GOP Wins Big In Northwest Florida House District In First Vote Since Rejecting Medicaid Expansion

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GOP wins big in Northwest Florida House district in first vote since rejecting Medicaid expansion Florida Democrats hoping the fight over Medicaid expansion and the sequester would win them support with those who depend on federal funding won’t find much encouragement in Tuesday’s special election for House District 2.

In the first referendum since House Republicans bypassed more than $50 billion in federal aid for health care, Mike Hill, a 55-year-old tea party Republican insurance agent, won 57.9 percent of the vote in a Northwest Florida district that has an economy dominated by hospitals as well as the military -- which is weathering a sequester deal rife with budget cuts forced by congressional Republicans.

Hill’s Democratic opponent, Jeremy Lau, mustered 42.1 percent of the vote in a special election held after Rep. Clay Ford died in March. Lau, a 40-year-old aircraft mechanic for L-3 Com Vertex Aerospace, a military contractor at Pensacola Naval Station, had made Medicaid expansion his No. 1 issue.

“The failure of the Legislature to expand Medicaid has cost our district jobs,” Lau said. “It’s a huge issue here.”

A University of Florida study concluded that expansion of Medicaid would create an average of 1,619 full-time and part-time jobs in Escambia County annually over the next 10 years and help provide coverage for county’s residents, 20 percent of whom don’t have health insurance.

But Lau couldn’t overcome the district’s conservative demographics (Mitt Romney won 59 percent of the vote here in 2012) and Hill’s overwhelming financial advantage. The district, which covers parts of Escambia and Santa Rosa counties, leans so hard right that no Democrat ran in either 2010 or 2012 against Ford. Hill raised $200,000 compared to Lau’s $29,500, getting plenty of help from the GOP, which chipped in $51,000. Democrats could manage only $1,090 for Lau.

Hill also made the Medicaid expansion a key issue, but as a way to spruce up his conservative credentials.

“I’m so proud of Speaker (Will Weatherford) and the House for turning that down,” Hill said. “We can’t afford that in Florida.”

Hill, a veteran of the U.S. Air Force, becomes the first black Republican in the Florida House since Jennifer Carroll served there between 2003 and 2010. He’s also the first black legislator from Northwest Florida since Reconstruction.

“I know the historical significance,” Hill said. “But it doesn’t matter to me if I’m the first black this or that. I don’t want to be chosen based on my skin color. I want to be chosen based on my character and my value system.”

 

Hill founded the Northwest Florida Tea Party in 2010. He summarizes his value system succinctly: “Limited government, low taxes, personal freedom and individual responsibility.”

He said he will aim to eliminate the corporate tax rate, reduce the state sales tax and eliminate rules and regulations for business.

“People want jobs, they want business to expand,” Hill said.

He lists his net worth, as of April 1, at $1.1 million, deriving about $424,000 a year from his State Farm Insurance agency. He makes another $8,000 a year sitting on the board of Pride Enterprises, which is a St. Petersburg company that makes state license plates using prison inmates. Hill said he supports the program as a board member, but said that as a legislator, he will evaluate the contract independently of his association with PRIDE. Upon running, however, he did step down from his board position with Integrity Florida, a public watchdog group in Tallahassee.

This is the first elected office held by Hill, who ran and lost in 2010 a senate race against Greg Evers. He recently got a shout-out from MSNBC talking head Joe Scarborough for his support in his congressional campaigns from the early 1990s.

Hill is new to District 2. He moved last week to a Pensacola Beach condo so he could qualify. Florida law requires candidates to live in the district upon getting elected. Hill said he actually lived in Ford’s district, but was drawn out of it when the boundaries were reconfigured last year.

He will have a year more in the Legislature than the next class of rooking lawmakers, giving him a headstart in the race for House Speaker. Other recent “red-shirt” freshmen to become speakers or speaker designates are Marco Rubio, who served as speaker in 2008 and 2009, and Jose Oliva, who is designated to become speaker in 2018.

But Hill wouldn’t say if he will vie for the Speaker job in 2020.

“I don’t know what it means to be Speaker,” Hill said. “I don’t know if it’s something I want.”

In a statement from the Republican Party of Florida, Weatherford welcomed Hill.

"Representative Hill will be a strong voice for limited government and individual liberty," Weatherford stated.

 "His election sends a clear message that Floridians want smaller government, lower taxes, and the freedom to pursue the American Dream," said Rep. Steve Crisafulli, R-Merritt Island, in a statement. "Representative Hill will be a strong conservative voice in our caucus."

Crisafulli, who is set to become Speaker in 2014, shares political consultants with Hill: Meteoric Media Strategies, founded by former Gov. Rick Scott spokesmen Brian Hughes and Brian Burgess.

Posted by Michael Van Sickler at 9:40 PM on Tuesday, Jun. 11, 2013 in 2013 FLORIDA LEGISLATURE, Will Weatherford | Permalink

The Miami HeraldCopyright 2013 The Miami Herald. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Comments

You can follow this conversation by subscribing to the comment feed for this post.

A lot of Hill's money came from the Insurance Industry. You can expect him to continue the attacks on Citizens and the overblown estimates of storm exposure in Floriduh. In other words, you can expect him to continue the inflated premiums and the corporate welfare system Republicans hold near and dear to their hearts and wallets (that's a redundant statement).

Posted by:Anti-Tallahassee |June 12, 2013 at 12:34 AM

Just what Florida needs--another Tea Party Legislator.

Posted by:M.A. Salfinger |June 12, 2013 at 07:26 AM

One more nut for the fruitcake in Tallahassee!!

Posted by:Doug Watson |June 12, 2013 at 10:09 AM

Glad to know that corporate welfare will continue to be the primary mission of the Florida Legislature. West Florida has always been much more a part of Alabama than Florida. No real loss if we just partitioned the state at the Apalachicola River.

Posted by:Can't take anymore |June 12, 2013 at 01:12 PM

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Oregon Study Throws a Stop Sign in Front of ObamaCare’s Medicaid Expansion

Today, the nation’s top health economists released a study that throws a huge “STOP” sign in front of ObamaCare’s Medicaid expansion.

The Oregon Health Insurance Experiment, or OHIE, may be the most important study ever conducted on health insurance. Oregon officials randomly assigned thousands of low-income Medicaid applicants – basically, the most vulnerable portion of the group that would receive coverage under ObamaCare’s Medicaid expansion – either to receive Medicaid coverage, or nothing. Health economists then compared the people who got Medicaid to the people who didn’t. The OHIE is the only randomized, controlled study ever conducted on the effects of having health insurance versus no health insurance. Randomized, controlled studies are the gold standard of such research.

Consistent with lackluster results from the first year, the OHIE’s second-year results found no evidence that Medicaid improves the physical health of enrollees. There were some modest improvements in depression and financial strain–but it is likely those gains could be achieved at a much lower cost than through an extremely expensive program like Medicaid. Here are the study’s results and conclusions:

We found no significant effect of Medicaid coverage on the prevalence or diagnosis of hypertension or high cholesterol levels or on the use of medication for these conditions. Medicaid coverage significantly increased the probability of a diagnosis of diabetes and the use of diabetes medication, but we observed no significant effect on average glycated hemoglobin levels or on the percentage of participants with levels of 6.5% or higher. Medicaid coverage decreased the probability of a positive screening for depression [by 30 percent], increased the use of many preventive services, and nearly eliminated catastrophic out-of-pocket medical expenditures…

This randomized, controlled study showed that Medicaid coverage generated no significant improvements in measured physical health outcomes in the first 2 years, but it did increase use of health care services, raise rates of diabetes detection and management, lower rates of depression, and reduce financial strain.

As one of the study’s authors explained to me, it did not find any effect on mortality because the sample size is too small. Mortality rates among the targeted population – able-bodied adults 19-64 below 100 percent of poverty who aren’t already eligible for government health insurance programs – are already very low. So even if expanding Medicaid reduces mortality among this group, and there is ample room for doubt, the effect would be so small that this study would be unable to detect it. That too is reason not to implement the Medicaid expansion. This is not a population that is going to start dying in droves if states decline to participate.

There is no way to spin these results as anything but a rebuke to those who are pushing states to expand Medicaid. The Obama administration has been trying to convince states to throw more than a trillion additional taxpayer dollars at Medicaid by participating in the expansion, when the best-designed research available cannot find any evidence that it improves the physical health of enrollees. The OHIE even studied the most vulnerable part of the Medicaid-expansion population – those below 100 percent of the federal poverty level – yet still found no improvements in physical health.

If Medicaid partisans are still determined to do something, the only responsible route is to launch similar experiments in other states, with an even larger sample size, to determine if there is anything the OHIE might have missed. Or they could design smaller, lower-cost, more targeted efforts to reduce depression and financial strain among the poor. (I propose deregulating health care.) This study shows there is absolutely no warrant to expand Medicaid at all.

