“A Deal Too Good To Pass”: Why It’s Still In States’ Interests To Expand Medicaid
For supporters of the Affordable Care Act, it was hard to hear—over the cheering—anything besides the fact that the Supreme Court today kept the law almost entirely intact. But the Court did make a slight change to a crucial part of the ACA: Medicaid expansion. Under the law, by 2014, states are supposed to extend their Medicaid programs to cover people under 65 with incomes up to 133 percent of the federal poverty line. An analysis from the Center on Budget and Policy Priorities shows that means 17 million more people would have access to health care over the next 10 years. Before today, it looked like states didn’t have much choice in the matter. If they didn’t make the necessary expansion, they would lose all federal Medicaid dollars. In their brief, states argued that wasn’t much of a choice—federal Medicaid grants simply constitute too much money to lose. Back in February, Timothy Jost had a very helpful explanation of the states’ argument on this point in Health Affairs. As he wrote:
A state that refuses to expand its Medicaid program will under the ACA lose all Medicaid funding. Medicaid is the single largest source of federal funding to the states, accounting for 40 percent of all federal money dispersed to the states. States do not really have a choice to walk away from federal Medicaid funding, they argue. The states do not, therefore, really have a choice to refuse to participate in the Medicaid expansions. This coercion, the states contend, is unconstitutional.
According to SCOTUS Blog, the Supreme Court basically agreed: The feds can’t cut all Medicaid funding for states that refuse to expand. Now, states that choose not to extend benefits will forgo the money they would have received for doing so—but they won’t lose the money they’re already getting for current Medicaid services. But while states can now avoid the extension more easily, there’s still no practical reason to go down that path. “It’s still an incredibly good deal for the states,” says Edwin Park, vice president for health policy at the Center on Budget and Policy Priorities. Already the federal government pays, on average, 57 percent of Medicaid costs. But the ACA gives states much higher levels of funding when it comes to extending benefits. As a CBPP report in March noted, the feds will pay a whopping 93 percent of the costs of expansion over the next nine years:
Specifically, the federal government will assume 100 percent of the Medicaid costs of covering newly eligible individuals for the first three years that the expansion is in effect (2014-2016). Federal support will then phase down slightly over the following several years, and by 2020 (and for all subsequent years), the federal government will pay 90 percent of the costs of covering these individuals. According to CBO, between 2014 and 2022, the federal government will pay $931 billion of the cost of the Medicaid expansion, while states will pay roughly $73 billion, or 7 percent.
That means, all in all, states will only see a 2.8 percent increase in what they would have spent on Medicaid if there was no health-care bill. The expansion is also in the interests of health-care providers. The ACA was meant to vastly decrease the amount of health care hospitals have to provide with little or no compensation. It was for that reason, Park says, that providers agreed to reductions in Medicaid and Medicare rates. But without the Medicaid expansion, working adults who are too poor to afford health care but not poor enough to qualify for Medicaid could still be left without coverage in some states. “Now there’s going to be a donut hole in the middle if the state doesn’t proceed,” says Park. That’s bad business for hospitals. There’s another factor that states will have to consider: the savings they will realize as populations begin to get healthier. According to the CBPP report, there will be 33 million fewer uninsured people by 2022. Uninsured people are expensive; they often rely on expensive emergency-room care, rather than getting preventative and early treatment which is ultimately cheaper and more effective. The Urban Institute reports that in 2008, $10.6 billion in state and local dollars went toward hospital care for the uninsured—20 percent of the total costs. The percentage is even higher when it comes to mental-health services. With the expansion, those costs will likely go down dramatically. States may have the option now to forgo the Medicaid expansion. But the results won’t be pretty.
By: Abby Rapoport, The American Prospect, June 28, 2012
“Illusions Of Care”: Romney’s Healthcare Plan That Isn’t
If someone asked you to come up with a good reason that Mitt Romney—the boring one-term governor of a state he left with high debt, poor job-creation and low approval ratings—became a credible national candidate, you might have a hard time doing so. The fact that he is wealthy and could self-finance his way into the top tier of Republican presidential contenders helped, as did the fact that he had won in the bluest of states, Massachusetts.
