It has only been a month and the recently approved minimum wage initiative, Proposition 206, is already inflicting permanent damage on Arizona’s Economy, hardworking taxpayers and our most vulnerable and needy residents.
Similar to previous proposals, Prop 206 was sold on the idea that Arizona could raise its minimum wage to $12 an hour (adjusted for inflation every year thereafter) and require employers offer mandated paid sick leave to employees without any negative repercussions. Reading the fine print of Prop 206 exposed this fraudulent claim; as the funders of the initiative (California Unions) exempted collective bargaining agreements from critical components of the initiative. If this was so good, why exempt themselves from it?
Now the debilitating impacts of Prop 206 are being felt, and they are far more widespread and catastrophic than even the opponents of the initiative realized. While it wasn’t a secret that Arizona businesses would face hard choices in order to comply with the wage hike, some of the worst hit organizations will be those that serve the neediest and most vulnerable populations in our state.
Currently in-home care services, many of which aid fragile and feeble seniors, range from $20-$24 an hour. These services will go up; pricing out many of these seniors on fixed-incomes from receiving the care they desperately need or force more individuals onto state welfare rolls.
The developmentally disabled in our community will also be devastated by Proposition 206. According to the President and CEO of the Centers for Habilitation and member of the Arizona Association of Providers for People with Disabilities, some providers will be forced to close operations as soon as January 1, 2017.
Some of these providers have contracts with the State of Arizona that set the reimbursement rates. This means the state will be forced to allocate more taxpayer money to cover the higher costs. If the state doesn’t cough up more tax dollars to address these needs, thousands of developmentally disabled in Arizona will be left without vital care.
It only gets worse from here.
Many subdivisions of the state such as school districts will also be deeply impacted by the voter mandate. Positions such as cross walk guards cafeteria workers and bus drivers, many of which are part time positions, represent a significant aggregate cost to schools; costs which were neither anticipated nor planned for by districts or the state.
For Chandler Unified School District, Prop 206’s passage represents a $1.1 million hit to their budget. Agua Fria Union High School District in the West Valley, $123,500. Peoria Unified District – $1.1 million by 2020. And Sahuarita District in southern Arizona $907,576. These are tremendous costs which will necessitate the diversion of other resources from teachers and students or require more monies from taxpayers.
And although the law does not apply to state or federal agencies, many government departments will still be on the hook. The State of Arizona has expenditure obligations for school districts as well as private contracts through AHCCCS (Arizona Healthcare Cost Containment Center System). But the legislature has already passed a budget for 2017. These additional costs were not included in the state’s budget.
Many voters that supported Prop 206 were not aware of the harmful effects this initiative would cause. Yet unlike bills proposed and passed at the legislature, there was no independent review, hearings, or public comment process of the initiative language to inform voters of these inevitable issues.
Now, even if voters wanted these issues fixed, Prop 206 can’t be modified because Arizona initiatives are bound by the strictest voter protection law in the country. Once a measure is passed at the ballot, it can’t be changed unless it is sent back to the voters, and that can’t happen for two years.
As the saying goes, “elections have consequences.” We suspect that the consequences of Prop 206, however, are not what Arizona voters signed up for.
Amid some discussion by Republican leaders to thwart President-Elect Trump from moving to completely repeal Obamacare, it is clear Republicans must have a definitive plan to not just repeal, but replace the current disastrous healthcare law.
And at this point, with millions of middle class Americans facing sky-rocketing premiums, narrow networks, and shoddy benefits, something must be done quickly. Perhaps the most comprehensive plan to address the healthcare system has been offered by House Speaker Paul Ryan. Ryan’s general approach is to loosen the grip of central federal control and return power to the states to improve the flexibility, efficiency, costs, and quality of healthcare for their unique populations.
Unfortunately, many states (including Arizona) expanded their Medicaid rolls to take advantage of federal matching subsidies, and will face an extra layer of complexity following a repeal. Without precedence, this Medicaid expansion was extended to include able-bodied adults who are 138 percent over the federal poverty line (FPL). This represented an additional 63,000 beneficiaries in Arizona alone. Repealing Obamacare poses a significant problem for these states as they will either be left with huge state budget deficits to make up for the loss of federal funding, or potentially be forced to kick tens of thousands of people off the health subsidies.
But there are common sense solutions to address this problem and others.
The current process for states to reform their Medicaid program is to go to the Federal Government on bended knee and apply for a waiver. As expected, these waivers have been granted with mixed approval and endure a lengthy and oftentimes politicized process. In the meantime, states struggle to shoulder increasing costs and face uncertainty whether they will be able to hedge those costs.
A critical component of Ryan’s plan is to reform the waiver process and divest more power in the states. This includes creating a set of predictable parameters, fast tracking requests that meet those parameters, and then not requiring a renewal of such waivers. The plan also requires that Medicaid waivers be federal budget neutral as a way to reduce costs and protect taxpayers from states looking to game the system.
Another key component of reform is to address the issue of able-bodied adults on Medicaid being completely insulated from the true costs of healthcare. It is critical that any reform allow states to charge reasonable premiums, offer more limited benefits, and allow waiting lists and enrollment caps for non-mandatory populations. Additionally, those states that currently have a waiver for managed care that have been previously renewed twice would be grandfathered in and not have to seek another renewal. Obamacare has incentivized able-bodied adults to remain dependent instead of self-sufficient; empowering states to make these common sense and well proven reforms is a step in the right direction.
The last key component is identifying a way to contain the spiraling costs of Medicaid. Currently Medicaid represents 15 percent of all federal healthcare spending and is growing fast. The program is unsustainable, and states must be weaned off this open ended entitlement program. One such proposal is for the federal government to allocate money to states in the form of “block grants.” Going to a block grant would mean that each state would receive a defined amount of funding for a base year and assume the state is transitioning non-mandatory populations into other coverage over time. If states are working toward streamlining costs, any savings realized could remain with the state instead of federal coffers.
Obamacare has come with a great deal of cost and pain for individuals, families, businesses, and state governments alike. It is unlikely that the transition away from it will be painless either. However, not reversing course cannot be an option for Republican leaders in Washington. Now is not the time to get cold feet. After all it should not be impossible to imagine a healthcare system driven by free market principles and individual choice rather than government mandates and punishments.