View the original article here

Why the Obamacare Medicaid Expansion Is Bad for Taxpayers and Patients

Medicaid needs reform, not expansion. This federal–state health care program provides health care to over 60 million Americans and consumes a growing portion of state and federal budgets. Research shows a long history of Medicaid enrollees having worse access and outcomes than privately insured individuals.[1] Due in part to low reimbursement, one in three doctors refuses to accept new Medicaid patients.[2] Despite access issues, Medicaid spending continues to grow. In 2010, total federal and state spending on Medicaid exceeded $400 billion.[3]

Instead of reforming Medicaid, the Patient Protection and Affordable Care Act (Obamacare) expands eligibility to all individuals earning less than 138 percent of the federal poverty level (FPL).[4] The Medicaid program is already struggling to provide care to its core obligations—a diverse group of low-income children, disabled, pregnant women, and seniors. Adding more people further exacerbates Medicaid’s underlying problems.

The expansion of Medicaid fuels a larger trend under Obamacare: government coverage supplanting private coverage. By 2021, 46 percent of all Americans will be dependent on the government for their health care. Of this group, 86.9 million will be on Medicaid/Children’s Health Insurance Program (CHIP), followed by 64.3 million on Medicare and 23.4 million enrolled in government exchanges.[5] This will push U.S. health care closer to a government model.

The Temptation of Medicaid Expansion

Obamacare provides additional federal funding to the states for this new expansion population. Starting in 2014, the federal government would pick up 100 percent of the benefit costs for the newly eligible population for three years. Thereafter, this enhanced federal funding would gradually decline to 90 percent in 2020.

Obamacare also directed states to expand eligibility or risk forgoing all of their federal Medicaid dollars. The Supreme Court, however, ruled on behalf of 26 state plaintiffs that this “all-or-nothing” proposition was coercive. To rectify this, the Court essentially made the expansion optional, meaning that a state could reject the expansion but not lose its existing Medicaid funding.

Today, governors and state legislators are weighing this option as they develop their budgets for the coming year. Proponents use a variety of unrealistic arguments in support of the Medicaid expansion:

It provides states with an influx of new, generous federal revenue. This will cause states to spend money that they otherwise would not have spent. Moreover, due to the structure of Obamacare, states will likely have to absorb many currently eligible but not enrolled individuals as well as those who lose their existing employer coverage. These effects would add to the cost.[6]It will result in savings as the cost of uncompensated care declines with expanded coverage. Heritage data analysis shows that in the first few years, when federal funding is at its peak, states may see some savings. Over time, however, in the majority of states, Medicaid spending will accelerate and dwarf any projected uncompensated care savings.[7] These savings are also contingent on states enacting legislation to further reduce uncompensated care funds (Disproportionate Share Hospital [DSH] payments) on top of the $18 billion of federal cuts enacted under Obamacare. Heritage analyst Ed Haislmaier predicts that “governors and state legislators should expect their state’s hospitals and clinics to lobby them for more—not less—state funding to replace cuts in federal DSH payments.”[8]
Finally, contrary to the theory that expanding Medicaid would cause the number of uninsured to decline and reduce the need for uncompensated care, a similar expansion in Maine found the opposite effect. In Maine, uncompensated care increased, and the number of uninsured in the targeted population (those below 100 percent of FPL) saw limited change.[9]Rejecting the expansion will mean that other states get more. The federal share of Medicaid is based on a formula calculation and actual expenditures. Rejected funds do not go into a general fund for redistribution to other states. The fewer states that expand, the less the federal government spends. States that draw down on these new federal funds fuel the fiscal crisis in our country.

The Trade-Off Dilemma

Committing to an expansion creates a dilemma for the states. To control Medicaid spending, states typically fall back on predictable techniques to manage costs, such as limiting reimbursements to health care providers and limiting services, which ultimately limits access to care. These Medicaid cost controls, however, go only so far. Today, Medicaid consumes over 23 percent of state budgets, surpassing education as the largest state budget item.[10] As Medicaid spending continues to rise, other important state priorities such as education, emergency services, transportation, and criminal justice are squeezed.

Finally, if states resist balancing among spending programs, the alternative is generating more revenues with tax increases. But higher taxes come with a steep price: They reduce economic growth. With most states still experiencing anemic growth, tax increases on top of already higher taxes at the federal level are not an appealing option.[11]

Fueling the Country’s Fiscal Crisis

Any positive assumptions about Medicaid expansion also assume that federal funding remains unchanged. With deficits running over $1 trillion a year, the country’s fiscal future is in need of reform. Federal spending on health care entitlements, including Medicare and Medicaid, is the largest driver.[12]

Even this Administration recognizes that such entitlement spending, including Medicaid, is unsustainable. The President’s fiscal year (FY) 2011 budget outlined several Medicaid reform policies, including setting an across-the-board blend rate for federal reimbursement and limiting the states’ ability to leverage provider taxes for the state share of matching funds. Although the Administration attempts to distance itself from its own proposal, any serious efforts toward entitlement reform must include Medicaid.

In spite of this fact, several Democrat and Republican governors that support Medicaid expansion condition their support on federal funding remaining untouched. In essence, pro-expansion governors are telling Washington, “don’t touch entitlement spending.” This reliance on federal revenues exacerbates the country’s fiscal challenges and could also affect states’ own fiscal health. Recently, Moody’s cited Missouri’s reliance on the federal government, including Medicaid funding, as adversely affecting its credit rating outlook.[13]

Setting Good Policy

There are several recommendations that the states and Congress could adopt to help mitigate the crisis that Obamacare has exacerbated:

Reject the Medicaid expansion. Greater dependence on federal dollars tangles the states in bad fiscal policy and bad health care policy. States that reject the expansion avoid relying on unsound federal revenues, stretching an already thin program beyond its means and adding millions to a failing program.  Scale back existing eligibility where possible. Some states have allowed Medicaid to grow beyond its original intent by moving middle-class families into a welfare program. To restore Medicaid as a safety-net program, states should review eligibility levels, scale back eligibility where possible, and restore the program’s focus on its core Medicaid functions.Advance a separate, state alternative. Instead of using a flawed Obamacare model, states should put in place an alternative. States should develop a state solution tailored to the specific needs of this new population rather than placing them in a one-size-fits-all Medicaid option.[14] A non-Medicaid, state-based approach, especially for this targeted population, would give states the control to design policies best suited to addressing the needs of their citizens without onerous Medicaid constraints. Congress should eliminate the federal enhanced Medicaid match. To avoid the argument that states rejecting Medicaid are leaving federal dollars on the table, Congress should level the playing field by removing the new, enhanced federal dollars. This would remove/minimize the temptation of excessive and unsustainable federal funding and restore fiscal constraint at the federal level. States would still be able to expand eligibility but would have to do so with the traditional (non-enhanced) federal matching rate. If Congress ignores this opportunity to restrain federal spending, it could “block grant” the enhanced federal dollars to the states to develop their own state-specific approaches, including alternatives outside of Medicaid.

Alternate Solution Needed

Medicaid is already spread too thin. Adding a new and complex population to this program does not solve its challenges; it only makes them worse. States should resist, and Congress should remove, this temptation. Both should begin to lay out a better and more sustainable alternative than a failing government health program to care for the less fortunate.

—Nina Owcharenko is Director of the Center for Health Policy Studies and Preston A. Wells, Jr., Fellow at The Heritage Foundation.

View the original article here

Medicaid Expansion Wrong for SC

‘For every problem,” H.L. Mencken wrote, “there is a solution which is simple, clean and wrong.” Enter Obamacare and one of the main ways that it purports to reduce the number of uninsured: putting more people on Medicaid.

S.C. legislators are being pressured to do just that. The House has rejected the idea, and Gov. Nikki Haley has vowed to veto it, but it’s not dead. And if they ultimately sign on to the idea, they’ll find they’ve made a costly mistake and created a long-term fiscal problem.

Specifically, some in the Legislature want to expand Medicaid eligibility to more adults during the three years the federal government covers the expansion population.

But this allegedly good deal will only bring turmoil to the state’s budget in the future. For one thing, Medicaid expansion is not “catch and release” for the states. Once such an expansion has occurred, it is politically difficult if not impossible to roll back enrollment. It becomes a permanent entitlement — and one that is completely unaffordable.

If South Carolina expands Medicaid, taxpayers would be on the hook for millions. According to our research, the expansion would begin costing the state just four years from now and would cost $612 million over the next 10 years — outstripping any purported “savings.”

Already Medicaid is consuming a greater share of the state budget. Expanding Medicaid will make it even larger and harder to pay for other state priorities, including schools and roads, in the future.

This also assumes that federal funding for the Medicaid expansion goes unchanged. Right now, Washington is struggling to get the country’s fiscal house in order. Any serious efforts to address this crisis would have to address real entitlement reform, including Medicaid.

Although administration officials say Medicaid is off the table, it was just last year that the president’s own budget proposed changing Medicaid financing. So these promises are good only until the president needs money to pay for his many other spending priorities.

But affordability isn’t the only issue. Extending coverage via Medicaid doesn’t mean that individuals will, in fact, gain access to the health care they need. Already, it is becoming harder to find a doctor who will accept a new Medicaid patient, primarily due to lower payment rates.