But the main reason, ironically, is that he was associated with a policy achievement—healthcare reform—that he has completely come to oppose. Back in 2007, Republicans still pretended to care about the crisis of 45 million uninsured Americans and costs that keep spiraling upwards. And so they looked to the one Republican who had tackled that problem at the state level and had done so with a program that harnessed the private sector rather than creating a massive new entitlement program. Conservative organs such as National Review, which would later inveigh against the Affordable Care Act (ACA), cited Romney’s experience with reforming the health insurance system as one of his most valuable credentials.
Throughout this campaign Romney has walked a tiny tightrope on healthcare: he attempts to make amends for passing the state level template for the ACA by issuing over the top denunciations of socialist, unconstitutional “Obamacare.” Meanwhile he has studiously avoided saying anything of substance about how he would address the massive market failure that defined the pre-reform American healthcare system.
On Tuesday in Orlando Romney gave a speech intended to create the false impression that he intends to replace the ACA with something that would provide the same benefits through other means. Here is how the Washington Post summarized the speech: “Romney fleshed out a plan he proposed earlier that would apply free-enterprise principles to the nation’s health-care system rather than operate it like a ‘government-managed utility,’ letting competition drive down prices and increase quality.” The “earlier” they refer to is Romney’s big healthcare speech last May that was meant to make it clear how different he is from Obama on the subject.
That was the main thrust again on Tuesday. Romney repeated the usual right-wing shibboleths: that the ACA has hamstrung the economic recovery by placing “unaffordable” cost burdens and new taxes on families and businesses. He has been at this for a while, using misleading anecdotes, such as his blatant misrepresentation of a passage from Noam Scheiber’s book that he claims shows the White House knew healthcare reform would damage the recovery, when it only shows that it knew more stimulus might have been more valuable to the short-term recovery. Of course, had Obama proposed more stimulus spending instead of healthcare reform in the fall of 2009, Romney and other Republicans would have opposed it.
In fact, the Romney campaign appears to disagree with the Post that Romney offered much more substance than he did last May. When I asked for details of what he is proposing, the campaign said he laid it out last year and the program is available on the campaign website.
The healthcare page on Romney’s site does not, in fact, tell you much about what Romney would do. Instead it mostly offers vague, inoffensive sounding principles such as “Ensure flexibility to help the uninsured, including public-private partnerships, exchanges, and subsidies” and “Offer innovation grants to explore non-litigation alternatives to dispute resolution.”
Some of the principles are more blatantly ideological and potentially quite troubling, such as “Limit federal standards and requirements on both private insurance and Medicaid coverage.” Those federal standards and requirements are in place to protect citizens from rapacious companies and miserly state governments that would deprive recipients of necessary treatments. Any given federal requirement might be too costly or unnecessary. But Romney doesn’t specify which federal requirements he would eliminate so as to avoid inviting scrutiny of what his policy would do to the vulnerable.
The few specifics Romney offers could reduce, rather than expand, medical coverage. Romney would turn Medicaid into a block-grant program. That way, if poverty increases the federal government would not be on the hook for covering more Medicaid recipients. It would be the state’s problem. And what would the states do? Reduce the quality of coverage, or tighten eligibility rules to reduce the number of people covered.
The only other major change to the health insurance delivery system Romney offers is this: “End tax discrimination against the individual purchase of insurance.” That’s a euphemism for creating an expensive new tax deduction. That’s pretty hypocritical coming from someone who promises to cut tax rates and somehow magically make up for the lost revenue by eliminating tax expenditures.
Currently employer-provided health insurance is not taxed as income. Consequently, we overspend on health insurance by favoring that compensation over money employers pay to workers and the workers spend on anything else. This is actually not a very good policy for anyone. Employers are stuck with escalating healthcare costs, employees see their wage increases get diverted to healthcare, and the individual insurance market offers inferior, expensive coverage that unfairly disadvantages the self-employed and thus discourages risk taking.
