Exiling the Poor from the Insurance Market

July 22, 2012 by · 1 Comment
Filed under: Hospital Finances, Medicaid, Medicare 

pasquale_frank_lg1John Roberts’ jurisprudential wizardry in NFIB has been compared with the artistic genius of pro wrestlers and rappers. Poor Americans in states newly empowered to resist the ACA’s Medicaid expansion may need even more ingenuity to get themselves insured. Both Kevin Outterson and my colleague John Jacobi have observed the perplexing predicament imposed on the poor in states that keep Medicaid 1.0, and resist Medicaid 2.0. From Jacobi’s post:

The reform provides insurance subsidies through tax credits. The credits are calculated on a sliding scale, according to household level, for people with income up to 400% of FPL [the federal poverty line] — subsidizing more generously someone earning 200% of FPL, for example, than someone earning 350% of FPL. But, under 26 USC 36B(c)(1), credits will not be distributed to those with incomes below 100% of the FPL. Why? Because Congress assumed states would take up the Medicaid expansion, obviating the need for exchange-based subsidies for the very poor. . . .Bottom line: states rejecting Medicaid 2.0 will not only forego about 93% federal funding for the program between 2014 and 2022, but they could also be depriving the poorest of the uninsured from any shot at coverage — potentially affecting millions nation-wide.

Georgia hospitals are already worried about the “unexpected prospect of lower reimbursements without the expanded pool of patients” to be covered by the Medicaid expansion:

Last year, Georgia hospitals lost an estimated $1.5 billion caring for people without insurance. The promise of fewer uninsured is what led the national hospital industry to agree to the health law’s $155 billion in Medicare and Medicaid cuts over a 10 year period. The Medicaid curveball comes at a time when Georgia hospitals are already in the throes of a massive industry transformation to improve quality and efficiency driven by market forces as well as the new law. Hospitals face lower payments from insurers and pressures to consolidate. One in three Georgia hospitals lose money. All are busy preparing for new standards under the law that, if not met, could mean millions of dollars in penalties.

It’s hard to imagine how hospitals like Grady can continue to act as a safety net in that environment. The article notes that “Georgians already pay for the cost of care provided to people without insurance through higher hospital bills and inflated insurance premiums.” If that trend continues, all the states refusing Medicaid 2.0 may end up doing is shifting the cost of the Medicaid expansion population from national taxpayers to Georgians with insurance. The superwealthy Americans of Marin County and Manhattan ought to send Georgia Governor Nathan Deal a thank you note for keeping Georgians’ problems for Georgians themselves to solve.

Share

Tags: , , , , , , , ,

Comments

One Response to “Exiling the Poor from the Insurance Market”
  1. John Rusche says:
    07/23/2012 at 10:01 pm

    I think the Medicaid expansion will depend on a few variables.

    First, what is the existing eligibility limit in the State. For many of those assumed to be covered under the ACA expansion, they will already be covered under the existing eligibility. This “wood work” effect, currently eligible but not previously enrolled, might be worryisome, particularly seniors in nursing care and assisted living., the dual eligibles.

    Secondly, what are the existing state requirements on indigent care. Some states, like here in Idaho, have the counties or local hospital districts be responsible for the care of indigents. These programs are usually supported by local property taxes and the “cost shift” from insured patients. Many states have reinsurance or stop loss programs for these local entities, and end up paying for care from the state general fund. Some states have no requirement for either state or local governmental support for the care of indigents. In that case, it is the providers that will continue to eat the bills, or have to increase their cost shift, thereby increasing the cost of commercial health insurance.

    Finally, I think that the politics and vision of state leaders will weigh heavily. For example, here in Idaho the Governor, an outspoken ACA opponent, is conducting a fiscal analysis (we have shared county and state general fund indigent responsibility). This review will allow a look beyond the state Medicaid budget and general fund appropriation to get to the true cost to taxpayers here.

    In Texas there is a similar sharing of financial responsibility, but a smaller state share. But the Governor has announced, prior to a comprehensive review, his opposition. I think he may well be in for a political surprise when the property tax payers of the state begin to understand how they are being left holding the bag.

    Of course, there are calls to relieve hospitals and clinics of their duty to see all ill individuals, to repeal EMTALA. That would be a mess.

    John Rusche, MD
    Minority Leader
    Idaho House of Representatives

Speak Your Mind

Tell us what you're thinking...
and oh, if you want a pic to show with your comment, go get a gravatar!