Obamacare tries to temporarily raise Medicaid payment rates for some doctors. But here too it leaves the state holding the bag and ignores the reality that you can’t add millions of people on to a program where there are fewer doctors to see them. Not only will new and existing patients have a harder time finding a doctor, but the doctors will have less time to spend with each patient. The expansion of Medicaid also will displace private insurance and shift more of the cost of health care to the few who still have private insurance.

Who suffers the most if this happens? The needy, of course, including children. Medicaid doesn’t pay for many procedures, and physicians are only able to manage because of their non-Medicaid patients. If more people are dumped into the program, that lack of compensation will only worsen, and the doctors will be forced to do more for even less.

A massive expansion of Medicaid will not meet the needs of those it is intended to reach and will only further exacerbate the challenges of delivering quality care to those currently on it. Medicaid needs reform, not expansion. These reforms can start now with states, like South Carolina, working to develop their own solution for addressing the needs of the uninsured. Ideas that don’t depend on approval or more financing from the federal government.

But as the Hippocratic Oath says, “First do no harm.” S.C. legislators can honor that dictum by not expanding their Medicaid program.

-Former Sen. DeMint is president-elect of the Heritage Foundation.

First appeared in The State.

View the original article here

Medicaid Expansion: Implications for Ohio

Testimony before
Finance and Appropriations Committee Health
and Human Services Subcommittee
Ohio House of Representatives

 March 13, 2013
Edmund F. Haislmaier

My name is Edmund Haislmaier.  I am Senior Research Fellow at The Heritage Foundation. The views I express in this testimony are my own, and should not be construed as representing any official position of The Heritage Foundation.

Thank you Madam Chairman and Members of the Committee for inviting me to testify today on the implications for Ohio of the Medicaid expansion included in the federal Patient Protection and Affordable Care Act (PPACA) of 2010.

State lawmakers debating whether or not to adopt the Medicaid expansion should note that the expansion population differs significantly from the other populations already covered by Medicaid.

Since it’s inception the focus of Medicaid has been on providing health care to vulnerable low-income individuals—namely, children and disabled and elderly adults.  In many instances, the parents of children on Medicaid also receive coverage.

States that now adopt the expansion in PPACA will be extending Medicaid to a different population, consisting of able-bodied adults, the vast majority of whom do not have dependent children.

Table 1 reproduces Ohio data (as well as national data for comparison) from an Urban Institute analysis of the composition of the Medicaid expansion population. The data yield several important observations.

Table 1

Uninsured Adults Newly Eligible for Medicaid with Incomes Below 138% of FPL (Numbers in 1000’s)

Adults without Dependent Children

Source: Genevieve M. Kenney, et. al., “Opting in to the Medicaid Expansion under the ACA:Who Are the Uninsured Adults Who Could Gain Health Insurance Coverage?,” Urban Institute, August 2012

First, because Ohio's current Medicaid program covers parents up to 90% of the federal poverty level (or 96%, if working), just over 10% of the expansion population will be parents.  The other 90% of the expansion population will be adults without dependent children.

Second, the expansion population will be relatively young, with half between the ages of 19 and 34.

Third, the expansion population will be more male than female.  In part, that is due to the fact that Ohio’s Medicaid program already covers pregnant women up to 200% of the federal poverty level.

The Urban Institute estimates that adopting the expansion would increase Ohio Medicaid enrollment by a total of 578,000 individuals.  Of those, an estimated 445,000 are below 100% of the federal poverty level.  This is significant because the other 133,000 individuals, or 23% of the expansion population—who are between 100% and 138% FPL—will be able to instead obtain federally subsidized exchange coverage if Ohio does not expand Medicaid. Table 2 gives the same enrollment composition data for the subgroup with incomes below 100% FPL. In that subset only 5.1% are parents, while 94.9% are adults without dependent children.

Table 2 

Uninsured Adults Newly Eligible for Medicaid with Incomes Below 100% of FPL (Numbers in 1000’s)

Adults without Dependent Children

Source: Genevieve M. Kenney, et. al., “Opting in to the Medicaid Expansion under the ACA:Who Are the Uninsured Adults Who Could Gain Health Insurance Coverage?,” Urban Institute, August 2012.

Because this population consists overwhelmingly of adults without dependent children and is both younger and more male, Medicaid coverage designed for more vulnerable populations is not the most appropriate solution for these individuals.

Among this population, low-income is largely a reflection of certain factors, and those factors also tend to correlate with age.  In general, low-incomes among younger adults (those in their twenties) tend to result from combinations of poor education, lack of skills and limited workforce participation.  They are less likely to have serious or chronic medical conditions. In contrast, those older than age 30 with low incomes are more likely to also have chronic health conditions or behavior health issues, such as substance abuse.

Consequently, any health care assistance provided to this population should incorporate strong incentives for both work and healthy behavior, neither of which are features of the Medicaid program.  A health care assistance program for this population should include the following specific design features:

Any coverage should be subsidized on an income-related sliding scale, so as to avoid creating economic disincentives for work. Assistance should be conditioned on a strong work requirement.  Recipients should be required to be working, actively seeking work, or engaged in job preparation activities, on a full-time basis. A recipient could satisfy this requirement by engaging in more than one of those activities, as appropriate to the individual’s circumstances, provided that the total effort was normally 40 hours per week. The coverage should be structured to emphasize the provision of primary care services. Like private insurance, the coverage should include strong disincentives (such as significant copays or deductibles) for inappropriate use of hospital emergency department services. For those with chronic conditions such as diabetes, or behavioral health issues such as substance abuse, the program should offer disease management and behavior modification programs, accompanied by compliance monitoring and tangible rewards for successful participation.

If Ohio covers this population through a Medicaid expansion, then federal Medicaid rules will prevent the state from implementing some of these features, such as work requirements, and will also limit the state’s ability to implement others, such as more appropriate copay structures or rewards for behavior modification.  Furthermore, any variances for this population from the standard coverage provided to existing Medicaid populations will require federal approval.

Consideration needs to also be given to how Ohio adopting the Medicaid expansion will interact with other provisions of the PPACA.

For example, it is commonly assumed that because the PPACA requires employers to extend dependent coverage to children of their workers up to age 26, that most young adults will be covered on a parent’s policy.  However, if a young adult does not qualify as a dependent on someone else’s tax return he or she is treated as a separate household for Medicaid or exchange eligibility purposes.  Furthermore, there is no requirement that a young adult enroll in the health plan of a parent’s employer, if that option is available.  When the PPACA requirement for dependent coverage up to age 26 went into effect many young adults shifted from coverage under their own employer’s plan to coverage under a parent’s employer plan.  It can similarly be expected that when the new exchange subsidies and Medicaid expansion take effect, many young adults will shift from employer coverage to Medicaid or exchange coverage if they qualify for that coverage based on their own income.

It has also been widely noted that the design of the employer mandate in the PPACA will encourage employers to favor hiring more part-time workers and fewer full-time workers.  That is most likely to occur with respect to lower-wage and younger workers.  Extending Medicaid coverage with no work requirements to those individuals will make that option more attractive for employers.  Not only is that likely to result in higher than projected Medicaid enrollment over time, it will also exacerbate growing rates of youth unemployment and underemployment.  Relative to their European counterparts, young adults in America today are less likely to have health insurance but more likely to have jobs.  Expanding Medicaid unconditionally to this population is a good way to increase youth unemployment and underemployment to European levels.

Similarly, colleges and universities typically provide health plans to students.  However, because several of the PPACA’s new insurance rules will make that coverage much more expensive, many higher education institutions are considering dropping their student plans. That is much more likely to happen if a state expands Medicaid, thus enabling students, particularly graduate students who do not have access to coverage under a parent’s policy, to obtain Medicaid coverage.

Rather than adopting the PPACA’s broad Medicaid expansion, Ohio should instead extend Medicaid coverage only to the remaining parents and disabled adults below 100% of the FPL who are not already covered by the program.  For non-disabled adults without dependent children who are below 100% of the FPL, Ohio should then design a state-only funded health care assistance program that is more suitable for that population.  Such a program should be constructed on the design principles outlined above.

As noted, a strong work requirement should be a key feature of such a program.  Indeed, increasing employment and hours worked among this target population not only will benefit those individuals, but will also reduce the need for the program, and thus limit the cost to the state.  That is because once a worker earns more than the federal poverty threshold he or she will become eligible for the PPACA’s federally subsidized exchange coverage.  The current federal poverty threshold is $11,170 and the current federal minimum wage is $7.25 an hour.  A full-time (40 hours a week, 50 weeks per year) minimum wage worker earns $14,500 in annual income, or 130% of the poverty threshold.  Indeed, at Ohio’s current, higher, minimum wage of $7.85 per hour, all that is needed to exceed the federal poverty threshold (and thus qualify for federally subsidized exchange coverage) is 30 hours work per week for 50 weeks per year, or 40 hours work per week for 36 weeks per year.

