Monday, June 26, 2017

Trumpcare is War on the States

Trumpcare punishes the states.   Which states?  All of them, but especially blue ones.

It might be clever payback to those blue states the GOP thinks coddled public employees and expanded Medicaid.   Trumpcare does more than pass the buck.  It delivers a bomb.

Frequent Guest Post writer Thad Guyer made the suggestion that there is some craft--or at least a happy accident--in the way that Trumpcare forces states either to raise taxes or to take the blame for kicking blue collar workers off Medicaid.  The states get the blame, not Trump and the GOP Congress.   Not only does Trumpcare escape the blame but chaos in the states is good for the Republican brand.

Guyer wrote:

"The awful convergence of your PERS and pension blogs awaits if the GOP kicks healthcare to the states. This will be especially true in blue states like Oregon with crushing PERS deficits. It will be retirees vs. the working poor. Red states that resisted public unions and government pensions will end up more politically and fiscally stable in the coming budget wars. This is a large unstated GOP strategy. "

States with Republican governors generally refused to take federal money to expand Medicaid.  It will be blue states that will experience Trumpcare as a loss, with people kicked off a benefit they once had.  And blue states will have the hardest time replacing that lost Medicaid money.

There are multiple websites evaluating the fiscal health of states.

Overall Financial condition.  The states in the worst overall financial position are in fact blue states: Illinois, New York, Massachusetts, Connecticut, Maryland, DC, and California.   Only Kentucky is a red state outlier in that group of the most fiscally stressed, and it had a Democratic governor.   I have written several times about Oregon's intractable problem (one the legislature again failed to resolve this session--it is just too hard) and Oregon is far from the worst: 30th out of 50.

Click here: Oregon is ranked 30 out of 50 states.

Underfunded Pension Liabilities.  Here is another analysis of the fifty states, this one looking specifically at unfunded pension obligations.  The higher the number, the greater the problem of unfunded pension.  Again, the great problem states skew blue, with Connecticut (50), Illinois (48), New Jersey (47), and Michigan (46).  Again, Kentucky is among them (49).   

Click here: Unfunded Liability Chart


Can Trumpcare effectively pass the buck?  No, in the short run, but long term, yes.  State government chaos helps the GOP brand.

State legislators and governors are not quiet patsies.  Both Republicans and Democrats in the states will object, loudly, to having the burden passed to them.  They will join the chorus of opponents to Trumpcare, saying that it isn't their fault that hospitals are in trouble and that people lost benefits.  

Some states will deal effectively and proactively with the impending loss of Medicaid funding, whether or not Trumpcare goes fully into effect.  Oregon just did.  Oregon's legislature was  able to pass a special tax on healthcare providers.  

How did they accomplish that?  Because healthcare providers did not really, deep down, oppose the tax.   

The tax on them is a mechanism to shift costs from the insured middle class to pay for the uninsured working poor getting benefits through Medicaid.  The fees paid by the full-freight patients will make possible the revenue to fund Medicaid, so the money comes back to the providers, with a big federal match.   Hospital providers need Medicaid, otherwise they provide uncollectible services for free.  (This is one of the great bipartisan political vulnerabilities of Trumpcare: Hospitals will suffer under it and middle class voters care about hospitals.)

A tax to fund Medicaid
But Oregon was a close call.  It passed with exactly one Republican vote, just enough.  Many other states will not be able to cope, and blue states' legislatures will face angry disappointed voters, which leads to political chaos.  As Democrats discovered, political unrest, whatever the cause, leads to a populist revolt against government.   

Michigan in 2016 is a classic example.  The failure of local government in Flint led to a takeover by an agent of a Republican governor, who then made decisions that put high levels of lead into the water supply.   Chaos.  In the face of that chaos, Michigan voters did not express its anger at the party of the governor.  It expressed it at government generally, and the blue wall of Michigan voted for change, not for Democrats.  Its electoral votes went to Trump.

Democrats perceive themselves as the party of good, effective government, and that is their brand ideal.   Republicans perceive themselves as the party of small government, encouraging individual freedom and self reliance, and that is their brand.   Chaos in government does not hurt the parties equally.  Chaos injures the Democratic brand and helps the Republican brand.

If Trumpcare passes, and the states go into a tizzy, generally it helps confirm what Republicans have been saying all along: that government is the problem and it cannot do anything well, so vote Republican.

1 comment:

  1. It remains to be seen if the Kabuki dance will result in the bill passing. It looks like a significant number of Senators are quietly hoping the 5 holdouts will give them cover.

    One thing is emerging from this: Republicans will be seen as willing to sacrifice sick children for bombs.


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