This year’s campaign for governor has largely been focused on jobs and education, and for good reason. Those two issues are central concerns to many voters.
However, if we set aside all of the rhetoric, while stipulating the realities of setting policy in Washington state today — particularly when it comes to revenue — we’ll see the next governor’s ability to support job creation and significantly increase funding to education is severely limited. There is one exception, though. There is one area of policy that may do more to create jobs and free revenue to fund education than anything else available to the next governor does.
That jobs-and-education issue is fully implementing the Affordable Care Act (ACA), the health care reform law passed by Congress in 2010.
To address the question of creating jobs, we have to start in the emergency room. Approximately 1 out of 5 patients in an emergency room are uninsured. Hospitals must treat them regardless. This leaves those who are insured and treated in the ER — as well as every other person who is insured and who receives treatment at the hospital — to cover the difference.
This results in something called cost shift, where the costs of the uninsured are moved to those who are insured so that the hospital can keep its doors open. That cost shift amounts to about $1,100 per year to a family’s insurance premiums.
Now, let’s assume you are a small business owner with 25 employees and you are trying to grow your business and you are trying to hire employees. You provide them health benefits and cover 80 percent of the costs. The employee picks up the rest.
Now, hold this image in your mind, because here’s where the ACA comes in.
Under the ACA — and the U.S. Supreme Court’s ruling that upheld it — the next governor will be able to choose to expand Medicaid in Washington to all individuals whose incomes fall under 133 percent of the federal poverty level (FPL). For the most part, today’s Medicaid covers children and pregnant women. Childless adults are left to fend for themselves.
Expanding Medicaid would provide coverage to low-income uninsured folks who couldn’t get coverage otherwise. And, it’s often precisely those folks who are showing up in the ER — the ones without insurance — that are forcing your premiums to go up $1,100 per year. If you provide those folks in the ER insurance coverage through Medicaid, you may essentially eliminate the burden of cost shift in Washington state resulting from uninsured patients.
So, let’s go back to our small business person with 25 employees who is covering 80 percent of the cost of their health insurance. The expansion of Medicaid, which eliminates the cost shift, will mean downward pressure on the small business’s insurance premiums of up to $22,000 per year. That is real money and real savings.
It also means a savings to the family of $5,500 per year in dollars staying in the employee’s pocket rather than going to pay for the uninsured.
Those dollars will both allow the small business the resources to start thinking about hiring, and allow the family to spend more in the market, thus driving up consumer demand. In other words, it’s a plan to create jobs and get the economy moving.
Now, let’s turn to education and how implementing the ACA could help fund education.
Under the ACA, states must create insurance exchanges; Washington already passed a law to comply with the requirements. Think of these as being like the stock exchange where instead of choosing stocks (in a tradeoff between risk and reward), you get to choose from among insurance policies (in a tradeoff between costs and customer service — benefits will be standardized).
For many folks, the insurance plans on the exchange will be more costly than their current plan, because the benefits will be much better. So, the federal government has created subsidies to offset the cost. If you make between 100 percent and 400 percent of the FPL — $92,200 in Washington state for a family of four — you’ll be offered help from the federal government in the form of payments to the insurance company to offset the costs of your premium (sort of like an employer offsets the cost today).
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