While a fully insured program would be desirable, the PPACA’s new regulations imposed on private insurance will likely make that option too inflexible and expensive. The existing Cover Tennessee and Cover Florida programs will encounter those problems next year.  Consequently, an Ohio program should, at least initially, directly reimburse participating enrollees and/or providers.  However, the state could also contract on an “administrative services only” (ASO) basis with one or more insurers to run the program.  Existing managed care organizations would be obvious candidates.  If a suitable work-around to the PPACA’s insurance market rules can be devised, it may be possible to later shift the program onto a fully insured basis.

The state should look to fund the program by redirecting other, existing state spending.  In particular, the presence of federally subsidized exchange coverage will enable the state to discontinue Medicaid coverage for optional populations with incomes above either 100% of the FPL or otherwise federally mandated minimum levels, saving the state its share of the current costs.

In particular, Ohio can reduce Medicaid eligibility for working disabled adults from the current level of 250% FPL to 100% FPL, and pregnant women from the current level of 200% FPL to 138% FPL.  Once the PPACA’s “maintenance of effort” requirement on coverage of children in Medicaid and CHIP expires, the state will also be able to reduce eligibility levels for children to the federally mandated minimum of 138% FPL.  It is important to note that all of the individuals who would lose Medicaid coverage as a result of these changes will be able to obtain replacement federally subsidized exchange policies that provide comprehensive coverage with low enrollee premiums and very low cost sharing.

Given that a subset of the target population for the new program (non-disabled adults without dependent children below 100% FPL) will have chronic health conditions or behavioral health issues, the state should also consider repurposing to the new program some portion of existing spending on substance abuse treatment and state supplemental payments to hospitals and clinics for uncompensated care. For example, Ohio currently receives $115 million a year in grants from the federal Department of Health and Human Services’ Substance Abuse & Mental Health Services Administration (SAMHSA), $66 million of which is Substance Abuse Prevention and Treatment Block Grant funding.

In conclusion, it is an undisputed fact that the United States spends more on health care—on a per-capita basis and as a share of gross domestic product—than any other nation.  It is also a fact that the results of all that spending are sub-optimal. That is particularly evidenced by inadequate access to medical care among some sub-populations—particularly young adults. 

Congress failed to adequately address this situation when it enacted the PPACA.  What Congress should have done is to redesign health care financing incentives to generate a better-value, lower-cost system and then direct the resulting savings into expanding access.  Instead, in PPACA Congress shoved more people into a failing system and burdened the country with even higher public and private health care spending.

As Ohio and other states consider their own health reform measures, they should not simply go along with a set of bad federal policies, but should instead pursue the more appropriate, effective, and less costly reforms that Congress failed to include in the PPACA.

Madam Chairman, this concludes my prepared testimony. Thank you for this opportunity and I will be happy to answer any questions you or the other members may have.

View the original article here

Why Medicaid Expansion Is Still Wrong for the States

Governor John Kasich now joins the list of governors that are looking to expand their Medicaid programs. In some instances, the logic of such a decision makes sense. Democratic governors have traditionally supported expanding the role of Medicaid. But the decision by Republican governors, such as Governor Jan Brewer (Ariz.), Governor Jack Dalrymple (N.D.), Governor Susana Martinez (N.M.), Governor Brian Sandoval (R., Nev.), and now Governor John Kasich (R., Ohio), is puzzling.

Like most government programs, Medicaid promises more than it delivers. While it consumes an ever increasing portion of state budgets — crowding out other state priorities, such as education and transportation — its track record for delivering quality health care to those in need falls short. Endorsing the expansion ignores these underlying problems and in some instances seems to make them worse.

Of these five Republican governors, four joined the lawsuit against the Obama administration regarding the coercive nature of the Medicaid expansion. It is troubling that now that the Medicaid expansion has been deemed voluntary not mandatory by the Supreme Court, these governors are perfectly happy to have the federal government coerce them into the expansion with the enticement of new federal dollars.

Second, many of these governors argue that the Medicaid expansion is actually good fiscal policy. These governors may be looking at a short-term bump in new federal dollars, but the longer view shows that over time this new revenue disappears and the cost of expansion continues to rise. A recent study in support of the expansion in Ohio supports this conclusion. There are also many underlying assumptions that raise further questions related to the true cost of the expansion.

One is the assumption that the federal funding will remain constant. However, here too the longer view indicates the opposite. As federal policymakers debate the course for fixing the country’s fiscal woes, it is inevitable that if these efforts are serious, entitlement programs such as Medicaid will need to be on the table. Although the administration is trying to distance itself from its previous recommendations on federal financing of Medicaid, it is impossible to guarantee that the federal dollars will remain untouched.

Some governors have made their willingness to expand the program contingent on the federal government’s keeping its funding promises. They that if the federal funding changes, the states will opt out of the expansion. Such an opt-out strategy seems difficult. It is the exception not the norm for a state to scale back its Medicaid program. As a matter of fact, while there may be periods of slowing enrollment, overall enrollment continues to climb. From a practical position, it also remains unclear the process by which a state would opt out and the role that the secretary of HHS would have in that process.

Some expansion supporters argue that choosing not to expand Medicaid would mean that a state opting out would just be leaving money on the table, and that this money will include money from the non-expanding state’s federal taxpayers. Rather than a race to the bottom to scoop up as much federal tax dollars as possible in support of a program with poor results, the better solution would be for the states to recommend that Congress eliminate the enhanced federal matching funds. That would remove the temptation of federal dollars to do bad policy.

By 2017, one in four Americans is expected to be on Medicaid. In states that are trying to jumpstart their economy, it seems governors should be working to reduce dependence on the welfare state, not add millions more to it. It should be focused on getting people back to work, not creating incentives that keep people out of work. And states should be focused on fixing the program for those who are on it today rather than dumping more people into an already broken government program.

There needs to be a better solution. Simply because a governor wants to expand Medicaid doesn’t mean the legislature has to agree. State officials should be advancing reforms at the state level that move Medicaid in the right direction, not the wrong one.

— Nina Owcharenko is Director of the Center for Health Policy Studies and the Preston A. Wells Jr. Fellow at the Heritage Foundation.

View the original article here

Medicaid Expansion Wrong for SC

‘For every problem,” H.L. Mencken wrote, “there is a solution which is simple, clean and wrong.” Enter Obamacare and one of the main ways that it purports to reduce the number of uninsured: putting more people on Medicaid.

S.C. legislators are being pressured to do just that. The House has rejected the idea, and Gov. Nikki Haley has vowed to veto it, but it’s not dead. And if they ultimately sign on to the idea, they’ll find they’ve made a costly mistake and created a long-term fiscal problem.

Specifically, some in the Legislature want to expand Medicaid eligibility to more adults during the three years the federal government covers the expansion population.

But this allegedly good deal will only bring turmoil to the state’s budget in the future. For one thing, Medicaid expansion is not “catch and release” for the states. Once such an expansion has occurred, it is politically difficult if not impossible to roll back enrollment. It becomes a permanent entitlement — and one that is completely unaffordable.

If South Carolina expands Medicaid, taxpayers would be on the hook for millions. According to our research, the expansion would begin costing the state just four years from now and would cost $612 million over the next 10 years — outstripping any purported “savings.”

Already Medicaid is consuming a greater share of the state budget. Expanding Medicaid will make it even larger and harder to pay for other state priorities, including schools and roads, in the future.

This also assumes that federal funding for the Medicaid expansion goes unchanged. Right now, Washington is struggling to get the country’s fiscal house in order. Any serious efforts to address this crisis would have to address real entitlement reform, including Medicaid.

Although administration officials say Medicaid is off the table, it was just last year that the president’s own budget proposed changing Medicaid financing. So these promises are good only until the president needs money to pay for his many other spending priorities.

But affordability isn’t the only issue. Extending coverage via Medicaid doesn’t mean that individuals will, in fact, gain access to the health care they need. Already, it is becoming harder to find a doctor who will accept a new Medicaid patient, primarily due to lower payment rates.

Obamacare tries to temporarily raise Medicaid payment rates for some doctors. But here too it leaves the state holding the bag and ignores the reality that you can’t add millions of people on to a program where there are fewer doctors to see them. Not only will new and existing patients have a harder time finding a doctor, but the doctors will have less time to spend with each patient. The expansion of Medicaid also will displace private insurance and shift more of the cost of health care to the few who still have private insurance.

Who suffers the most if this happens? The needy, of course, including children. Medicaid doesn’t pay for many procedures, and physicians are only able to manage because of their non-Medicaid patients. If more people are dumped into the program, that lack of compensation will only worsen, and the doctors will be forced to do more for even less.

A massive expansion of Medicaid will not meet the needs of those it is intended to reach and will only further exacerbate the challenges of delivering quality care to those currently on it. Medicaid needs reform, not expansion. These reforms can start now with states, like South Carolina, working to develop their own solution for addressing the needs of the uninsured. Ideas that don’t depend on approval or more financing from the federal government.

