Expand Medicaid? Sure… If You Think Uncle Sam Can Keep His Financial Commitments

Healthcare in a post-Boomergeddon economy.

by James A. Bacon

It looks like Virginia will get its first serious debate about Medicaid in decades. In its recent ruling on Obamacare, the Supreme Court made it optional for the states to participate in the law’s massive Medicaid expansion. After an initial phase-in period covered by the federal government, in which coverage will be extended to individuals 38% above the poverty line, states would be responsible for paying 10% of the cost.

The center-left Commonwealth Institute has weighed in with a pro-expansion paper, “Making the Right Choice on Medicaid,” arguing that the program “would be a lifesaver for hundreds of thousands of Virginians, a real bargain for the Commonwealth, and a much needed boost to our economy.” The paper articulates the main line of argument that the pro-Obamacare forces will likely reprise as the debate intensifies.

  • Despite its relatively high income, Virginia already has the fourth “stingiest” Medicaid program in the country.
  • Expanding the program will bring an influx of billions of federal dollars into the state.
  • Without an expansion 400,000 working Virginians and their family members will be stranded between Medicaid and an Obamacare-mandated state insurance exchange with little hope of finding coverage.
  • Virginia will spend an estimated $48 billion on Medicaid over the next 10 years. Expanding coverage would add only $2.2 billion more.

There’s more, but you get the idea. Foes object that Virginia can ill afford even $2.2 billion over the next 1o years. They also argue that Medicaid is broken. Provider payments are so low that 28% of doctors say they do not accept new Medicaid patients. “Instead of vastly expanding the rolls and subjecting residents to this failed insurance plan, policymakers should force Washington to pass real reforms to Medicaid,” write Audrey Jackson and Nicole Kaeding with the Virginia branch of Americans for Prosperity in the Times-Dispatch.

My concern is even more fundamental. Obamacare is erecting a fiscally unsustainable model of health care. Facing trillion-dollar deficits as far as the eye can see, the United States is hurtling toward Boomergeddon, a catastrophe that will result either in fiscal collapse or, if the Federal Reserve Board sops up federal deficits by printing money, hyper-inflation and economic collapse. Either way, the federal government will face extraordinary pressure to curtail entitlement payments, and the Medicaid expansion, as the most recently enacted entitlement, will be the most vulnerable. Virginia needs to insulate itself from the coming fiscal disaster, which is the most foreseeable and inevitable economic catastrophe in U.S. history.

But it’s not enough to “just say no.” If we choose not to expand a failed healthcare model, Virginia needs to dedicate itself, insofar it is possible with an intrusive federal government, to (a) creating a functioning health care marketplace with transparent price and quality data, (2) encouraging innovation among health care providers, and (3) redefining the relationship between insurer and patient. When the national system collapses, with luck, Virginia will have a health system still standing.

11 Responses to Expand Medicaid? Sure… If You Think Uncle Sam Can Keep His Financial Commitments

  1. the only way your “we cannot afford it” logic makes any sense at all is if you are assuming that uninsured people do not already get health care that we pay for.

    OR you’re fine if children and the elderly do not get it because it will cost you money.

    either way – you have a hypocritical position.

    Virginia COULD do what Massachusetts or Vermont or New Hampshire did and take State responsibility for it’s uninsured and not need the Feds at all.

    But instead, we play this game that the Feds are “forcing” us to …in essence… figure out how to deal with our uninsured as if we ought to be able to do that without interference ….but we won’t.

    You cannot have it both ways. If you want to deal with this in an honest manner you have to responsibly own your position instead of blaming others.

    but back to the beginning… are you really convinced that you do not already pay for the uninsured? Yeah.. they won’t go to a primary care physician when they feel bad but 18 months later when they are in serious medical distress they are going to go to the ER and then YOU WILL pay for their care.

    I call that a hypocritical position – to pretend that we cannot “afford” to do what we already are doing…and then blame it on others…..