These are all good reasons to get rid of our current system and switch to a universal, single-payer approach, such as making everyone eligible for Medicare. The alternative way to eliminate the current market distortion would be to end the tax deductibility of employer-based health insurance. That’s the program John McCain ran on in 2008. Back then, conservatives made sensible arguments in favor of doing so. For example, the Family Research Council complained in 2007 that employer-sponsored health insurance enjoys the single largest subsidy in our tax code.
But Mitt Romney is not John McCain. He is a coward, who lacks an iota of McCain’s political bravery. Consequently, Romney fears the backlash that would ensue if he took the principled position in favor of removing this inefficiency. So instead he proposes to equalize the treatment by making it also tax-deductible for individuals to buy their own insurance. That’s good for them, but it does nothing for the market. (The advantage to the market of McCain’s proposal was that it would move millions of health working-age Americans into the individual insurance market, much as the individual mandate would.) The ACA creates a flat tax credit for buying insurance. Romney would repeal that and offer a tax credit based on how much you spend on health insurance, so it would disproportionately benefit richer people who can afford more expensive tax plans.
In a similar act of falsely telling voters they can have their cake and eat it too, Romney promises to keep the most popular provision of the ACA, the rule preventing insurers from excluding prior conditions, without explaining how he would prevent the insurance market from a death spiral of cost increases. (The current mechanism for preventing that, the individual mandate, is the core of what Romney promises to repeal if the Supreme Court doesn’t do so first.)
As a freelancer who pays for his own insurance, I stand to benefit. But as American citizens, we all stand to lose.
By: Ben Adler, The Nation, June 12, 2012
“Gender Pay Gap Is Alive And Well”: Facts About the Health Insurance Compensation Gap
Unfortunately the gender pay gap is alive and well: Women in the United States earned 77 cents for every $1 earned by men in 2011—an average of $10,622 in lost wages every year. Yet that earnings ratio actually understates the extent of women’s disparate treatment in the workforce because they also experience a health insurance compensation gap. Below are the answers to some key questions about this gap, as well as how the Affordable Care Act—the new health reform law—works to close it.
Q: What is the health insurance compensation gap?
A: Women are less likely than men to receive health care coverage through their employer and are more likely to have higher out-of-pocket medical costs. This results in a health insurance compensation gap on top of the wage gap.
Q: What is the difference between men’s and women’s access to job-based coverage?
A: Women are significantly less likely than men to have access to their own employer-based coverage. Less than half of women (48 percent) are eligible to get health insurance through their jobs, compared with 57 percent of men, in part because women are more likely to work for small businesses and in low-wage jobs. Although two-thirds of women between the ages of 18 and 64 have employer-based insurance coverage, only 38 percent of women are enrolled in an insurance plan they receive through their own employer,1 while 24 percent receive employer-based coverage as a dependent on their spouse’s or partner’s plan. In contrast, 50 percent of men receive insurance coverage through their own employer, and only 13 percent of men receive dependent coverage.
Q: What is the financial impact of the compensation gap?
A: The gap in health insurance compensation translates into women losing an average of $4,508 for single coverage and $10,944 for family coverage in employer contributions to health benefits each year. Given that two-thirds of mothers are either primary breadwinners or co-breadwinners for their families, the compensation gap is a significant burden on the budgets of many American families.
Q: Where do women turn when they don’t have access to job-based coverage?
A: When working women cannot obtain employer-based coverage and earn too much to qualify for Medicaid, they must turn to the individual health insurance market. Yet women often face discrimination in the individual market—they are charged more for coverage, denied coverage for gender-specific conditions, and sold plans that inadequately cover their health needs.
Q: How much more do women spend out of pocket on health care?
A: Even with employer-based coverage, women have higher out-of-pocket medical costs than men. Overall, women of reproductive age spend 68 percent more out of pocket than men on health care, in part because their reproductive health care needs require more frequent health care visits and are not always adequately covered by their insurance. Among women insured by employer-based plans, oral contraceptives alone account for one-third of their total out-of-pocket health care spending.
Q: How are women affected by the compensation gap?