But as the Hippocratic Oath says, “First do no harm.” S.C. legislators can honor that dictum by not expanding their Medicaid program.

-Former Sen. DeMint is president-elect of the Heritage Foundation.

First appeared in The State.

View the original article here

Medicaid Expansion: Implications for Ohio

Testimony before
Finance and Appropriations Committee Health
and Human Services Subcommittee
Ohio House of Representatives

 March 13, 2013
Edmund F. Haislmaier

My name is Edmund Haislmaier.  I am Senior Research Fellow at The Heritage Foundation. The views I express in this testimony are my own, and should not be construed as representing any official position of The Heritage Foundation.

Thank you Madam Chairman and Members of the Committee for inviting me to testify today on the implications for Ohio of the Medicaid expansion included in the federal Patient Protection and Affordable Care Act (PPACA) of 2010.

State lawmakers debating whether or not to adopt the Medicaid expansion should note that the expansion population differs significantly from the other populations already covered by Medicaid.

Since it’s inception the focus of Medicaid has been on providing health care to vulnerable low-income individuals—namely, children and disabled and elderly adults.  In many instances, the parents of children on Medicaid also receive coverage.

States that now adopt the expansion in PPACA will be extending Medicaid to a different population, consisting of able-bodied adults, the vast majority of whom do not have dependent children.

Table 1 reproduces Ohio data (as well as national data for comparison) from an Urban Institute analysis of the composition of the Medicaid expansion population. The data yield several important observations.

Table 1

Uninsured Adults Newly Eligible for Medicaid with Incomes Below 138% of FPL (Numbers in 1000’s)

Adults without Dependent Children

Source: Genevieve M. Kenney, et. al., “Opting in to the Medicaid Expansion under the ACA:Who Are the Uninsured Adults Who Could Gain Health Insurance Coverage?,” Urban Institute, August 2012

First, because Ohio's current Medicaid program covers parents up to 90% of the federal poverty level (or 96%, if working), just over 10% of the expansion population will be parents.  The other 90% of the expansion population will be adults without dependent children.

Second, the expansion population will be relatively young, with half between the ages of 19 and 34.

Third, the expansion population will be more male than female.  In part, that is due to the fact that Ohio’s Medicaid program already covers pregnant women up to 200% of the federal poverty level.

The Urban Institute estimates that adopting the expansion would increase Ohio Medicaid enrollment by a total of 578,000 individuals.  Of those, an estimated 445,000 are below 100% of the federal poverty level.  This is significant because the other 133,000 individuals, or 23% of the expansion population—who are between 100% and 138% FPL—will be able to instead obtain federally subsidized exchange coverage if Ohio does not expand Medicaid. Table 2 gives the same enrollment composition data for the subgroup with incomes below 100% FPL. In that subset only 5.1% are parents, while 94.9% are adults without dependent children.

Table 2 

Uninsured Adults Newly Eligible for Medicaid with Incomes Below 100% of FPL (Numbers in 1000’s)

Adults without Dependent Children

Source: Genevieve M. Kenney, et. al., “Opting in to the Medicaid Expansion under the ACA:Who Are the Uninsured Adults Who Could Gain Health Insurance Coverage?,” Urban Institute, August 2012.

Because this population consists overwhelmingly of adults without dependent children and is both younger and more male, Medicaid coverage designed for more vulnerable populations is not the most appropriate solution for these individuals.

Among this population, low-income is largely a reflection of certain factors, and those factors also tend to correlate with age.  In general, low-incomes among younger adults (those in their twenties) tend to result from combinations of poor education, lack of skills and limited workforce participation.  They are less likely to have serious or chronic medical conditions. In contrast, those older than age 30 with low incomes are more likely to also have chronic health conditions or behavior health issues, such as substance abuse.

Consequently, any health care assistance provided to this population should incorporate strong incentives for both work and healthy behavior, neither of which are features of the Medicaid program.  A health care assistance program for this population should include the following specific design features:

Any coverage should be subsidized on an income-related sliding scale, so as to avoid creating economic disincentives for work. Assistance should be conditioned on a strong work requirement.  Recipients should be required to be working, actively seeking work, or engaged in job preparation activities, on a full-time basis. A recipient could satisfy this requirement by engaging in more than one of those activities, as appropriate to the individual’s circumstances, provided that the total effort was normally 40 hours per week. The coverage should be structured to emphasize the provision of primary care services. Like private insurance, the coverage should include strong disincentives (such as significant copays or deductibles) for inappropriate use of hospital emergency department services. For those with chronic conditions such as diabetes, or behavioral health issues such as substance abuse, the program should offer disease management and behavior modification programs, accompanied by compliance monitoring and tangible rewards for successful participation.

If Ohio covers this population through a Medicaid expansion, then federal Medicaid rules will prevent the state from implementing some of these features, such as work requirements, and will also limit the state’s ability to implement others, such as more appropriate copay structures or rewards for behavior modification.  Furthermore, any variances for this population from the standard coverage provided to existing Medicaid populations will require federal approval.

Consideration needs to also be given to how Ohio adopting the Medicaid expansion will interact with other provisions of the PPACA.

For example, it is commonly assumed that because the PPACA requires employers to extend dependent coverage to children of their workers up to age 26, that most young adults will be covered on a parent’s policy.  However, if a young adult does not qualify as a dependent on someone else’s tax return he or she is treated as a separate household for Medicaid or exchange eligibility purposes.  Furthermore, there is no requirement that a young adult enroll in the health plan of a parent’s employer, if that option is available.  When the PPACA requirement for dependent coverage up to age 26 went into effect many young adults shifted from coverage under their own employer’s plan to coverage under a parent’s employer plan.  It can similarly be expected that when the new exchange subsidies and Medicaid expansion take effect, many young adults will shift from employer coverage to Medicaid or exchange coverage if they qualify for that coverage based on their own income.

It has also been widely noted that the design of the employer mandate in the PPACA will encourage employers to favor hiring more part-time workers and fewer full-time workers.  That is most likely to occur with respect to lower-wage and younger workers.  Extending Medicaid coverage with no work requirements to those individuals will make that option more attractive for employers.  Not only is that likely to result in higher than projected Medicaid enrollment over time, it will also exacerbate growing rates of youth unemployment and underemployment.  Relative to their European counterparts, young adults in America today are less likely to have health insurance but more likely to have jobs.  Expanding Medicaid unconditionally to this population is a good way to increase youth unemployment and underemployment to European levels.

Similarly, colleges and universities typically provide health plans to students.  However, because several of the PPACA’s new insurance rules will make that coverage much more expensive, many higher education institutions are considering dropping their student plans. That is much more likely to happen if a state expands Medicaid, thus enabling students, particularly graduate students who do not have access to coverage under a parent’s policy, to obtain Medicaid coverage.

Rather than adopting the PPACA’s broad Medicaid expansion, Ohio should instead extend Medicaid coverage only to the remaining parents and disabled adults below 100% of the FPL who are not already covered by the program.  For non-disabled adults without dependent children who are below 100% of the FPL, Ohio should then design a state-only funded health care assistance program that is more suitable for that population.  Such a program should be constructed on the design principles outlined above.

As noted, a strong work requirement should be a key feature of such a program.  Indeed, increasing employment and hours worked among this target population not only will benefit those individuals, but will also reduce the need for the program, and thus limit the cost to the state.  That is because once a worker earns more than the federal poverty threshold he or she will become eligible for the PPACA’s federally subsidized exchange coverage.  The current federal poverty threshold is $11,170 and the current federal minimum wage is $7.25 an hour.  A full-time (40 hours a week, 50 weeks per year) minimum wage worker earns $14,500 in annual income, or 130% of the poverty threshold.  Indeed, at Ohio’s current, higher, minimum wage of $7.85 per hour, all that is needed to exceed the federal poverty threshold (and thus qualify for federally subsidized exchange coverage) is 30 hours work per week for 50 weeks per year, or 40 hours work per week for 36 weeks per year.

While a fully insured program would be desirable, the PPACA’s new regulations imposed on private insurance will likely make that option too inflexible and expensive. The existing Cover Tennessee and Cover Florida programs will encounter those problems next year.  Consequently, an Ohio program should, at least initially, directly reimburse participating enrollees and/or providers.  However, the state could also contract on an “administrative services only” (ASO) basis with one or more insurers to run the program.  Existing managed care organizations would be obvious candidates.  If a suitable work-around to the PPACA’s insurance market rules can be devised, it may be possible to later shift the program onto a fully insured basis.

The state should look to fund the program by redirecting other, existing state spending.  In particular, the presence of federally subsidized exchange coverage will enable the state to discontinue Medicaid coverage for optional populations with incomes above either 100% of the FPL or otherwise federally mandated minimum levels, saving the state its share of the current costs.

In particular, Ohio can reduce Medicaid eligibility for working disabled adults from the current level of 250% FPL to 100% FPL, and pregnant women from the current level of 200% FPL to 138% FPL.  Once the PPACA’s “maintenance of effort” requirement on coverage of children in Medicaid and CHIP expires, the state will also be able to reduce eligibility levels for children to the federally mandated minimum of 138% FPL.  It is important to note that all of the individuals who would lose Medicaid coverage as a result of these changes will be able to obtain replacement federally subsidized exchange policies that provide comprehensive coverage with low enrollee premiums and very low cost sharing.

