Obama Hurts Blue States
In the wake of President Obama’s decision to allow state insurance commissioners to decide if the cancellations of health insurance policies Obamacare has forced are to stand, Democratic, blue-state commissioners are digging a hole for the president and for their party. So deep and so wide is the hole that it may serve as a grave in which to inter their party’s fortunes in the 2014 election.
Obama gave these commissioners the power to let insurance companies waive the cancellations after an outpouring of bitterness and outrage forced Senate Democrats to hunt for a way to blunt the anger their constituents felt at having their policies cancelled. Not only did the cancellations force them to pay more for insurance — and perhaps also lose the doctors and hospitals with whom they had been working — it served as a bold reminder that the president lied when he promised that they could keep their plans and their doctors if they wished.
In red states, Republican insurance commissioners have generally decided to let insurers and their customers co-operate to waive the cancellations. But the true believers in the blue states who serve as insurance commissioners have largely refused. So the very voters upon whom the Democratic Party must depend are the most likely to continue to be forced to cancel the policies they want, despite their wishes and protests.
It’s hard to think of a more shortsighted policy than to anger your own voters in such a heavy-handed way. Now the arguments about big government and regulation will no longer be theoretical to Democratic voters. They will be forced to endure the cancellation of their own health plans.
The legions that have lost their individual health insurance plans are only the tip of the iceberg. Tens of millions could face the cancellation of their group or employer-provided health insurance. The decision of the blue-state insurance commissioners to sustain these cancellations assures plenty of ammunition for Republicans who oppose Obamacare and a vast willing constituency, right in the heart of blue America, willing to listen.
But Obama’s gift to blue states doesn’t stop there. The Supreme Court has granted states the right to opt out of the Medicaid expansion built into the Obamacare legislation. Those who have Ok’d raising the Medicaid threshold for eligibility to 133 percent of the poverty level are finding that there are millions eager and willing to take advantage of the program. Some of these are already eligible and others are not.
Both groups will cost state taxpayers a lot. One now and the other later.
Immediately, the new Medicaid enrollees who have always been eligible but who haven’t signed up until now, will cost states a bundle. These new enrollments will only receive the federal reimbursement that Medicaid has always had — usually between a half and a third of the cost varying by state. The new extra reimbursement will not be available for this new group of enrollees. We don’t know how many there are, but in Washington state, one-third of the new Medicaid enrollees were eligible before Obamacare was passed. So no extra reimbursement for them.
And in three years, the states must pay 10 percent of the cost of the new enrollees who were made eligible by the Obamacare law. And three years after that? Who knows.
The net effect of this new spending — only in blue states, which accepted the Medicaid expansion — will be huge increases in taxes now, in three years and in six years. The divide between the high-tax blue states and the low-tax red states will be heightened to the disadvantage of the Democrats in the blue states, particularly when jobs flow to red states.
So, all in all, Obamacare sends a crushing political burden to blue states, but a much milder one to red states. The Democratic policies carry within themselves the seeds of their own destruction.
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