A: The combination of being paid less than their male counterparts and having higher out-of-pocket medical expenses leaves many women struggling to pay their medical bills or trading off other necessities such as food, heat, and electricity to cover their medical costs. Fifty-two percent of women report delaying or going without needed care because of cost (not filling prescriptions or skipping tests, treatments, or follow-up visits), compared with 39 percent of men. Women also report higher rates of medical debt than their male counterparts. And one study showed that more than half of low-income women are underinsured, meaning they spend 10 percent or more of their income on out-of-pocket health care costs and premiums.
Q: How will the Affordable Care Act help reduce the health insurance compensation gap?
A: The Affordable Care Act institutes a series of reforms designed to drastically expand coverage and contain health insurance costs for all Americans. Many of the reforms enacted by the new health law have been and will continue to be especially beneficial for women, as they help resolve many of the problems outlined above. The health care bill:
- Provides insurance premium assistance through income-based tax credits on a sliding scale beginning in 2014
- Expands Medicaid eligibility to people with incomes below 138 percent of the federal poverty level—about $31,809 for a family of four in 2011
- Allows young people to remain on their parents’ health plans until the age of 26
- Ends discrimination that has left women paying up to 150 percent more for the same coverage purely because of their gender
- Bans insurance companies from denying coverage to women through pre-existing condition exclusions Ensures that women receive vital preventive care at no additional cost—significantly including contraceptive coverage, which will eliminate one of the primary sources of women’s out-of-pocket health care spending
- Mandates that maternity benefits be covered as an essential part of women’s health care
- Caps co-pays and deductibles, which will help reduce the amount women pay in out-of-pocket expenses
Through these reforms that level the playing field for women in the health care market, the Affordable Care Act will help reduce the compensation gap that exacerbates the disparity between men and women’s earnings.
BY: Jessica Arons and Lindsay Rosenthal, Center For American Progress, June 1, 2012
“Confronting Health Care Reform”: What Romney Won’t Do On Health Care
He has awful plans that he’ll probably never implement.
Despite what the average voter probably thinks, presidential candidates keep the overwhelming majority of the promises they make. And most of the ones they don’t keep aren’t because they were just lying, but because circumstances changed or they tried to keep the promise and failed. But that’s in the big, broad strokes, while the details are another matter. It’s easy to put out a plan for, say, tax reform, but even if you achieve tax reform, it’s Congress that has to pass it, and they will inevitably shape it to their own ends. This happened to a degree with President Obama’s health care reform: it largely resembles what he proposed during the 2008 campaign, but not entirely. He had said he wanted a public option, for instance, but eventually jettisoned that, and had rejected an individual mandate, but eventually embraced it as unavoidable.
Which brings us to Mitt Romney’s health care plan. In its details, it’s quite horrifying. Jonathan Cohn has done us the service of giving it a close read, and explains: “He wants to scale back health insurance, so that it reaches less people and provides less protection from medical bills. In theory, this transformation will unleash market forces that restrain the cost of medical care. In practice, it will cause serious hardship, by exposing tens of millions of Americans to crushing medical bills or forcing some of them to go without necessary, even life-saving care.” Estimates are that under Romney’s plan—which repeals the Affordable Care Act, makes Medicaid a block grant (leading almost inevitably to fewer people getting covered), eliminates the tax advantage for employer-sponsored coverage (leading to more employers dropping coverage) and turns Medicare into a voucher, as many as 58 million fewer Americans could have health insurance than will once the ACA fully takes effect. Wow.
So the question is, is Mitt Romney really going to do this? I’m guessing the answer is no, and here’s why. If he becomes president, he’ll confront health care under one of two scenarios. The first is one in which the Supreme Court has upheld the ACA. In that case, conservatives are still mad, and will want to repeal it. But as long as there are more than 40 Democrats in the Senate to mount a filibuster, they won’t let repeal happen. So faced with the inability to achieve great big things on health care, Romney will probably settle for some smaller bills, probably including malpractice reform. One year into his presidency, the ACA will take full effect, and at that point, implementing his plan would mean not just preventing people who don’t have insurance from getting it, but actually tossing people who have insurance off their plans. Which just isn’t going to happen.
