A dollar is a dollar is a dollar.
But just how much it's worth to us at a given moment depends upon the circumstances.
Someone who buys a $30,000 car probably won't even notice if the cost ends up $50 more than she expected. But if she pulls up to the gas station one day and gets charged $80 instead of her normal $30 for a tank of gas, she's going to be more than a little perturbed.
If we hear that a new government program will cost the state $900 million, and that this equals nearly a fifth of the state budget, we’ll probably at least get worried — particularly if we aren't that crazy about the new program. How in the world will the state, already strapped for cash and barely scraping by, possibly manage to afford that extra cost?
But what if the $900 million isn't a one-year cost, but the total cost for 10 years?
What if instead of telling you we were getting hit with a $900 million bill for a new program, I told that the total 10-year cost of a program we already operate was going to increase from $20.9 billion to $21.8 billion — 4 percent?
Not quite so alarmed any more?
Of course I'm talking about the Medicaid expansion required under the new federal health law.
We still might not like the idea of the federal government telling us we have to help provide medical coverage to more of the working poor. Might not like the idea of providing that coverage at all, ordered to or not. But it's important to understand what the fiscal implications really are. And so far, the critics of this law are conveniently leaving out the contextual information — and in some cases coming very close to actually lying about the numbers — in their efforts to whip the public into an outraged frenzy and, coincidentally of course, boost their own election chances.
The most blatant misrepresentation of the cost is borne of the different ways Washington insiders talk about budgets and the way we talk about them here in South Carolina.
The federal budget is constructed, and revenues and expenditures are calculated, based on 10-year projections. There are legitimate reasons to look at budget figures that way — just as there are legitimate reasons to look at them in one-year increments, which is what we do in South Carolina. What’s wrong is mixing the 10-year apples with the annual oranges. That's what the politicians in South Carolina who are complaining the loudest about the health law are doing, if not all the time at least some of the time.
The more subtle and passive misrepresentation involves omission. And before I explain this, a disclaimer: I am not among those who say things like, "One hundred million dollars is barely a dent in a five billion dollar budget, so there's no point in worrying about it." Quite the contrary, I agree with Ben Franklin about pennies saved and earned. But that doesn't mean you can ignore percentages and still be honest.
Medicaid already is a huge program in South Carolina, and it’s huge because S.C. politicians of both parties have decided it's a smart investment and a moral responsibility. Today, more than one in six South Carolinians — 790,000 people — are so poor that they are covered by the federal-state health insurance program. State taxpayers spend $1.6 billion a year for the program — second only to public education.
A report prepared for the Department of Health and Human Services, which oversees Medicaid, projects that the new federal health law will cause total enrollment to increase by 61 percent, to 1.3 million people. That's 28 percent of the state’s population.
From a pure numbers perspective, what's actually striking is how little the state will have to pay for such a large expansion. Even in 2019, when the federal subsidy for the expanded coverage has reached its low point, of 90 percent, the state will be paying just 12 percent more than it would be had the law not gone into effect — $2.9 billion instead of $2.6 billion.
This is where it might be helpful to talk about political context.
Most elected officials in our state at some point have sung the praises of Medicaid — more specifically of the federal Medicaid match. The context often times has been the cigarette tax debate. But it also has come up as we’ve had to slash state spending, in the form of calls to preserve Medicaid at all costs.
Whether it’s a good deal for the country or not can be debated. But once the Congress made the decision to fund Medicaid – a decision backed by Democratic and Republican congresses and presidents – there never has been any question that South Carolina benefits by participating.
The state traditionally has received about $3 back from Washington for every dollar we spend on Medicaid; that number has been increased to $4-to-$1 under the federal stimulus act, and for the first few years of the Medicaid expansion, the feds will pick up 100 percent of the federal match, before phasing down to 90 percent.
Much of that money pays doctors, hospitals and nursing homes here in South Carolina, keeping people employed not only in the medical industry but in the businesses that provide supplies for the industry. Under the new federal health law, there will be a cumulative total of about $14 billion in additional federal money spent in the state in the next decade.
If you figure that much of that money will circulate through the economy multiple times over, being spent again by the doctors and nurses and hospital administrators and pharmacists and support personnel whose salaries it will pay, and then by all the folks in retail and services whose salaries are enhanced by the medical employees' expenditures, it's easy to see where the additional sales, income and property tax revenue that we collect would offset much of the $900 million expenditure.
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