The Haley Budget Translated: Blame It on Obamacare

To listen to Governor Nikki Haley, a core budgetary problem facing our state is Obamacare. “Every dollar that Washington forces us to spend on a still-inefficient Medicaid program is a dollar we can’t put into our schools, into our roads and infrastructure,” her Executive Budget transmittal letter tells us.

Even if we let the Feds run our Health Benefits Exchange and even if we refuse to expand Medicaid, the Affordable Care Act will still cost South Carolina $67.4 million next year because “of the people that the Feds are driving into the system for Medicaid” she told the Thursday presser.

Who are these folks that the Feds will “drive” into Medicaid? SCDHHS estimates that “162,000 people currently eligible, but unenrolled will enroll in Medicaid even without the Medicaid expansion.” So, this $67.4 million is not for some new group of people that Obamacare just made eligible but mainly very-low-income parents and low-income children that SCDHHS has failed to enroll over the years.

The Governor and SCDHHS assume a welcome mat effect as the federally-run Health Benefits Exchange goes online and currently eligible people finally enroll. The agency projects that 60 % will come because employers drop coverage—a fallacy considering people making so little they qualify for the Low-Income Families program likely don’t have access to employer-provided health benefits.

Those currently eligible will come onto the rolls at current federal match rates, not the 100 % declining to 90 % rates[1] that will apply to newly eligible enrollees under the ACA Medicaid expansion to 133 % of the federal poverty level (FPL).

Haley’s budget increases spending on health care by $173 million according to her slideshow. Of that $79 million is for employee and retiree health benefits and $74 million to SCDHHS for Medicaid. Admirably, $11million additional goes to Mental Health, and $5 million to DDSN. Haley blames most of the DDSN increase on new Medicaid rules.

So, health care is a large part of new funding. But the question we must ask is “Will it really suck up dollars that we would otherwise spend on schools and infrastructure?” Not likely.

Nikki Haley is not going into the history books as The Education Governor.

Last year, with a billion dollars added to state budgets, Haley argued that the Base Student Cost, the core of state funding of local schools, should drop to $1,766, lower than the previous year’s BSC funding of $1,880. The General Assembly fixed it at $2,012, well-below the FY12-13 formula requirement of $2,790 per pupil. Maintaining last year’s BSC is her proposal this year. Twenty percent of new General Fund funding for schools goes to charter schools. The additional $16.3 million for the Education Finance Act noted in her slideshow only covers student population growth. Faced with new dollars last year, the Governor proposed that they go to tax cuts and not education.

“Is health care funding sucking dollars from infrastructure?”

South Carolina has a desperate need to improve our infrastructure. SCDOT recently reported that we need $30 billion in new revenues for road needs over the next 20 years. Add to that ports, water and sewer needs and the investment need nearly triples. We have more than 1,000 bridges in need of repair or replacement. For years, the business community and others looking at infrastructure needs have called for a significant increase in our fourth in the nation lowest gas and diesel taxes. The fact is that business recruitment is much harder when we as a state fail to provide adequate water, sewer and roads.

While declaring “infrastructure means jobs,” the Governor categorically rejects a gas tax increase. The Governor’s budget proposal is to take the new dollars that will appear as the BEA updates its revenue estimates in coming months (“the money tree” to Ms. Haley) and apply those first to a modest tax cut ($26 million) by eliminating the 6 % tax bracket and then to infrastructure. Haley claims that spending General Funds on infrastructure is tax relief because it avoids the badly needed increase to the gas tax and, although she didn’t mention it, borrowing for infrastructure needs.

She expects about $100 million in new dollars by the time Senate Finance and the Conference Committee get hold of the budget.  After giving 74 percent of income tax filers a tax cut of about $2.50 a month, that should leave roughly $74 million for infrastructure … against a need of tens of billions to raise the basic safety standards of our state’s roads and bridges.

Misplaced Blame—Federal Health Improvement Efforts Are Not our State’s Economic Pothole

Rather than simply admitting that improving human capital through public education (other than charter schools) is not her priority and that she is unwilling to do the things that are needed to provide the physical infrastructure which underlies economic development, Governor Haley blames Obamacare for our troubles. This is not the leadership our state needs as we make critical budget choices that will frame our state’s priorities in the coming years. As we face the challenges of attracting businesses and keeping our most talented minds engaged, we must admit that our priorities are reflected in our state’s budgeting, and place South Carolinians’ safety and future before blame-game talking points as the gubernatorial election cycle begins.

[1] The Governor misstates the match rates for a Medicaid expansion which start at 100 % and decline to 90 % in 2020 for the newly eligible. Haley asserted that it will start at 10-1 (9 %) and then decline.

This entry was posted in Economy, Education Funding, Health Care, SC Budget, Taxes and tagged , , , , , , . Bookmark the permalink.

1 Response to The Haley Budget Translated: Blame It on Obamacare

  1. suzanne says:

    Many thanks for excellent coverage on health care – I somehow missed this one, but your maps article was excellent and rocked the LWV State Board meeting Saturday

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