  2. Larry, I buy your argument, but only to a point. Clearly, expanding health insurance coverage could reduce some of the unpaid emergency room visits — the costs of which are passed along to payers. But that assumes there will also be behavioral changes wherein people go to “mainstream” medical providers and not keep coming to emergency rooms, except in emergencies. I suspect there is not a one-to-one correlation.
    On a much larger scale, it is my understanding the big medical players accepted some of the cuts, taxes and restrictions associated with the AHCA because the Administration was expanding Medicare through the provisions struck by the Supreme Court. Presumably, expanding insurance coverage (Medicaid) that generates more revenue for the big players than would be lost to the ACHA compliance costs. To me, this suggests expansion of Medicaid will, at least in the longer run, result in higher medical spending than the savings from reductions in emergency room care by the uninsured.
    Nothing the feds ever do costs only as much as was projected. I don’t think your argument carries the day.

  3. thank you TMT for adding to the dialog. My primary point was Virginia has the freedom and the authority to go the way that best suits them instead of continuing to blame the Fed for a system that Virginia does not have to adopt from the get fo.

    Virginia is basically blaming the Feds for what it won’t take responsibility for itself.

    If we covered the uninsured and they went to an ER – we could legitimately turn them away.

    but studies of late are saying that the uninsured do not go to the ERs for routine care anyhow but the they go for legitimate acute reasons – including those that are the result of NOT getting routine care and catching problems before they get expensive – like Diabetes II which if un-treated leads to organ failure, catastrophic cardiovascular damage, amputation and blindness – ALL of these things paid for by you and me that could have been prevented or mitigated had they been dealt with at the primary care level.

    we know this but instead of putting together a Virginia plan for dealing with it – we blather on about how bad the Federal MediAid solution is.

    I find this this the height of hypocrisy. If you don’t like the Fed approach, fine, do your own approach but what we do is blame the Fed and do nothing else.

    that’s irresponsible both fiscally and morally.

  4. constructionandlaborguy

    Check out this article on a Medicaid study in Oregon:

    “The study put to rest two incorrect arguments that persisted because of an absence of evidence,” said Katherine Baicker, a Harvard economist who worked on the study and served as an economic adviser to President George W. Bush.

    “The first is that Medicaid doesn’t do anything for people, because it’s bad insurance or because the uninsured have other ways of getting care,” Ms. Baicker said. “The second is that Medicaid coverage saves money” by increasing preventive care, for instance.

  5. thanks for the link constructionguy. It’s an interesting study with some provocative implications but the two conclusions do not make much sense and going to the original report did not clear it up.

    here’s another study with some push-back on conventional wisdom:

    Study: Medicaid patients aren’t using the emergency department for routine care

    http://www.washingtonpost.com/blogs/ezra-klein/wp/2012/07/11/study-medicaid-patients-arent-using-the-emergency-department-for-routine-care/

    something does not add up.

    If MedicAid costs are out of control and threaten to bankrupt the states, what is the money being spent on and to what purpose?

    The implication seems to be that the poor do not use ERs for routine care but that if they had access to routine care – they’d “overuse” it and drive up costs.

    and the logical conclusion (you can bet will be used by some) is that the least expensive way to do health care is to not give it to the poor because in doing so, it will cost more.

    One thing is for sure – if conventional wisdom about ER use and primary care availability is proven wrong – then we’re need to rethink what we are doing right now.

    also… we need to differentiate between uninsured who are poor and cannot afford care vs uninsured who are cash-pay for care and basically only see a doctor when something is wrong vs regular visits.

    I’d also point out that Virginia is free to do what Oregon did – to dig into the issue and to figure out what is right for Virginia – instead of engaging in the never ending partisan blame game over the govt role in health care.

