I will explain why I have opened a bill file to refuse the Obamacare expansion of Medicaid in Utah.
Background:
The Supreme Court ruled that states are not forced to expand Medicaid to cover Obamacare’s insurance mandate. Utah now can choose whether to expand Medicaid (instead of losing all Medicaid funding by refusing to expand, as Obamacare intended). Medicaid is the fastest growing part of Utah’s budget, growing from 10% of the state budget a decade ago to 20% currently.
The Obamacare expansion would provide government insurance to additional categories (e.g., adults without children) and to more people within existing categories (e.g., adults with children would be eligible, if they made 133% of the poverty level, instead of the present 50%). The federal government initially would cover most of the Medicaid expansion costs.
Analysis:
1. Government v. the People: American government gets its power from individuals. At some point (which I think we have crossed), the growth of government means the diminution of people. People—allowed by a limited government to exercise their freedom and liberty—have made America great. Government has not made America great. In my opinion, President Obama disagrees with that perspective. As a result, he and Obamacare promote governmentalism, at the expense of individual freedom and liberty. People increasingly are working to support their government, instead of government working to protect the freedom and liberty of individuals. I oppose that power shift.
2. The hollowness of Government promises. The same government that attacks Utah—by shutting down drilling in Utah and pulling millions of acres out of “multiple use” management, to gain favor with special interest groups—promises Utah that it will give huge federal matches to fund Medicaid expansion. Yes, that would be the same government that has pulled back such matches in the past and that imposes requirements sure to escalate state costs. Color me skeptical. Also, the “free” money, of course, isn’t free. Our drunk Uncle Sam can’t afford this bender forever. What can’t go on forever, won’t. States ultimately will be expected to cover the expansion costs.
3. Even with the matches, Utah’s outlay would be huge. In 10 years, Utah’s costs for the expansion easily will exceed $100,000,000. That is money that won’t be available for education and transportation.
4. It’s not up to Utah to fix the problems of Obamacare. By not expanding Medicaid, a “doughnut hole” will be created. The “state insurance exchange” allows people earning over 133% [ed: corrected from original post] of the poverty level to receive subsidies for the purchase of insurance. If we don’t expand Medicaid, many people earning less than that amount won’t qualify for Medicaid but also won’t qualify for the subsidies. That is the “doughnut hole.” Rather than spend lots of resources to plug the hole in a bad law, we should work to repeal the law or maybe do away with the state exchange.
First a correction,
“allows people earning over 150% of the poverty level”
Its 133% of the poverty level, Easy mistake tho the house version of the bill that didn’t pass went to 150% and hr3200 probobly got more press then the bill that did pass.
On point 4, Can I read that you think the State should take the exchange subsidies?
Also its not a zero sum game, how much of that $100 million will be picked back up by the State from the $2.4 billion or so in Federal spending from the expansion. Between income, property, and sales taxes on spending from the doctors, hospital staff, etc that will be employeed due to this expansion what is the real cost to the State.
Are you also aware that having healthier workers will lead to increases in productivity and hense tax revenue?
How much money does the State have to pay out or lose in revenue from uncompensated care at hospitals, is the State already paying for the cost of the expansion in the form of tax write offs and deductions related to uncompensated care at doctors and hospitals?
Given part of Obama care will reduce hospital compensation rates in medicare, can the hospitals in the State afford not having the medicaid program expanded?
I would also like to ask how much money the State would save under the simplified means testing rules that the expansion would apply, as the expansion eliminates means testing opting instead to simply check income as the solve measure of eligibility.
Thanks, Ron. I made, and noted, that change in the post. I drafted this too quickly, and would like to edit a few other items too. But, I assume we’ll have plenty of opportunities to discuss this issue. Rest assured that we do know (as indicated in my 3rd paragraph) that 133% of the FPL is the magic number.
I don’t yet have an answer for your question about my point 4. In some ways it would be nice to not have the state exchange. But, there are some advantages to having one (i.e., regulatory control staying with the State, instead of moving to the feds). This item does require more analysis.
You state your point about revenues/benefits coming in to offset (or possible exceed) costs very well. I would counter by noting the less visible costs that come with increasing governmental largesse. Dependency is promoted, the private market is diminished, and costs will escalate.
“Dependency is promoted, the private market is diminished, and costs will escalate.”
