Last week I attended a luncheon with some other small business people to hear the Arizona State Treasurer address Arizona’s private and public economic status. The Treasurer pulled no punches. The state legislature is deadlocked over the budget and barring either immediate spending cuts or an immediate tax increase the state is 30-60 days away from being out of money.
He then recounted to us how Arizona came to find itself in this predicament.
At bottom, the cause is a fatal flaw within the state’s Medicaid program. How that fatal flaw came about is the key lesson that we must not forget during the national health care debate.
The flaw was a Trojan Horse that once entered into Arizona law ensured an economic crisis years down the road, and that day has now arrived.
Some nefarious lies were told to the Arizona electorate that misled them in 2000 into voting for something other than what they thought they were.
Does this sound like any tactics you’ve seen employed by Big Government recently?
In Arizona, the state Medicaid program is known as The Arizona Health Care Cost Containment System (AHCCCS, pronounced “Access”). As a Medicaid program, it is a joint-expense program between the State of Arizona and the Federal Government, by way of its Centers for Medicare and Medicaid Services (CMS).
In 1998 Arizona, along with 46 other states, agreed to settle a lawsuit it had filed against the tobacco industry. The tobacco manufacturers agreed to pay each state a part of the total $206 billion settlement. The payments were to be made to the states over 25 years, a portion paid each year.
Arizona’s share was at the time estimated to be $3.2 billion, with adjustments for inflation and with a provision to lower payments if the number of cigarettes sold in the US dropped over that time. Each state was permitted to spend its settlement money in whatever way it saw fit.
Enter Proposition 204. The proposition was proposed to “Set into law the method of disbursing and spending the approximately $3.2 billion the state anticipated to collect as part of the Tobacco Master Settlement Agreement. Targets for the funds include education aimed at the prevention of tobacco use among minors as well as health care.” (emphasis SBABG)
So what you had was this chunk of money coming in, and a proposal to use it to prevent tabacco use among minors and help out with public health care. Well, who doesn’t want to help kids not to smoke, right? And if there’s “free money” coming in, heck, we can use it to help provide health care, too, right?
This is what was sold to the public. A claim that it the proposition was to just use tobacco settlement monies to fund children’s and health programs.
But the actual language of the proposition was far different from what was sold to the public.
The proposition actually changed who was eligible for AHCCCS by broadening the eligibility threshold from 34% of the poverty level to 100% of the poverty level. And it stipulated that if the tobacco money was not sufficient to cover this increase in spending that the spending increase would have to be covered by general funds and no limitations on enrollment could be made. Straight from the horses mouth.
TO ENSURE THAT SUFFICENT MONIES ARE AVAILABLE TO PROVIDE BENEFITS TO ALL PERSONS WHO ARE ELIGIBLE PURSUANT TO THIS SECTION, FUNDING … SHALL BE SUPPLEMENTED, AS NECESSARY, BY ANY OTHER AVAILABLE SOURCES INCLUDING LEGISLATIVE APPROPRIATIONS AND FEDERAL MONIES.” (underline and emphasis SBABG)
That part in bold, just 17 words, tacked onto the end of a paragraph, snuck into a proposition 2 pages, 24 paragraphs, 65 sentences, 836 words long, just 2% of the language in the proposition, was the Trojan Horse.
The taxpayers had no idea that language meant they were on the hook for this program for any amount not covered by the tobacco settlement. They had no idea they had just massively expanded taxpayer exposure to an “all-in” program with no caps on enrollment up to 100% of the poverty line. And because AHCCCS is a first-dollar program, it meant that all tax revenue went first to meet all AHCCCS needs, and then whatever was leftover would go to the budgets of other programs, like, say, education, police, fire, etc.
And to add insult to injury, the provision allowed persons with incomes above the poverty line to spend down their income on medical bills to qualify for coverage. Perverse incentives, anyone?
Fast forward to 2009. What have been the consequences?
If you have a modicum of common sense, what happened was about what you’d expect. More people went on AHCCCS and more money per person on AHCCCS was spent. By 2003 Arizona had more people on AHCCCS than they had in public education!