Given that a subset of the target population for the new program (non-disabled adults without dependent children below 100% FPL) will have chronic health conditions or behavioral health issues, the state should also consider repurposing to the new program some portion of existing spending on substance abuse treatment and state supplemental payments to hospitals and clinics for uncompensated care. For example, Ohio currently receives $115 million a year in grants from the federal Department of Health and Human Services’ Substance Abuse & Mental Health Services Administration (SAMHSA), $66 million of which is Substance Abuse Prevention and Treatment Block Grant funding.

In conclusion, it is an undisputed fact that the United States spends more on health care—on a per-capita basis and as a share of gross domestic product—than any other nation.  It is also a fact that the results of all that spending are sub-optimal. That is particularly evidenced by inadequate access to medical care among some sub-populations—particularly young adults. 

Congress failed to adequately address this situation when it enacted the PPACA.  What Congress should have done is to redesign health care financing incentives to generate a better-value, lower-cost system and then direct the resulting savings into expanding access.  Instead, in PPACA Congress shoved more people into a failing system and burdened the country with even higher public and private health care spending.

As Ohio and other states consider their own health reform measures, they should not simply go along with a set of bad federal policies, but should instead pursue the more appropriate, effective, and less costly reforms that Congress failed to include in the PPACA.

Madam Chairman, this concludes my prepared testimony. Thank you for this opportunity and I will be happy to answer any questions you or the other members may have.

View the original article here

Why the Obamacare Medicaid Expansion Is Bad for Taxpayers and Patients

Medicaid needs reform, not expansion. This federal–state health care program provides health care to over 60 million Americans and consumes a growing portion of state and federal budgets. Research shows a long history of Medicaid enrollees having worse access and outcomes than privately insured individuals.[1] Due in part to low reimbursement, one in three doctors refuses to accept new Medicaid patients.[2] Despite access issues, Medicaid spending continues to grow. In 2010, total federal and state spending on Medicaid exceeded $400 billion.[3]

Instead of reforming Medicaid, the Patient Protection and Affordable Care Act (Obamacare) expands eligibility to all individuals earning less than 138 percent of the federal poverty level (FPL).[4] The Medicaid program is already struggling to provide care to its core obligations—a diverse group of low-income children, disabled, pregnant women, and seniors. Adding more people further exacerbates Medicaid’s underlying problems.

The expansion of Medicaid fuels a larger trend under Obamacare: government coverage supplanting private coverage. By 2021, 46 percent of all Americans will be dependent on the government for their health care. Of this group, 86.9 million will be on Medicaid/Children’s Health Insurance Program (CHIP), followed by 64.3 million on Medicare and 23.4 million enrolled in government exchanges.[5] This will push U.S. health care closer to a government model.

The Temptation of Medicaid Expansion

Obamacare provides additional federal funding to the states for this new expansion population. Starting in 2014, the federal government would pick up 100 percent of the benefit costs for the newly eligible population for three years. Thereafter, this enhanced federal funding would gradually decline to 90 percent in 2020.

Obamacare also directed states to expand eligibility or risk forgoing all of their federal Medicaid dollars. The Supreme Court, however, ruled on behalf of 26 state plaintiffs that this “all-or-nothing” proposition was coercive. To rectify this, the Court essentially made the expansion optional, meaning that a state could reject the expansion but not lose its existing Medicaid funding.

Today, governors and state legislators are weighing this option as they develop their budgets for the coming year. Proponents use a variety of unrealistic arguments in support of the Medicaid expansion:

It provides states with an influx of new, generous federal revenue. This will cause states to spend money that they otherwise would not have spent. Moreover, due to the structure of Obamacare, states will likely have to absorb many currently eligible but not enrolled individuals as well as those who lose their existing employer coverage. These effects would add to the cost.[6]It will result in savings as the cost of uncompensated care declines with expanded coverage. Heritage data analysis shows that in the first few years, when federal funding is at its peak, states may see some savings. Over time, however, in the majority of states, Medicaid spending will accelerate and dwarf any projected uncompensated care savings.[7] These savings are also contingent on states enacting legislation to further reduce uncompensated care funds (Disproportionate Share Hospital [DSH] payments) on top of the $18 billion of federal cuts enacted under Obamacare. Heritage analyst Ed Haislmaier predicts that “governors and state legislators should expect their state’s hospitals and clinics to lobby them for more—not less—state funding to replace cuts in federal DSH payments.”[8]
Finally, contrary to the theory that expanding Medicaid would cause the number of uninsured to decline and reduce the need for uncompensated care, a similar expansion in Maine found the opposite effect. In Maine, uncompensated care increased, and the number of uninsured in the targeted population (those below 100 percent of FPL) saw limited change.[9]Rejecting the expansion will mean that other states get more. The federal share of Medicaid is based on a formula calculation and actual expenditures. Rejected funds do not go into a general fund for redistribution to other states. The fewer states that expand, the less the federal government spends. States that draw down on these new federal funds fuel the fiscal crisis in our country.

The Trade-Off Dilemma

Committing to an expansion creates a dilemma for the states. To control Medicaid spending, states typically fall back on predictable techniques to manage costs, such as limiting reimbursements to health care providers and limiting services, which ultimately limits access to care. These Medicaid cost controls, however, go only so far. Today, Medicaid consumes over 23 percent of state budgets, surpassing education as the largest state budget item.[10] As Medicaid spending continues to rise, other important state priorities such as education, emergency services, transportation, and criminal justice are squeezed.

Finally, if states resist balancing among spending programs, the alternative is generating more revenues with tax increases. But higher taxes come with a steep price: They reduce economic growth. With most states still experiencing anemic growth, tax increases on top of already higher taxes at the federal level are not an appealing option.[11]

Fueling the Country’s Fiscal Crisis

Any positive assumptions about Medicaid expansion also assume that federal funding remains unchanged. With deficits running over $1 trillion a year, the country’s fiscal future is in need of reform. Federal spending on health care entitlements, including Medicare and Medicaid, is the largest driver.[12]

Even this Administration recognizes that such entitlement spending, including Medicaid, is unsustainable. The President’s fiscal year (FY) 2011 budget outlined several Medicaid reform policies, including setting an across-the-board blend rate for federal reimbursement and limiting the states’ ability to leverage provider taxes for the state share of matching funds. Although the Administration attempts to distance itself from its own proposal, any serious efforts toward entitlement reform must include Medicaid.

In spite of this fact, several Democrat and Republican governors that support Medicaid expansion condition their support on federal funding remaining untouched. In essence, pro-expansion governors are telling Washington, “don’t touch entitlement spending.” This reliance on federal revenues exacerbates the country’s fiscal challenges and could also affect states’ own fiscal health. Recently, Moody’s cited Missouri’s reliance on the federal government, including Medicaid funding, as adversely affecting its credit rating outlook.[13]

Setting Good Policy

There are several recommendations that the states and Congress could adopt to help mitigate the crisis that Obamacare has exacerbated:

Reject the Medicaid expansion. Greater dependence on federal dollars tangles the states in bad fiscal policy and bad health care policy. States that reject the expansion avoid relying on unsound federal revenues, stretching an already thin program beyond its means and adding millions to a failing program.  Scale back existing eligibility where possible. Some states have allowed Medicaid to grow beyond its original intent by moving middle-class families into a welfare program. To restore Medicaid as a safety-net program, states should review eligibility levels, scale back eligibility where possible, and restore the program’s focus on its core Medicaid functions.Advance a separate, state alternative. Instead of using a flawed Obamacare model, states should put in place an alternative. States should develop a state solution tailored to the specific needs of this new population rather than placing them in a one-size-fits-all Medicaid option.[14] A non-Medicaid, state-based approach, especially for this targeted population, would give states the control to design policies best suited to addressing the needs of their citizens without onerous Medicaid constraints. Congress should eliminate the federal enhanced Medicaid match. To avoid the argument that states rejecting Medicaid are leaving federal dollars on the table, Congress should level the playing field by removing the new, enhanced federal dollars. This would remove/minimize the temptation of excessive and unsustainable federal funding and restore fiscal constraint at the federal level. States would still be able to expand eligibility but would have to do so with the traditional (non-enhanced) federal matching rate. If Congress ignores this opportunity to restrain federal spending, it could “block grant” the enhanced federal dollars to the states to develop their own state-specific approaches, including alternatives outside of Medicaid.

Alternate Solution Needed

Medicaid is already spread too thin. Adding a new and complex population to this program does not solve its challenges; it only makes them worse. States should resist, and Congress should remove, this temptation. Both should begin to lay out a better and more sustainable alternative than a failing government health program to care for the less fortunate.

—Nina Owcharenko is Director of the Center for Health Policy Studies and Preston A. Wells, Jr., Fellow at The Heritage Foundation.

