OK, We Enacted Medicaid Expansion. Let’s Measure How Well It Works.

A “die-in” held at Capitol Square: Long on symbolism, short on data. Photo credit: Washington Post

So… The General Assembly has enacted Medicaid reform. That’s a big win for Governor Ralph Northam and Virginia Democrats, and potentially good news for 400,000 of near-poor Virginia adults who now will qualify for a healthcare program that will be 90% funded by the federal government and 10% by the state. It’s not such good news for budget hawks concerned about Medicaid’s runaway impact on Virginia’s General Fund budget or for patients who could pick up the tab for a new $300 million-a-year assessment on hospitals.

The reporting on Medicaid expansion, the biggest entitlement expansion in recent Virginia history, has been truly dreadful — a fact that I attribute to the downsizing of newsrooms across Virginia and the resulting inability of Virginia media to field the manpower to do anything more than cover General Assembly hearings. It is astonishing how little we really know about the impact this legislation will have on the cost and delivery of health care in Virginia.

My big questions now: (1) Will the program improve the health of Virginia’s near poor; (2) will it do so within the budget constraints that have been promised; and (3) how much of the cost, if any, will get passed on to the privately insured?

In all likelihood we will never know. That’s because no one appears to have identified benchmarks by which the effectiveness of the legislation can be measured. The politicians, activists and pundits will declare victory and move on to the next cause of the day. The last thing they want is to lay down markers by which this entitlement expansion can be judged to be effective or not. We don’t have the capacity here at Bacon’s Rebellion to do that heavy lifting, but we  can ask questions that are worth bearing in mind as the Medicaid juggernaut rolls forward.

Budget savings. A key promise in getting Medicaid expansion enacted is that the program will pay for the state contribution through savings in state programs. In theory, the Commonwealth will save $370 million in prison healthcare, mental health, indigent care funding, FAMIS pregnant women, and the like, over the next two-year budget. Will those savings materialize? I’m fairly confident that they will — budget items like this are among the easiest things to predict. But we won’t know for sure if we don’t check.

Impact on the Affordable Care Act. Steve Haner noted in a previous post that an estimated 60,000 Virginians now covered by Affordable Care Act health plans will be enrolled in Medicaid. What does it say about Medicaid expansion if, to a significant degree, it is just shifting tens of thousands of patients from one government-subsidized program to a different government subsidized program? Another question: Does Medicaid provide better coverage than Obamacare or worse? Yet another: What actuarial impact will the loss of 60,000 patients have on the Obamacare plans?

Speaking of Obamacare… The Affordable Care Act insurance markets continue their meltdown in Virginia. According to HealthInsurance.org, the weighted average of next-year rate increases filed by all insurers in Virginia is 13.4%. Some fraction of that increase can be attributed to Trump administration actions, but the markets also have been in a death spiral in which healthy patients bail out, forcing insurers to hike rates to cover the remaining, sicker patients. Regardless of who or what is to blame, it is difficult to appraise what is happening in the Obamacare markets. Plans vary so widely by the amount of deductibles and discounts negotiated from listed prices that it is impossible to compare Plan A with Plan B. The situation could be worse than it appears from comparing premiums alone. What will happen to the near-near poor (as opposed to the near-poor enrolled in Medicaid) if they get priced out of the market? Will Medicaid have to expand to cover them, too?

Quality of Medicaid care. Medicaid reimburses hospitals and doctors at the lowest rate of anybody in town, and most providers lose money on their Medicaid patients. Combine that with an acute shortage of doctors, and you get a situation in which it is exceedingly difficult for Medicaid patients to find primary case physicians. The General Assembly has done nothing to alleviate the doc shortage. Perhaps the managed care plans set up for Medicaid patients will devise work-arounds for the problem. Perhaps not. Nationally, there has been considerable debate about whether Medicaid patients are better off with Medicaid than if they just threw themselves upon the mercy of hospitals and doctors. Inevitably, that debate will be reprised here in Virginia. The Northam administration should settle upon metrics that track outcomes for Virginia’s near-poor population before and after Medicaid expansion.

Cost shifting. The financing of the health care system is stacked against the middle class. Hospitals shift a portion of the cost of treating their money-losing patients (indigent, uninsured, and Medicaid) to patients with privately insured health plans. Privately insured patients could get a triple whammy next year. Not only will they pay higher premiums due to general health care inflation (the first whammy), but they’ll eat the estimated $300 million hospital assessment enacted as part of Medicaid expansion (the second whammy). Plus, they could take another hit as docs and hospitals treat more money-losing Medicaid patients and shift costs to the privately insured (the third whammy). On the other hand, Medicaid expansion will inject a couple billion dollars into the system, so maybe cost-shifting pressures will diminish. Frankly, nobody knows. But it would inform future debate if someone tracked the numbers and performed the analysis.

Hospital profitability. With the exception of some rural hospitals, putatively nonprofit hospitals have consistently maintained high levels of profitability through the twists and turns of health care markets over the years. Will Medicaid expansion pad or diminish their profitability? I’m predicting that overall industry profits in Virginia will surge, but I could be wrong. Again, it would be helpful if someone kept track so we can understand what’s happening.