From 2001 to 2003 alone AHCCCS payments increased from $200 million to $1.2 billion – a 500% increase. You’ll remember that the entire tobacco settlement, over 25 years, was only $2 billion more than that! Gulp. In three years they gobbled up nearly 40% of the settlement funds.
In 2009 alone the amount spent on AHCCCS is projected to be $1.5 billion. The tobacco funds are long gone.
Before going on to more carnage, let’s just point out again that AHCCCS is an acronym standing for “Arizona Health Care Cost Containment System.” You have to love the ironies embedded in Big Government misnomers.
Cost containment. To be fair, Arizona is a growing state and its population increases regularly, therefore the number of the poor in the state has increased, as well.
However, by 2006 real (adjusted for inflation) per capita spending increased 46% by 2006! (see the graph below, created by the Goldwater Institute).
And there’s another kick in the teeth. The $3.2 billion is turning out to be less than that amount, because smoking has decreased.
Finally, the end game has arrived. Barring a miracle, AZ will likely pull a California and begin handing out IOUs at some point this year. Of course, AZ could always sell the state capitol building and kick the can further down the road.
And all of this because of the unintended consequences brought about by little Trojan Horse snuck into a proposition.
Now, why is this important to the current health care debate?
That there are unintended consequences of giving out free health care that will make costs rise for everyone? Check. But that’s no Trojan Horse. That’s right in the bill and has been well documented by the Congressional Budget Office.
That health care will be rationed and choice reduced? Check. But that’s no Trojan Horse, either. That’s also right in the bill and is being well documented.
Is it that the program doesn’t bode well for the nation or the rest of the states since, “As Arizona Goes, So Goes the Nation?” Well, of course that’s true, but that’s no Trojan Horse.
The Trojan Horse is something called “The Public Plan.” The Public Plan is a proposal being put forth in the Health Care Plan (HR 3200) which establishes a government-run insurance provider.
But that’s a lie. Not only doesn’t it do those things, saying that the purpose of the plan is to achieve those objectives is an effort to obscure it’s real purpose.
Its real purpose it to lay the groundwork for the creation of what’s called a “single payer” program. That is code for a government-run, socialist, health care system, where the government makes all payments for all health care procedures and therefore, sets pricing, determines care, and determines coverage for all citizens.
Don’t believe it? Just have a listen to the President and his advisers. When they thought we weren’t watching, they stated very clearly that their intention with The Public Plan was to reduce choice and competition.
Of course, they are out in full force, trying to spread disinformation, and telling you that they’ve said no such things as you just observed.
And they will tell you that they want an open debate, but they don’t. And they will tell you they’re being transparent, but they’re not.
You can add that spending to the already projected Budget Deficits:
And let’s not forget the deficits that Social Security and Medicare are already on target to hit over the coming century (A Cumulative Deficit of $83 Trillion by 2080). Tack the expenses of this plan on top of these.
Public opposition is building against the Health Care Plan and the Public Option particularly. Only 32% of Americans support Single Payer while 57% Oppose it.
Now, watch out. The Senate knows that the public is against single payer, and they know that the public is becoming increasingly informed that the road to single payer is through the public plan, so they’re preparing to introduce a public plan by another name. They’re calling the plan a co-op plan. The co-op is Health Care’s version of a Freddie Mac or Fannie Mae. One Senator warned that it will:
You know this is the case when Senate Majority Leader Harry Reid concurs and says:
So don’t be deceived. It’s the same old Trojan Horse the Public Plan is They’ll lie about it now. And in a few short years we’ll have a real mess on our hands.
Learn from Arizona. Don’t be deceived by what’s being sold you. Read the fine print in the bills, listen to the past statements of the people who are lying to you now. Be forewarned.
Reject the entire Health Care Bill as it currently stands, and particularly the Public Plan and its brother-in-arms the Co-Op Plan. It’s the Trojan Horse of Single Payer.
Please visit DownsizeDC.org and use their free service to send your Representatives a message.
We’re always interested in your hearing from you in the comments below. If you have any “Trojan Horse” stories of your own, please also share them.