Tax cuts sweep House; broader policy moves swept under rug

When it comes to helping taxpayers and boosting the economy, the $28 million tax cut House Republicans pushed through last week is, in the end, small potatoes. It’s also not likely to win the Senate, given the upper house’s protective instincts toward an existing multiyear plan to boost education spending.

There is a more significant policy tool available to lawmakers that would inject billions into the state economy, create thousands of jobs, produce savings for broader tax relief or better roads and schools, and help Idahoans at all income levels: Medicaid expansion.

To Brian Whitlock, the former state budget director and chief of staff for Gov. Dirk Kempthorne who now leads the Idaho Hospitals Association, there could not be a better-designed economic stimulus package that also happens to improve the lives of thousands of Idahoans. The $7.5 billion in Medicaid dollars that would flow into the state over the next 10 years is just another source of federal money that Idahoans have already contributed through their taxes. About one-third of all spending in the state already comes from Washington, D.C.

“There’s an attempt to say, ‘Yeah, but those Medicaid dollars are colored differently. Even if they’re coming from the federal government, we don’t know if they’ll always be there,’” Whitlock said. “There’s no difference in color between that and a transportation dollar, or a Mountain Home Air Force Base dollar, or an Idaho National Lab dollar. To say that these are somehow different from the agricultural programs that we see in this state, the federal lands management programs and everything else, just boggles my mind.”

FORGOTTEN: TAX PANEL’S FINDINGS, SAYER’S ADMONITION

The economic case for expanding Medicaid is getting harder to refute, as more opposing states are seeing. Even with a recent change in Idaho’s forecasted short-term savings, the benefits to the state would ripple through the economy.

But it’s a heavy lift and hard sell. House lawmakers last week instead went for the cheap, quick thrill, pushing through the tax cut as fast as you can say “election year.” Bills for new state license plates have seen more substantive debate.

Left behind: six months of work by a panel of lawmakers tasked to review the big picture on state spending and taxes, the way Utah did a decade ago, before it enacted broad changes to drop its tax rate to a flat 5 percent.

Forgotten, too, was the urging of outgoing state Commerce Director Jeffery Sayer, who told that panel — and anyone else within earshot — that tax cuts now don’t make sense for a state that needs to invest in its economy and workforce.

You can’t rap tax-cut supporters for acting a little desperate. When you post Idaho’s income tax rates next to those in neighboring states, Idaho’s numbers stand out. One look and the out-of-state business interests the state wants to attract might not stick around to hear the nuanced explanation of how Idaho’s combined tax burden is actually among the lowest in the nation.

Expansion debate: not about money

At the same time last week, a Senate committee held the first-ever hearing on a Medicaid expansion bill, and while the committee didn’t kill it, Republican opposition holds firm. Opposition is political: no to further implementation of the Affordable Care Act. Or ideological: no to bigger federal government, to entitlement, to subsidized health insurance that critics say boosts the federal deficit. Studies say it’s not, but repealing it would.

With expansion blocked, Gov. Butch Otter has proposed a state plan that, while not insurance, would help get up to 78,000 poor Idahoans to the doctor. The annual cost is $30 million, and pretty much all it covers is that basic doctor’s visit. But it’s considered better than nothing.

Compare that to what happens under Medicaid expansion. A state investment of $25 million next year would deliver $577 million in federal assistance, health coverage for 78,000 working poor, plus up to 39,000 more who are slightly better off, an end to the current Dickensian system of state and county programs that cover health bills for the poor, and lower insurance costs for privately insured groups.

Is that last point significant? It is to employers, the state of Idaho among them. Next year’s budget includes $13 million to cover increased premiums for state employees, including the employee’s share of the increase. All told, the average cost is $1,040 per employee.

Compare that to state costs if Medicaid is expanded, about $385 per person annually. Without insurance, those people’s first contact with the health-care system is typically the ER. And the average cost of a one-day hospital stay in Idaho? About $2,600.

This story was originally published February 6, 2016 at 11:16 PM with the headline "Tax cuts sweep House; broader policy moves swept under rug."