Obamacare Creates a Two-Tiered Medicaid System
Nearly a year after the Supreme Court limited the expansion of Medicaid under President Obamafs
health care reform law, the federal-state health program for the poor and
disabled is evolving into a disturbingly stark dual system in which the
availability of health care is being determined largely by the same political
divide that settled the 2012 presidential election.
The historic 5 to 4 ruling last June 28 upheld the Affordable Care Act in the face of bitter opposition
from conservative groups and Republican state officials. But seven of the nine
justices agreed that Congress exceeded its constitutional authority by coercing
states into participating in the Medicaid expansion – or risk losing federal
payments.
Once free to decide for themselves whether to go along with expanding
Medicaid coverage – at virtually no cost to them during the first three years –
20 states and the District of Columbia agreed to the coverage. But 14 other
states rejected the offer and a dozen more states are leaning against it.
That means that tens of millions of poor or disabled people currently living on the Eastern
Seaboard or in parts of the Midwest or along the Pacific Coast will be in line
to obtain Medicaid health care coverage for the first time next year. Yet
millions more – living primarily in the South and Southwest and portions of the
Midwest – will be denied coverage because of political and budgetary
calculations by their state political leaders and lawmakers.
And while many low-income people locked out of the Medicaid expansion can
still qualify for government subsidized insurance under the new health care law,
the poorest of poor living below the federal poverty level will be denied
insurance of any type.
gItfs ironic that the people who need health coverage the most and can least
afford it are the ones who will be totally left out in the cold,h
Ron Pollack, the executive director of Families USA, the national organization
for health care consumers, told The Fiscal Times Wednesday. gThere are a number
of states where we donft know yet [whether they will participate or not], but I
think itfs fair to assume there will be an approximate half-and-half division of
the statesh by early next year.
SHARP
REDUCTION IN PROJECTONS
Two years ago, CBO estimated that 34
million uninsured individuals would gain coverage as a result of the ACAfs
proposed expansion of Medicaid and other insurance market reforms. But last
month, CBO sharply reduced that projection by nine million people – largely
because of the number of states that have turned down the Medicaid offer.
A new non-profit RAND Corporation study released this week forecasts that 4.4
million people will be denied Medicaid insurance in the 14 states refusing to
take part in the program. But that number is certain to rise substantially when
other states opt out as well.
Obamacare sought to make Medicaid
eligibility more uniform by mandating that anyone earning up to 138 percent of the poverty level – or $15,856 in 2013
dollars – would be eligible for the program. But the Supreme Court ruling
invalidated that federal mandate and set the stage for tough battles and debates
in every state capital across the country.
gA lot of [this] has to do
with whether Medicaid programs can absorb the additional people in a way that
doesnft disadvantage everybody in the program,h said Joseph Antos, a health care
expert with the conservative American Enterprise Institute. gI think that is a
big issue that nobody ever talks about.h
The controversy
over whether or not to sign on to Medicaid 2.0 has roiled the political waters,
in some cases pitting GOP governors against their conservative state
legislatures in trying to win approval of the expanded coverage. Governors Jan
Brewer of Arizona, John Kasich of Ohio and Rick Snyder of Michigan are all
locked in bruising battles to persuade state lawmakers to go along with the
program. Florida Republican Gov. Rick Scott, an ardent critic of Obamacare, changed
directions and endorsed the Medicaid extension, but his efforts have been
blocked by the GOP-controlled state legislature.
When Texas Republican Gov. Rick Perry said he would reject the Medicaid
expansion, he contended the decision was for budgetary reasons. "It would
benefit no one in our state to see their taxes skyrocket and our economy crushed
as our budget crumbled under the weight of oppressive Medicaid costs,h he
said.
The new RAND report, however, concluded that Texas and the 13 other
states that have rejected Medicaid expansion will forgo about $8.4 billion a
year in federal funding and have to spend an extra $1 billion in uncompensated
care – all while ending up with about 3.6 million fewer insured residents.
Carter Price, the RAND studyfs lead author told The Fiscal Times
Wednesday that while the Supreme Court allowed states to opt out of the
expansion, it didnft exempt them from other provisions of Obamacare, including
new taxes and fees.
gIn a very real sense, the citizens of their states are paying for Medicaid
expansion, regardless of whether or not the state chooses to do it,h Price said.
gSo those states that choose not to extend Medicaid are paying for something
they are not getting.h
G. William Hoagland, a senior vice president at the Bipartisan Policy
Center and a former health care industry executive, warns that with
so many states refusing to take the offer, gYoufre going to start to have a two-tiered system out there . . . and it sets up what I
think will be further disparities in some states.h
WINNING AND LOSING STATES
With a handful of notable exceptions, states accepting the expanded
Medicaid coverage are blue states that helped reelect President Obama last
November – while those turning down the offer are red states that voted for
Republican Mitt Romney, a critic of Obamacare.
Those states saying no include the southern states of Alabama, Georgia, North
Carolina, South Carolina, Mississippi and Virginia; the Midwestern and
Southwestern states of Wisconsin, Iowa, Indiana, Texas, Oklahoma and Nebraska,
as well as Idaho and Alaska, according to Avalere Health, a consulting firm. All
but Iowa, Wisconsin and Virginia supported Romney last November. Meanwhile,
governors or state legislatures in seven other red states – Montana, Wyoming,
South Dakota, Kansas, Missouri, Louisiana and Utah – are thought to be leaning
against Medicaid expansion.
The expansion is one of the two primary ways that Obamacare would provide
coverage to millions of uninsured Americans starting next year. The other is
through state health insurance exchanges, which will sell policies to
individuals whose incomes are too high to qualify for Medicaid.
In states that have rejected the Medicaid expansion, low-income people
earning between 100 percent and 138 percent of the poverty level have the option
of turning to the insurance exchanges for subsidized insurance coverage.
But the poorest of the poor with earnings below the federal
poverty level would be out of luck – unless, of course, they decided to move to
another state with the expanded coverage. The Affordable Care Act made no
provision for granting subsidies to uninsured people below the poverty level
because the administration and Congress assumed they would automatically go into
the Medicaid system. That, however, was before the Supreme Court
ruling.