View the original article here

South Carolina Republican Suggests GOP Opposes Medicaid Expansion Because Obama Is Black

Confederate flag flying on grounds of South Carolina's state capitol

On Tuesday, the South Carolina House rejected extra Obamacare funding for the state’s Medicaid program. One Republican legislator offered a novel reason for the Republican majority’s decision: the President’s race.

State Rep. Kris Crawford’s comments came during the early stages of the state Medicaid debate in late January. Crawford suggested that it was politically beneficial for Republicans (who run a Statehouse that flew the Confederate flag in front of it as recently as December 2011) to oppose any political initiatives spearheaded by a black man:

Rep. Kris Crawford, a Republican from Florence and also an emergency room doctor, supports the expansion but expects the Republican caucus to vote as a block against the Medicaid expansion.

“The politics are going to overwhelm the policy. It is good politics to oppose the black guy in the White House right now, especially for the Republican Party,” Crawford said.

South Carolina’s voter ID law was blocked last year by the Department of Justice on grounds that it violated the Voting Rights Act. The author of the law admitted to receiving, and responding positively to, racist emails in support of the law.

Governor Nikki Haley’s (R) steadfast opposition to the Medicaid expansion is becoming increasingly lonely; a wave of Republican governors have recently accepted federal assistance in providing health care for their poor citizens. South Carolina hospitals, who strongly support the expansion, have gone so far as to ask that their taxes be raised to pay for it.

(HT: David Graham.)

View the original article here

Medicaid Expansion: Implications for Ohio

Testimony before
Finance and Appropriations Committee Health
and Human Services Subcommittee
Ohio House of Representatives

 March 13, 2013
Edmund F. Haislmaier

My name is Edmund Haislmaier.  I am Senior Research Fellow at The Heritage Foundation. The views I express in this testimony are my own, and should not be construed as representing any official position of The Heritage Foundation.

Thank you Madam Chairman and Members of the Committee for inviting me to testify today on the implications for Ohio of the Medicaid expansion included in the federal Patient Protection and Affordable Care Act (PPACA) of 2010.

State lawmakers debating whether or not to adopt the Medicaid expansion should note that the expansion population differs significantly from the other populations already covered by Medicaid.

Since it’s inception the focus of Medicaid has been on providing health care to vulnerable low-income individuals—namely, children and disabled and elderly adults.  In many instances, the parents of children on Medicaid also receive coverage.

States that now adopt the expansion in PPACA will be extending Medicaid to a different population, consisting of able-bodied adults, the vast majority of whom do not have dependent children.

Table 1 reproduces Ohio data (as well as national data for comparison) from an Urban Institute analysis of the composition of the Medicaid expansion population. The data yield several important observations.

Table 1

Uninsured Adults Newly Eligible for Medicaid with Incomes Below 138% of FPL (Numbers in 1000’s)

Adults without Dependent Children

Source: Genevieve M. Kenney, et. al., “Opting in to the Medicaid Expansion under the ACA:Who Are the Uninsured Adults Who Could Gain Health Insurance Coverage?,” Urban Institute, August 2012

First, because Ohio's current Medicaid program covers parents up to 90% of the federal poverty level (or 96%, if working), just over 10% of the expansion population will be parents.  The other 90% of the expansion population will be adults without dependent children.

Second, the expansion population will be relatively young, with half between the ages of 19 and 34.

Third, the expansion population will be more male than female.  In part, that is due to the fact that Ohio’s Medicaid program already covers pregnant women up to 200% of the federal poverty level.

The Urban Institute estimates that adopting the expansion would increase Ohio Medicaid enrollment by a total of 578,000 individuals.  Of those, an estimated 445,000 are below 100% of the federal poverty level.  This is significant because the other 133,000 individuals, or 23% of the expansion population—who are between 100% and 138% FPL—will be able to instead obtain federally subsidized exchange coverage if Ohio does not expand Medicaid. Table 2 gives the same enrollment composition data for the subgroup with incomes below 100% FPL. In that subset only 5.1% are parents, while 94.9% are adults without dependent children.

Table 2 

Uninsured Adults Newly Eligible for Medicaid with Incomes Below 100% of FPL (Numbers in 1000’s)

Adults without Dependent Children

Source: Genevieve M. Kenney, et. al., “Opting in to the Medicaid Expansion under the ACA:Who Are the Uninsured Adults Who Could Gain Health Insurance Coverage?,” Urban Institute, August 2012.

Because this population consists overwhelmingly of adults without dependent children and is both younger and more male, Medicaid coverage designed for more vulnerable populations is not the most appropriate solution for these individuals.

Among this population, low-income is largely a reflection of certain factors, and those factors also tend to correlate with age.  In general, low-incomes among younger adults (those in their twenties) tend to result from combinations of poor education, lack of skills and limited workforce participation.  They are less likely to have serious or chronic medical conditions. In contrast, those older than age 30 with low incomes are more likely to also have chronic health conditions or behavior health issues, such as substance abuse.

Consequently, any health care assistance provided to this population should incorporate strong incentives for both work and healthy behavior, neither of which are features of the Medicaid program.  A health care assistance program for this population should include the following specific design features:

Any coverage should be subsidized on an income-related sliding scale, so as to avoid creating economic disincentives for work. Assistance should be conditioned on a strong work requirement.  Recipients should be required to be working, actively seeking work, or engaged in job preparation activities, on a full-time basis. A recipient could satisfy this requirement by engaging in more than one of those activities, as appropriate to the individual’s circumstances, provided that the total effort was normally 40 hours per week. The coverage should be structured to emphasize the provision of primary care services. Like private insurance, the coverage should include strong disincentives (such as significant copays or deductibles) for inappropriate use of hospital emergency department services. For those with chronic conditions such as diabetes, or behavioral health issues such as substance abuse, the program should offer disease management and behavior modification programs, accompanied by compliance monitoring and tangible rewards for successful participation.

If Ohio covers this population through a Medicaid expansion, then federal Medicaid rules will prevent the state from implementing some of these features, such as work requirements, and will also limit the state’s ability to implement others, such as more appropriate copay structures or rewards for behavior modification.  Furthermore, any variances for this population from the standard coverage provided to existing Medicaid populations will require federal approval.

Consideration needs to also be given to how Ohio adopting the Medicaid expansion will interact with other provisions of the PPACA.

For example, it is commonly assumed that because the PPACA requires employers to extend dependent coverage to children of their workers up to age 26, that most young adults will be covered on a parent’s policy.  However, if a young adult does not qualify as a dependent on someone else’s tax return he or she is treated as a separate household for Medicaid or exchange eligibility purposes.  Furthermore, there is no requirement that a young adult enroll in the health plan of a parent’s employer, if that option is available.  When the PPACA requirement for dependent coverage up to age 26 went into effect many young adults shifted from coverage under their own employer’s plan to coverage under a parent’s employer plan.  It can similarly be expected that when the new exchange subsidies and Medicaid expansion take effect, many young adults will shift from employer coverage to Medicaid or exchange coverage if they qualify for that coverage based on their own income.

It has also been widely noted that the design of the employer mandate in the PPACA will encourage employers to favor hiring more part-time workers and fewer full-time workers.  That is most likely to occur with respect to lower-wage and younger workers.  Extending Medicaid coverage with no work requirements to those individuals will make that option more attractive for employers.  Not only is that likely to result in higher than projected Medicaid enrollment over time, it will also exacerbate growing rates of youth unemployment and underemployment.  Relative to their European counterparts, young adults in America today are less likely to have health insurance but more likely to have jobs.  Expanding Medicaid unconditionally to this population is a good way to increase youth unemployment and underemployment to European levels.

Similarly, colleges and universities typically provide health plans to students.  However, because several of the PPACA’s new insurance rules will make that coverage much more expensive, many higher education institutions are considering dropping their student plans. That is much more likely to happen if a state expands Medicaid, thus enabling students, particularly graduate students who do not have access to coverage under a parent’s policy, to obtain Medicaid coverage.

Rather than adopting the PPACA’s broad Medicaid expansion, Ohio should instead extend Medicaid coverage only to the remaining parents and disabled adults below 100% of the FPL who are not already covered by the program.  For non-disabled adults without dependent children who are below 100% of the FPL, Ohio should then design a state-only funded health care assistance program that is more suitable for that population.  Such a program should be constructed on the design principles outlined above.

As noted, a strong work requirement should be a key feature of such a program.  Indeed, increasing employment and hours worked among this target population not only will benefit those individuals, but will also reduce the need for the program, and thus limit the cost to the state.  That is because once a worker earns more than the federal poverty threshold he or she will become eligible for the PPACA’s federally subsidized exchange coverage.  The current federal poverty threshold is $11,170 and the current federal minimum wage is $7.25 an hour.  A full-time (40 hours a week, 50 weeks per year) minimum wage worker earns $14,500 in annual income, or 130% of the poverty threshold.  Indeed, at Ohio’s current, higher, minimum wage of $7.85 per hour, all that is needed to exceed the federal poverty threshold (and thus qualify for federally subsidized exchange coverage) is 30 hours work per week for 50 weeks per year, or 40 hours work per week for 36 weeks per year.