I offer this list just to get the conversation started. I’m sure readers can refine the thinking. What’s important is that we start measuring now. I would hate to find ourselves revisiting Medicaid expansion two or three years knowing no more than we do now.

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8 responses to “OK, We Enacted Medicaid Expansion. Let’s Measure How Well It Works.”

  1. Steve Haner Avatar
    Steve Haner


    I find it fascinating that the GOP oriented pseudo-news blog Republican Standard has zero coverage of what happened, clearly the most important development for that party in a very long time. Deer in the headlights. More proof of my advice to the Republican legislators 25 years ago when we were in the minority – “When they divide we decide.” The roles are reversed but the tactic worked again.

    Advocates and opponents will each have data to support their positions well into the future. The financial benefits to the hospital industry should be clear. The medical outcomes will be mixed at best unless the underlying drivers of metabolic and heart diseases become the main focus of a significant public health drive aimed at this new patient population.

  2. LarrytheG Avatar

    Perhaps as fascinating is how the Virginia budget would have been without the expansion. Did the expansion help save the budget? Would the budget have been just fine if we did not do the expansion?

    I’m not sure I ever saw a budget proposal from the GOP sans the expansion.


    1. Steve Haner Avatar
      Steve Haner

      Good Grief. Larry, there are GOP majorities in both budget committees. You saw two Republican budget bills and then a compromise worked out by two GOP chairmen. Your partisan blinders are big enough for a Clydsdale.

  3. LarrytheG Avatar

    In terms of measuring… what would we measure that would not be agenda-driven by the nay sayers?

    The claim is that both the expansion and Obamacare are subsidized. Nope they’re not. They are actually paid for with earmarked taxes not general fund.

    So that claim alone seems to be agenda-driven.

    Then it’s said that there will be cost-shifting! holy bat crap! The heck you say! Like we don’t have that right now? geeze!

    Here’s some things to measure. We have the lowest life expectancy of any advanced economy nation.

    We pay twice as much for health care – BEFORE Obamacare and the MedicAid Expansion.

    There is nothing really magical about it. People who have diabetes and cardiovascular disease and no insurance – will die 10-20 years before they would if they received regular disease-managing primary care. Then when they do get these diseases – we expend heroic amount of money trying to keep them alive for a few more years.

    The regular cost of Medicare has skyrocketed in the USA long before anyone even thought about Obmacare… or the Expansion so the idea that we “measure” it… we kinda of know what that means.. just cook the data whatever is needed to “prove” that Obamacare and the Medicaid Expansion are “failed”.

    We hear that right now – that Obamacare is melting down… and that “proves” it’s a failure. Only problem is that it actually works if you don’t cripple it as is happening.

    Finally – the opponents have no real alternatives other than ideological idiocy and talking points tailored for rubes.

    The countries on earth with the longest life expectancies have government sponsored health care. The countries on earth with the lowest costs -are ones with govt-sponsored health care. Those are facts.

  4. Steve Haner that is true also in the pols. They are dividing us into classes, and the middle class is getting decimated. More and more like Soviet Russia?

  5. LarrytheG Avatar

    Actually countries where everyone has health care are more equal and when you add education , the two of them provide significant opportunity to all citizens from all economic classes – to advance on their own efforts.

    That’s the way every single industrialized country on the planet – today – actually works and citizens in those countries – no matter their economic status have that opportunity to move up whereas in 3rd world and developing world countries – if you are in the lower economic tiers – your chances at a better education and a healthy condition are not assured at all.

    1. TooManyTaxes Avatar

      So why don’t more poor Americans leave the United States for those countries that offer all these goodies? And why are so many people entering the United States without authorization even though they could go to other countries that provide “free health care and free post-secondary education”? Just maybe, the basic balance between freedom, tax burdens, size of social services and economic opportunity is found to be acceptable here. I had a set of 2nd great grandparents move here from Sweden in the mid 1860s. I’m not aware that any descendants have moved back.

  6. Peter Galuszka Avatar
    Peter Galuszka

    Medicaid expansion is a positive and compassionate move. It is disappointing to trot out all of these stale budget arguments to nitpick the victory. A few quick takeaways:

    (1) Virginia citizens and millions elsewhere truly want better, more affordable health care. This is a political reality.Conservatives can’t just wish it away.

    (2) It is not the responsibility of the Republicans in the General Assembly to balance the federal budget. Their budget arguments are hidebound and have been used to oppose ANY government program to help people such as Social Security and Medicare.

    (3) The “free market” doesn’t exist in U.S. medical care. The real choice is between prices set in secret by an oligarchy of insurance companies, hospitals and some other medical interest groups or government-led health care for all. It is time for a single payer system and Virginia’s decision to expand Medicaid is a move towards that.

    (4) And, by the way, when you keep talking about “runaway” costs, you ignore the fact that lower income people who didn’t qualify for Medicaid before and couldn’t pay for private insurance would end up at emergency rooms where they had to be treated regardless of the cost. Guess where that cost goes? To the general health care system and higher insurance rates by those who can pay. Somehow this is rarely mentioned in the nit-picking about budget overruns.

    (5) What about the actuarial impacts? Let’s really get down in the wonky weeds.

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