  6. I smell a rat:

    ” In 2008, a group of uninsured low-income adults in Oregon was selected by lottery to be given the chance to apply for Medicaid. This lottery provides a unique opportunity to gauge the effects of expanding access to public health insurance on the health care use, financial strain, and health of low-income adults using a randomized controlled design. In the year after random assignment, the treatment group
    selected by the lottery was about 25 percentage points more likely to have insurance than the control group that was not selected. We find that in this first year, the treatment group had substantively and statistically significantly higher health care utilization (including primary and preventive care as well as hospitalizations), lower out-of-pocket medical expenditures and medical debt (including fewer bills
    sent to collection), and better self-reported physical and mental health than the control group.”

    http://www.nber.org/papers/w17190.pdf?new_window=1

    the folks who were selected by lottery to receive MedicAid were 25% more likely to have insurance, had higher health care utilization and lower out of pocket expenses and less medical debt?

    WTF? Perhaps I’m missing something but this sounds like DUH.

    Here’s what we don’t have. We don’t have the comparison between those who are uninsured but do buy health care for cash and the uninsured who forgo care in terms of what they visited the ER for and the follow-on care for those who were found to have significant but heretofore undiscovered and untreated conditions – like Type II Diabetes.

    You can not go to the doctor and as a result never have you glucose and A1C tested so you’d not know you have Type II – but a few years down the road when you are now experiencing the damage to your body from untreated type II – you head to the ER and once they see the lab results, they discover that your glucose and A1C are 200 (instead of 100) and that you have significant organ damage that will lead to your death other expensive medical intervention is done and those costs get paid for by you and me.

    So a study that looks at one year of increased “utilization” and does not look at costs incurred as a result of not getting routine care is what? Does it help to inform as to the impacts and effects of not having insurance verses having insurance – in terms of outcomes?

    In order for that study to have much credibility, it would have to at the very least acknowledge the well-known longer term impacts of NOT getting routine and preventative health care that is confirmed by our lower life expectancy and higher infant death rates.

    having said that – the goal of ObamaCare was not to reduce costs but to increase access to health care.

    It did not ignore costs – there were follow-on plans to deal with costs.

    but this report basically said that if you give MedicAid to peope that they’ll use primary care services more than if they did not have MedicAid to which I would say DUH!

  7. constructionandlaborguy

    I read the Oregon study findings as expanding Medicaid coverage will increase costs, as opposed to magically decreasing costs, and people benefit from Medicaid. These seem like intuitive results to me. People need to know there really is a direct increased cost to a benefit like Medicaid and then make a choice whether governments have the money to afford these benefits. My beef is that the public has been fed lies that expanding Medicaid somehow costs less through fuzzy economics.

    The other beef I have with healthcare is that it is the only service we purchase where consumers have no concept of costs for a specific procedure and don’t have an easy method to shop for better deals at competing hospitals/clinics etc. Why not make it more of a marketplace to patients can make better consumer choices?

  8. “the goal of ObamaCare was not to reduce costs but to increase access to health care.”

    Back up the truck. The President has said on many occasions that health care reform would reduce costs. It’s a big lie, but he said it. Were he to have told the truth, I think he would agree with Larry’s statement.

    This is one of the reasons many oppose the AHCA. They will pay more and not receive anything of significance. If, on the other hand, existing premiums were to fall by 25% and grow only at the rate of inflatio
    n, I think more people would accept AHCA. But, as with most things Obama, there’s nothing in it for most of us.

  9. Obama did say reduce costs from a number of additional policies but the fundamental purpose of ObamaCare is to increase access. That’s easily confirmed.

    In terms of reduced costs – what costs more – a Type II Diabetic who receives no care or one that receives care and treatment?

    If you said #2 costs more then you’ve bought the MedicAid will cost more argument.

    If, on the other hand, you believe untreated diabetes will ultimately cost tens of thousands of dollars for amputations, kidney-failure, open-heart surgery, etc then you believe that primary care intervention is cheaper than no treatment.

    the thing we’ve lost these days is simple common sense.

  10. to assume that denying primary care by denying MedicAid will result in lower costs is to deny what happens to untreated Type II diabetes.

    you really don’t need to be a rocket scientist to see this – I hope.

    What the Oregon study did not do – was to follow the groups to see what happened to the control group after going for years without care.

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