While a fully insured program would be desirable, the PPACA’s new regulations imposed on private insurance will likely make that option too inflexible and expensive. The existing Cover Tennessee and Cover Florida programs will encounter those problems next year.  Consequently, an Ohio program should, at least initially, directly reimburse participating enrollees and/or providers.  However, the state could also contract on an “administrative services only” (ASO) basis with one or more insurers to run the program.  Existing managed care organizations would be obvious candidates.  If a suitable work-around to the PPACA’s insurance market rules can be devised, it may be possible to later shift the program onto a fully insured basis.

The state should look to fund the program by redirecting other, existing state spending.  In particular, the presence of federally subsidized exchange coverage will enable the state to discontinue Medicaid coverage for optional populations with incomes above either 100% of the FPL or otherwise federally mandated minimum levels, saving the state its share of the current costs.

In particular, Ohio can reduce Medicaid eligibility for working disabled adults from the current level of 250% FPL to 100% FPL, and pregnant women from the current level of 200% FPL to 138% FPL.  Once the PPACA’s “maintenance of effort” requirement on coverage of children in Medicaid and CHIP expires, the state will also be able to reduce eligibility levels for children to the federally mandated minimum of 138% FPL.  It is important to note that all of the individuals who would lose Medicaid coverage as a result of these changes will be able to obtain replacement federally subsidized exchange policies that provide comprehensive coverage with low enrollee premiums and very low cost sharing.

Given that a subset of the target population for the new program (non-disabled adults without dependent children below 100% FPL) will have chronic health conditions or behavioral health issues, the state should also consider repurposing to the new program some portion of existing spending on substance abuse treatment and state supplemental payments to hospitals and clinics for uncompensated care. For example, Ohio currently receives $115 million a year in grants from the federal Department of Health and Human Services’ Substance Abuse & Mental Health Services Administration (SAMHSA), $66 million of which is Substance Abuse Prevention and Treatment Block Grant funding.

In conclusion, it is an undisputed fact that the United States spends more on health care—on a per-capita basis and as a share of gross domestic product—than any other nation.  It is also a fact that the results of all that spending are sub-optimal. That is particularly evidenced by inadequate access to medical care among some sub-populations—particularly young adults. 

Congress failed to adequately address this situation when it enacted the PPACA.  What Congress should have done is to redesign health care financing incentives to generate a better-value, lower-cost system and then direct the resulting savings into expanding access.  Instead, in PPACA Congress shoved more people into a failing system and burdened the country with even higher public and private health care spending.

As Ohio and other states consider their own health reform measures, they should not simply go along with a set of bad federal policies, but should instead pursue the more appropriate, effective, and less costly reforms that Congress failed to include in the PPACA.

Madam Chairman, this concludes my prepared testimony. Thank you for this opportunity and I will be happy to answer any questions you or the other members may have.

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Medicaid Expansion and State Health Exchanges: A Risky Proposition for the States

Recent decisions by the Obama Administration concerning the health care exchanges and Medicaid expansion underscore what a risky proposition the Patient Protection and Affordable Care Act (PPACA) is for the states. Congress presumed in PPACA (Obamacare) that the states would agree to build and run exchanges and could be forced to expand Medicaid. The Supreme Court, however, ruled the Medicaid expansion voluntary, which has made states increasingly concerned over new burdens related to costs, control, and coverage—in both the exchanges and Medicaid.

State Health Care Exchanges

Cost. Proponents deflect attention from the true cost of the exchanges by focusing on the PPACA grants to fund states establishing them. However, unlike past federal-state policy ventures, like Medicaid or even the State Children’s Health Insurance Program (SCHIP), there will be no steady flow of federal dollars to the states. The law specifies that starting in 2015, any state implementing a state exchange must develop its own revenue source to fund the exchange’s annual operations. That puts the long-term costs squarely on the states.

Moreover, the recent announcement by the Department of Health and Human Services (HHS) that it will levy a 3.5 percent administrative fee on coverage sold through the federally run exchanges indicates there are significant costs if a state agrees to run its own exchange.[1]

Just this week a Maryland panel recommended to that state’s governor and legislature new taxes and fees to fund its state exchange.[2] The Maryland report projects annual administrative costs for the state’s exchange of $201 per enrollee in 2015, declining to $152 per enrollee in 2017.

In contrast, applying the 3.5 percent fee set by HHS to the $2,770 national average per-capita premium for all commercial group and individual major medical insurance sold in 2011 yields a projected annual administrative cost for exchanges of $97 per enrollee. The much higher Maryland figures are significant as they reflect thorough and detailed work by the state most committed to implementing a state Obamacare exchange.[3]

Control. Some argue that states should establish exchanges as a means to maintain control of their markets. However, in all matters not otherwise preempted by federal law, the states still regulate insurers (including those participating in the exchanges) regardless of who operates the exchange. States can also regulate exchange “navigators” through state professional licensure statutes to ensure a level playing field with existing insurance agents, regardless of who operates the exchange.

Furthermore, regulations promulgated by HHS allow states no meaningful flexibility or advantage by operating their own exchanges, relative to a federal exchange. Those states would simply be acting as vendors to HHS.

Coverage. Proponents point to the exchange as essential to expanding coverage. However, the law also created a federal default for states declining to establish exchanges. Therefore, the responsibility shifts to the federal government. With more Americans still opposed to the law than supporting it, the innumerable technical challenges to implementation, and large and uncertain future costs, there is a significant risk that the whole law could unravel, or even collapse, before fully taking effect. Given those prospects, states that agree to run exchanges could face significant fallout from failures at the federal level over which they have no control. Instead, a state should focus on creating a viable market for their citizens in the event that the law breaks down.

Medicaid Expansion

Cost. As proponents attempt to convince states that the cost of the Medicaid expansion will be covered by the federal government, the facts remain the same. To start with, the enhanced match is only for the expansion population, not the existing Medicaid population. In addition, it does not apply to administrative costs, which add about 5 percent to benefit payments. Finally, the full 100 percent enhanced match is temporary, with states picking up 10 percent of the new costs in 2020 and thereafter. At a time when Medicaid is already overwhelming current state budgets, it would be counterproductive for states to voluntarily add to those liabilities.

In addition, there are numerous other cost pressures states need to consider when assessing the expansion.[4] First, states will see increased enrollment among the non-expansion population as the law also expands eligibility by changing how income is measured and corrals those eligible, but not enrolled, into the program.

Second, states will face pressure from their hospitals to backfill $18 billion in federal payment cuts for uncompensated care. Third, the PPACA lifts Medicaid reimbursement for primary care physicians to Medicare levels, with federal funding of the difference—but only for two years. Once the federal funding expires, states will face pressure to maintain those levels and to increase payments to other physicians accepting Medicaid.

Moreover, regardless of HHS’s recent claim that it has backed away from previous proposals to shift Medicaid funding to a blended rate, the fiscal challenges facing Medicaid at the state and federal level make future financing adjustments to Medicaid unavoidable.

Control. While the HHS Secretary has touted offering flexibility to the states, the law and HHS regulations offer states no meaningful policy discretion. Specifically, the law extends the maintenance of effort (MOE) restriction from the stimulus law that prevents states from making key changes to their Medicaid programs. Moreover, the recent HHS decision to eliminate any possibility of a state expanding its Medicaid program short of the 138 percent federal poverty level (FPL) further underscores that flexibility was more talk than action. 

Coverage. As with the exchanges, proponents stress the importance of Medicaid in expanding coverage. Unlike the federal default in the exchange, there is no federal default for the Medicaid expansion. However, rather than throwing more people into a broken program, states should focus on improving the current program and developing sustainable alternatives for meeting the needs of the proposed expansion population.

Fighting Back to Minimize the Damage of Bad Decisions

Sometimes opposing bad policy—such as by declining to run exchanges or expand Medicaid— while important, is not enough. In those instances, lawmakers need to work to minimize the impact of bad policies that they are unable to fully reverse. They also need to insist on transparency, accountability, and a level playing field, so as to create public awareness of the true consequences of bad policies and build support for future reforms.

Still a Risky Proposition for the States

Enormous uncertainty still surrounds the health care law. With less than one year remaining before the major provisions of Obamacare take effect, it is no surprise that barely more than one-fifth of states have publically agreed to both establish a state exchange and expand their Medicaid programs. The other states would be wise to decline those risky steps and instead prepare better alternatives for health care reform.

—Nina Owcharenko is Director of the Center for Health Policy Studies and Preston A. Wells, Jr., Fellow at The Heritage Foundation. Edmund F. Haislmaier is Senior Research Fellow in the Center for Health Policy Studies at The Heritage Foundation.

[3]Author’s calculations using premium and enrollment data from Mark Farrah Associates, http://www.markfarrah.com/. In 2011, U.S. commercial insurers wrote $198,334,667,140 in group and individual major medical premiums covering 71,597,719 individuals.

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