I would argue that the group covered by the medicaid expansion is left out of the private market under almost entirely by the current system, And that in fact by covering them via medicaid will reduce the amount of uncompensated care costs “cost shifted” onto private insurance plans.
The people covered by the expansion are not the unworking poor either, we are talking about people who do have some amount of income, these are the working poor, The wallmart greeters, grocery store cashiers, farm workers, etc.
There is a human cost to all of this beyond any any argument about dollars and cents.
It’s fine to have a good argument about the role and size of government but lets not lose sight of what it is we are arguing about, access to health care for a great number of Utah citizens.
Ronald,
Thank you for dialoguing with me. I do try to listen and learn while doing this. So, your engagement is appreciated. Also, I appreciate your tone. You and I obviously disagree. And that is what makes for good dialogue and, at times, good solutions.
Okay, why are low-income people left out of current system? Many (a.k.a., the “indestructables”) choose to spend their money on other things, and, for many others, insurance is too expensive.
Okay, so why is it too expensive? Much of the reason lands in Government’s lap. Government imposes lots and lots of mandates, so that private insurance must cover everything and everybody. They can’t offer stripped down plans that mainly focus on preventive care. And, as a result, surprise surprise, insurance is unaffordable. Government has destroyed the market; so, now, Government must take over the market. Also, Government takes so many people out of the market and, with that huge user base and the might of government, Government pays low rates, which rates are subsidized in the market by providers charging more to private insurers and still more to the uninsured. And, Government policies–while driving up payment on other non-government users–also drive up overall healthcare costs by encouraging over-utilization. For example, the Government forbids reasonable co-pay requirements on Medicaid users, which are known to significantly reduce over-utilization. Thus, without co-pays and deductibles, Medicaid users have some of the best insurance around.
My belief is that Government involvement has completely screwed up the medical marketplace. Decrease that involvement, and the market will correct. Increase that involvement, and the market will further die (in which case, people will continue to argue that we need even more Government involvement).
I agree with your point that this is all about the human cost. But, you and I disagree whether individuals are helped or harmed over the long-term by increased government involvement.
“They can’t offer stripped down plans that mainly focus on preventive care.”
This is not entirely correct, small doctor service only health groups to in fact exist. These function not as insurance but as member subscribed services. Their is no regulation preventing these from existing, they are low profit and generally have very limited services and not very interesting to the health industry on the wide scale. Also the poor and young tend to move around alot to starting a subscription to such a service(and waiting through the ripening period) may or may not prove helpful to their needs.
For these to work they would have to be connected in a provider network accessable in many places, they would need to have services expanded to cover in office sugerical services(ear tubes, tonsils, other minor surgical services*ingrown toenail perhaps*). At this point and scale however the viability of the business model breaks down.
“Government pays low rates, which rates are subsidized in the market by providers charging more to private insurers”
This is half true, Medicaid causes cost shifting however medicare does not. Further if the government did not provide any compensation what so ever through medicaid or medicare for health services render to qualified people of those programs then who would?, The uncompensated care costs “cost shifting” would be much greater.
And remember that even with medicare and medicaid, that uncompensated care costs outside of any government program make up nearly 20% of the business of hospitals and doctors. I can’t think of any other industry where such a high loss ratio would be sustenable, not to say that it is in this one.
“For example, the Government forbids reasonable co-pay requirements on Medicaid users,”
PCN had co pays if i recall from when i was on that, But this is a regulation I can understand, the unworking poor that medicaid typically covers likely don’t have the money for co-pays. I have to wonder if any savings from reduced utilization would be eaten right back up in emergency room care as health problems are left untreated.
“And, Government policies–while driving up payment on other non-government users–also drive up overall healthcare costs by encouraging over-utilization.”
While their is a hint of truth to this, you must remember that health care doesn’t function like a normal market, demand is set by the atypical function of the accident and disease rate rather then supply, price, or regional access, etc.
Dropping the price of typhoid treatment, or leg casts to $0 is not going to cause everyone to run out and catch typhoid and break their legs. No matter what the price of these services are I can accurately say that the rate of leg breaks and typhoid infections will likely follow their existing statistical trends. Much of the health care market functions like this.
Excellent analysis, I totally agree with your points.
Medicare Utah