Last week, Alaska Governor Bill Walker announced that he will bypass the legislative process and implement Obamacare’s Medicaid expansion by executive fiat.
Walker’s announcement should be no surprise to Obamacare proponents – after all, President Obama has maltreated his executive authority dozens of times to amend his signature law. But expansion may come as a shock to Alaska’s legislative leadership, who last month brokered an informal arrangement with the governor to put Medicaid expansion on hold until 2016.
The press conference Walker held last week was heavy on promises, but light on specifics. To hear the Walker administration tell it, Obamacare’s Medicaid expansion would be an economic elixir for a state budget hit hard by declining oil prices. It would help failing hospitals become whole again, a sentiment echoed by the long line of high-paid Alaska hospital CEOs brought in to praise the decision. But Bill Walker is no magician and Medicaid expansion is far from magic.
Walker’s Obamacare Expansion Will Shrink Alaska’s Economy
Despite promises that Medicaid expansion will jumpstart the Alaskan economy, the governor’s Obamacare plan will actually discourage work and shrink the economy. Much of the Walker administration’s rosy claims about Medicaid expansion and the economy come from an unyielding belief in the “multiplier effect.”
In short, Walker believes that Medicaid expansion money is created out of thin air and every new dollar of government spending will create income for some people – in this case, hospitals and doctors who see Medicaid patients – and that income will be spent in local communities, generating jobs, sales tax revenue, and other economic activity. But there is no magic pot of Obamacare money and the Walker administration is only looking at one side of the ledger.
In fact, when the Congressional Budget Office looked at all aspects of Obamacare and its Medicaid expansion, it found that it would actually reduce economic growth.
Alaska’s Medicaid Expansion Will Discourage Work
Gov. Walker’s Obamacare Medicaid expansion will create a massive new tax cliff, where earning a single extra dollar means that Medicaid expansion enrollees could face hundreds or even thousands of dollars of extra costs if they try and move off the program. That new welfare cliff is sure to depress employment.
Those conclusions are supported by the independent Congressional Budget Office, which confirms that Obamacare will cause millions of working-age adults to drop out of the labor force or reduce their hours, ultimately reducing economic output. In Alaska, nearly 4,000 able-bodied adults could drop out of the labor force entirely, with many more reducing hours to avoid the welfare cliff.