The second scenario is that the Supreme Court overturns the ACA, in which case they will have largely done Romney’s job for him. The elements of his plan that don’t relate to the ACA—block granting Medicaid, ending the tax exemption for employer benefits—will still run into unified opposition from Democrats, and as far as congressional Republicans will be concerned, the battle over health care will be over, and they’ll move on to other things.
In any discussion of health care, it’s important to remember that Republicans don’t really care about the issue, except insofar as it’s a bludgeon they can use to beat Democrats with. They just don’t. They care about taxes, and regulation, and defense, and many other things, but they’re happy not to worry about health care unless they have to. So chances are that whatever the Supreme Court decides, big, dramatic changes to the health care system during a Romney presidency are going to be talked about briefly, then put on the back burner permanently.
By: Paul Waldman, Contributing Editor, The American Prospect, May 24, 2012
“Swapping Old Folks For Poor Folks”: Lamar Alexander’s Senior Moment
I can’t read the whole thing yet, since it’s hiding behind the Wall Street Journal’s paywall, and I’m not about to subscribe. But from the headline and lede, it seems Sen. Lamar Alexander (R-TN) has taken a long stroll down memory lane by resurrecting the one-fashionable idea of a “swap” whereby currently shared federal-state governing responsibilities would be divided. In particular, he proposes that Medicaid be taken over by the feds in exchange for total assumption of responsibility for education by the states, and mentions he tried to sell the idea to Ronald Reagan back in the early 1980s.
I don’t know exactly which meetings Alexander is talking about, but as it happens, I was working for the then-chairman of the National Governors’ Association, the late Georgia Democratic Gov. George Busbee, when he was leading “federalism” discussions with the Reagan folk in 1981. Most governors at the time, regardless of party, were interested in what was called a “sorting out” agenda that would federalize some programs and devolve others; this was a favorite topic in particular for Arizona’s Democratic Gov. Bruce Babbitt, who like to talk about “states’ rights for liberals.” Babbitt wanted a “grand swap” in which Washington would become responsible for all health care and “welfare” programs in exchange for state assumption of transportation, education and criminal justice, areas in which they were already the major funders and policymakers. My own boss had a similar approach, but was mainly concerned to head off the kind of one-way abandonment of federal responsibility that most conservatives had in mind when they talked about “federalism.”
Whatever they told Alexander, that was pretty much the tendency of the Reaganites of the day. Reagan’s famous OMB director, David Stockman was interested in a “swap” that would have devolved cash income support, food stamps, and health care for the poor in exchange for the feds taking responsibility for the health care needs of seniors who were “dual-enrolled” in Medicaid or obtaining long-term care subsidies. It was basically a “swap” of old folks for poor folks. The governors weren’t buying it, and in any event, the Reagan administration was simultaneously pursuing a budget that would “cap” federal Medicaid payments, basically intitiating the kind of gradual shift in responsibility for the program to the states that Paul Ryan is pursuing in a more comprehensive way with his proposal to turn Medicaid into a “block grant.” As it happened, the Medicaid “cap” was one of the few budget proposals Reagan lost on in 1981.
Best as I can recall, this was the high-water mark of national Republican interest in taking over Medicaid, and it obviously was lower than a snake’s belly in a wagon rut. It’s only gotten worse sice then. It is striking that ol’ Lamar is talking about a federal takeover of Medicaid even as he joins other Republicans in violently opposing ObamaCare, since one major feature of ObamaCare is a significant increase in federal responsibility for Medicaid (via higher match rates for new enrolees), and for the health care needs of low-income families generally.
The bottom line is that Alexander is really living in the distant past if he thinks his party will support federalization of Medicaid (unless they get the idea they can starve or abolish it). The prevailing sentiment in the GOP, as reflected in the Ryan budget, is to move towards devolution of all current federal-state programs to the states, via rapid funding cuts to non-defense discretionary programs and by turning Medicaid and food stamps into block grants (along with big funding cuts). Matter of fact, Alexander voted for the Ryan budget himself. Maybe he explained that little contradiction in the portion of his op-ed still behind the paywall. Or maybe he’s just having a senior moment.
By: Ed Kilgore, Contributing Writer, Washington Monthly Political Animal, May 16, 2012
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