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The Libertarian

Vin Suprynowicz

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These days, states are finding an increasing share of their budgets consumed by Medicaid -- the socialized medical subsidy for the poor.

Not that Medicaid is a one-size-fits-all program. It does require that certain poor people -- such as the disabled and pregnant mothers -- be covered. However, seeking the 60-for-40 federal matching grants, many states offer more services to more populations (such as children in families who earn too much to qualify for Medicaid) than actually required. Nevada is one of those states.

This means “About two-thirds of Medicaid spending is on optional populations and optional benefits,” according to John C. Goodman and Devon M. Herrick of the National Center for Policy Analysis, who note that New York, by offering “almost all optional benefits to all optional enrollees,” ends up spending four times more per beneficiary than Mississippi.

So when your delegate to the state capital claims all state Medicaid spending is “mandated,” ask how he or she voted on adding those optional coverages. (Hint: answers like “We disagree on how to define that” or “I don’t have that right here; I’ll have to get back to you,” mean “I voted for every damned one.”)

Short of filing a 10th amendment lawsuit to protest the whole scheme as an unfunded mandate (which would be interesting), states also have increased flexibility to restructure benefits and impose cost sharing under the federal Deficit Reduction Act of 2005. South Carolina, Florida, and West Virginia have launched interesting cost-saving experiments -- including versions of “health savings accounts” -- under those provisions.

Nevada has not.

But maintaining fiscal discipline and limiting benefits take some political courage. No one likes to be called a “Scrooge” -- even if they’re redistributing money seized from parents who already work hard to take care of their own families. Isn’t there another way?

Sure. Democrats to the core, the Maryland Legislature decided last year to employ a far simpler and time-tested method to reduce its $4.6 billion annual Medicaid tab: They simply ordered someone else to help pay for it.

The so-called Maryland Fair Share Health Care Fund Act (isn’t “fair” a wonderful word? Have you noticed how often whining children use it?) was enacted over the veto of Republican Gov. Robert Ehrlich. The law pretended to order “any” nongovernmental employer with 10,000 or more workers to spend at least 8 percent of its payroll on health insurance benefits, or else to pay the difference as a tax.

How many such employers are there in Maryland, do you suppose?

The state disingenuously argued this was not a bill aimed at making Wal-Mart spend more on health insurance (a long-standing demand of unions who demonize the Arkansas-based firm for operating its stores nonunion and still pleasing millions of customers), since the firm was “free” to instead pay an estimated $6 million fine per year.

Oh, please.

And the evidence that Wal-Mart employees are clogging Maryland’s emergency rooms, demanding “free” state-funded care because so many of them are pregnant or disabled and earn so little that they qualify for mandatory Medicaid? A bit thin.

If, in fact, Maryland Wal-Mart workers in any numbers are opting out of their company health plan and instead relying on “free” state handouts, isn’t that an indication that the Maryland Legislature has simply been too generous in extending “optional benefits” to the gainfully employed -- that Maryland Medicaid is (appalling as this may be to consider) “successfully competing” with company health plans by offering something for free that employees would otherwise have to pay for?

The state tried to argue the levy was a “payroll tax” and therefore not pre-empted by the federal Employee Retirement Income Security Act (ERISA), which preempts “any and all state laws insofar as they may now or hereafter relate to any employee benefit plan.”

But that didn’t fly, either. In Baltimore Wednesday, U.S. District Judge J. Frederick Motz threw out the “Wal-Mart Tax,” ruling its purpose was not to raise revenue for the state. “To the contrary,” the judge wrote, “its purpose was to force Wal-Mart to increase the level of its health care benefits.”

The law would impose an unacceptable burden on the firm by making it track and allocate its benefits for Maryland employees differently from the way it tracks employee benefits in other states, the judge explained. Furthermore, “State laws which impose health or welfare mandates on employers are invalid under ERISA.”

The judge doesn’t appear to have slammed the Legislature for passing a law which effectively singled out one successful business for punishment -- though he should have.

Wal-Mart Chief Executive Officer Lee Scott welcomed the news that businesses will not have to deal with a patchwork of rent-seeking edicts as they move from state to state. That’s true -- and good -- as far as it goes.

The best environment would be one in which neither the states nor the federal government meddle in private arrangements between employers and willing workers, allowing employers to offer better or more innovative wage and benefits packages as necessary to attract the best workers, while allowing even the least able or experienced workers to find work, and to quickly grasp the benefits of increasing the value of their labor by acquiring more useful skills and (real) education.

Instead, we have reached a point where we must celebrate a ruling which -- while it’s correct, and welcome -- in essence holds that it’s better to be pushed around by one big gorilla, than by 50 smaller ones.

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