Saturday, September 15, 2012

The Big Picture on Medicaid Expansion

Last July, when the Supreme Court ruled on Obamacare (I never liked that term, but now even the President has proudly embraced it), it tossed something of a hot potato into the states’ laps.

Under the Affordable Care Act (that’s the politer way of saying it), states were required to extend Medicaid coverage to everyone living at 133% of poverty or below; if they didn’t, they would lose all the Federal funding they already receive for the Medicaid patients they cover right now. And since the Federal government covers about 75% of current Medicaid costs, that’s a pretty hefty chunk of change. But the Supreme Court threw out that provision of the law, and states can now decide whether or not they want to extend Medicaid, without fear of losing current Federal Medicaid dollars. That’s the hot potato: whether or not to extend.

For most states, extending coverage to 133% of the poverty level means a big increase in the Medicaid population (in Montana, for example, the Medicaid roles would expand by more than 50,000 people).  So to make it easier for the states, under the ACA the Federal government will pay for 100% of the expansion for the first three years; after that, the states will have to pick up an increasing share of the cost, topping out at 10% after another three years.

Now that sounds like a pretty good deal. For every one dollar the state spends to cover low income people who currently have no insurance, the Federal government will throw in nine. What’s not to like? Seems like a no brainer, but as Mike Dennison recently reported, a lot of folks, including Governor Schweitzer, Steve Bullock and Rick Hill, are sounding kind of worried. And what they seem to be worried about is the impact that Medicaid extension will have on the state budget and taxpayers.

It’s a legitimate concern. The state will certainly have to spend something to extend Medicaid, although it’s not clear at this point how much or whether, if the program gets too expensive, it can be trimmed back. And with Romney and Ryan promising draconian fiscal austerity, we probably need to think about what  will happen if they are elected and the 9 to 1 Federal match disappears.

But when it comes to deciding whether or not to insure another 50,000 Montanans, worrying only about the state’s bottom line misses the big picture.

For one thing, those 50,000 people already get medical care, albeit haphazardly, in hospital emergency rooms and public clinics. And somehow, Montanans end up paying for most of that care one way or another: in higher hospital rates, higher health insurance premiums, higher taxes to pay for higher premiums for state employees, and so forth. But when these 50,000 patients get covered by Medicaid, most of the cost will be shifted to the Federal government. So while extending Medicaid may cost Montana taxpayers a chunk of money, they will make it back, several times over, in lower health insurance premiums and hospital charges.

Of course Montanans are going to pay some of the taxes that will make the Federal contribution to Medicaid extension possible, but we’re going to do that even if we turn down extension here at home. In that case, we’d not only continue to cover costs for the uninsured in Montana through higher premiums and hospital charges, we’d also help pay for Medicaid extension in Florida and Maine and California and New Jersey and… well, you get the idea.

Maybe the most important thing to think about, however, is this: when those 50,000 uninsured Montanans get covered by Medicaid, the amount and kind of health care they receive will change significantly, and their outcomes will improve dramatically.  They will receive more preventative care, experience greater medical security and fewer medical bankruptcies, feel better and live longer.* In short, they will enjoy the same relationship with and access to the health care system as the rest of us. They will be treated as the rest of us expect to be treated. And without that, health care reform is a hollow shell.

*There have been a number of studies of the impact of Medicaid expansion in a number of states in which it has occurred. Check out reports in Bloomberg and New York Times on reduced mortality, and again in the Times and the New England Journal of Medicine on impacts on costs and medical and financial outcomes for new Medicaid patients.