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Hoffman: Government health insurance will mean higher taxes for all Idahoans

Hoffman: Government health insurance will mean higher taxes for all Idahoans

Wayne Hoffman
August 16, 2009
Wayne Hoffman
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August 16, 2009

I've lost 40 pounds since January, but I gained a pound back this week. I couldn't resist a second helping of fudge brownies. And I haven't been exercising. I'm sorry. I'll try harder next week.

You care about my corpulence because you're going to be paying for me when we're all on government health care. Whether you're rich or poor, everyone in Idaho will be paying higher taxes to cover more people on public assistance as soon as next July.

"But President Obama promised that no one earning less than $250,000 a year will pay higher taxes," you blubber. But promises made in Washington are made to be broken in the states.

Congressmen understand that a can of soup on sale for $3.99 seems a lot cheaper than soup for $4. They're trying to keep the cost of national health insurance below $1 trillion, believing that $999 billion will seem like a pittance. So they're looking to expand Medicaid, the state-federal health care program for the poor and the disabled. That makes big government health insurance the states' cost and the states' problem. Expanding Medicaid will allow the national health care plan to look smaller than it actually is.

And by smaller, I mean roughly-equal-to-the-number-of-peas-it-takes-to-fill-the-Grand-Canyon small.

The state Department of Health and Welfare calculates that 40,000 Idaho adults will join the state's Medicaid program should it be expanded to include people earning 150 percent of poverty - as would be mandated by one of the major plans being discussed on Capitol Hill. The plan would increase the cost of health care in Idaho by half a billion dollars, of which about $104 million would come from the state taxpayers. Health and Welfare spokesman Tom Shanahan said department analysts "consider (that) to be a conservative estimate."

The department's analysis prompted Gov. Butch Otter to send a letter to lawmakers last month warning that a tax increase is virtually ensured if Congress pushes ahead with a Medicaid expansion, which would take effect next year.

"Paying for that kind of increase would mean imposing the equivalent of a 0.5-cent increase in Idaho's 6-cent sales tax," Otter wrote. "There are a number of reasons to be concerned about this sweeping legislation that so many economists and health care experts already oppose. Among the most compelling arguments against it are the potential budget consequences to Idaho, and ultimately to Idaho taxpayers."

But federal lawmakers have a different view. U.S. Sen. Max Baucus, a Montana Democrat, said the federal government expects the states to play a part in the financial solution.

"We can't foot the entire bill for the states. We just can't do that," Baucus said.

That means Idaho lawmakers, who are constitutionally required to balance the budget, will have to figure out a way to cut $104 million from the state budget or raise taxes. I'd rather they cut. Which do you think they'll do?

Jerome Republican Rep. Maxine Bell told me Thursday it's already proving too tough to slim down the state's $2.5 billion budget, and Congress' envisioned Medicaid expansion worsens matters.

"This could tip us over," Bell said. The state cut spending for childhood vaccines starting last month, but the uproar about that decision prompted Otter to pull $2.1 million from the state's rainy day fund to continue the program through January. Lawmakers will be asked to find additional funding for the program thereafter. And one month into the state's budget year, the Department of Health and Welfare says Medicaid is underfunded by about $20 million.

Medicaid is only part of the problem. The Obama administration and congressional Democrats insist on a government insurance plan that would compete against private insurers. If that's implemented, experts say people will drop their private insurance in favor of the government insurance, which is bound to be cheaper. That means states that assess a tax for each insurance premium sold would see a decrease in tax revenue. Idaho assesses a tax of 1.5 percent, generating $57 million for the state's general fund. The result of the federal plan is inevitable. Taxes will go up to cover the loss.

Faced with such a grim outlook for taxes and spending in Idaho, and with the very real possibility that taxes will go up for people earning less than $250,000, I asked my wife to hunt for a joke that could be inserted into this column, to cheer us all up.

"I found many instances of Medicaid being referred to as a joke, but no jokes about Medicaid," she informed me somberly.

So I've decided to take solace in brownies. And you should, too. The government will deal with the consequences.

Wayne Hoffman is the executive director of the Idaho Freedom Foundation, a nonprofit, nonpartisan think tank. E-mail him at [email protected].

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