Health Entitlement Expansion Passes

From Andy Zieminski of The Capital:

A Senate committee gave preliminary approval Wednesday to a $200 million health care expansion, after striking a key provision that would have helped small-business owners pay for health insurance they currently offer.

The bill approved by the state’s Senate Finance Committee would expand Medicaid in fiscal 2009 to families earning up to 116 percent of the federal poverty limit, up from the current 35 percent.

To say this is a monumentally bad idea is an understatement. Government health plans are a money sump. A vertiable black hole sucking in your hard earned cash (to mix metaphors). On the positive side, Governor O’Malley wanted a $500 million scheme approved as part of his solution of our “structural deficit” and the Senate has only agreed to cough up $200 million.

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At least on paper.

One of the key aspects of any government insurance program is reducing the number of customers it creates. WalMart was flagellated by various Maryland pols because it encourages Medicare eligible employees to use Medicare rather than enrolling in the company health plan. In that regards, at least as far as this article describes the bill, this bill fails the test.

[The health care expansion bill] would also offer up to $20 million in subsidies to small business owners who want to offer their employees health insurance but currently do not.

The committee scrapped a proposed $10 million subsidy to small business owners who do offer health insurance, “because there are lots of employers doing a good job in providing health care that we aren’t going to be giving this subsidy to,” said Sen. Thomas Middleton, D-Charles, the chairman of the committee.

Consider this for a moment. If you are a small business that currently does not offer health insurance as part of its benefits package you are entitled to a subsidy. But if you ARE currently offering health insurance you get bupkus.

Doesn’t that seem like a rather perverse incentive. Your competitor who was undercutting you by not providing health insurance, a benefit you used to attract a presumably better and more loyal workforce, now gets a subsidy from the state so he can continue undercutting you with customers and he can offer the same benefits you offer.

I think if I were a small business owner I’d cancel my health plan and wait until I qualified for subsidies before I offered it again.

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