayers-possibly including many businesses who are members of the Arkansas State Chamber of Commerce.

For a prosperous future, Arkansas needs to become a fiscally sound state. The private option only ensures the opposite.

Legislators-especially conservative lawmakers who in a puzzling move have come to defend something that only reinforces the disaster that is Obamacare-should ignore an arbitrary and flawed study and do the right thing: Defund the private option. -



Will Upton is a state affairs manager at Americans for Tax Reform.

Editorial, Pages 19 on 02/15/2014