My life was threatened by the multi-company, private health insurance system we currently have (repost from Joanne Tosti-Vasey's Blog)

Healthcare for All PA state Board Member and past PA Now President has written an article in http://civilrightsadvocacy.net/ on her own personal struggles with the insurance industry.  It is reposted here with her permission.  The name of the blog has changed to Healthcare for All PA PUSH to reflect that we are a chapter of the statewide organization.

Congressman John Conyers Jr. (D-MI) has reintroduced his National Health Care plan bill HR 676, “The Expanded and Improved Medicare for All Act.” I strongly support a universal national health care program such as HR 676. I also support any effort by any state to implement a state-based single-payer health care plan. Why?  For many reasons.

My life was threatened by the multi-company, private health insurance system we currently have.

I received a bone marrow transplant in 1989 from my identical twin sister. Although I had no problem finding a match, I had to jump through many hoops and barriers put up by the two health insurance companies covering my sister and myself. In the case of my insurance provider, I was refused coverage of the donor portion of the transplant because my twin sister wasn’t on my health insurance plan. In the case of my twin sister’s insurance provider, they refused to cover her portion of the transplant because she “wasn’t sick.” Then the hospital administration said that they would not perform the transplant until this conflict between the two insurance agencies was resolved with a guarantee of payment by either or both companies. And my doctors said that if the resolution did not occur rapidly, I would be dead within the year due to the seriousness of the form of leukemia that I had.
According to Health Care for America, health insurance companies profit by denying–not by providing–healthcare. Health insurance CEOs of the top 10 health insurance companies today typically enjoy an average of $10,000,000 in annual compensation–salary, bonuses, stock options, etc.

Back to my story. I went into battle mode against the insurance companies when I was told that they would let me die because of their bottom line and attempts to deny coverage. Because of the support and advocacy I had through the organization where I self-purchased my health insurance (the National Organization for Women), we were finally able to get me the life-saving transplant that I needed. And I am here today.
This experience is why I became an advocate for a single-payer health care system rather than the current system that allows private companies the ability to deny critical health care to “save” their bottom line for profit only.

Other Reasons why I support a Universal Health Care Plan at Either the National or State Level.

It is the ethical and moral to treat all people, regardless of economics or status when they are sick.

A 2009 article in the Journal of Public Health reports that approximately 45,000 people on average die each year due to lack of health insurance. One of the goals of The Affordable Care Act (ACA) is to reduce the number of people without health insurance, so that premature deaths from lack of coverage would also be reduced.
People will continue to struggle to receive health care coverage and treatment with both passage of the ACA and the Supreme Court’s decision declaring the ACA as constitutional while allowing states to opt out of the expanded Medicaid program for low-income people.
The Centers for Disease Control acknowledges that access to coverage will improve under the ACA. But that acknowledgement holds a caveat; they state, “Even after ACA is implemented fully, some persons eligible for coverage might go uninsured.” The ACA will not fully resolve this ethical and moral threat to peoples’ lives. 

Some states are threatening people’s health care and lives based on decisions either by their legislature and/or their governors.

These states place people who could have been covered under the Expanded Medicaid program in continued jeopardy since they will neither be able to sign up for Medicaid nor be able to afford private health insurance through the ACA’s health care exchanges. The 13 states that have already threatened the healthcare of their citizens are Alabama, Georgia, Idaho, Louisiana, Maine, Mississippi, North Carolina, South Carolina, South Dakota, Oklahoma, Pennsylvania, Texas, and Wisconsin. Five states – Iowa, Nebraska, New Jersey, Virginia, and Wyoming—are leaning towards opting out of coverage. Kentucky, New York and Oregon haven’t yet made their decision, but do appear to be leaning towards opting into full ACA with the expanded Medicaid coverage. All remaining 22 states plus the District of Columbia have opted into full ACA with the expanded Medicaid coverage.


Via: The Advisory Board Company
For the low-income people living in the 18 states that have either opted out of or are considering opting out of the expanded Medicaid coverage, nothing changes for them since most of these individuals will not be able to afford private health insurance in the new health care exchanges under the ACA.

A Single Payer, Universal Healthcare program would cover everyone.

According to predictions by the Congressional Budget Office and the Joint Commission on Taxation, we will we still have 30 million uninsured in 2023 under Obamacare. At the same time, health care costs for our nation, states, and families will continue to increase. A single-payer, universal healthcare program could cover everyone at lower cost. Everyone in and no one out regardless of income or health status.

The BETTER Alternatives: National and State-Based Single-Payer Plans

The plan introduced by Representative Conyers is basically an expansion of the efficient and cost-effective Medicare system currently used by the elderly and people with disabilities. Its overhead (all costs other than for healthcare) is much lower–and patient satisfaction is much higher–than under for-profit healthcare. And it would cover everyone regardless of their economic or health status without fear of an insurance company denying coverage to save their bottom line.

Similarly, legislation is being considered in about half of the states to create state-based single-payer healthcare programs. Some of these states’  legislatures have held hearings and/or had votes on universal healthcare. Vermont has already passed a law that sets in place the possibility of a single-payer healthcare program by 2017. 2017 is the year that the ACA—aka “Obamacare”—allows states to try other healthcare plans IF they cover at least the same number of people with at least the minimum coverage under the ACA.
Obamacare is now the law of the land. It is an improvement over what we had before 2009. It is also the basis from which we can work towards a comprehensive healthcare program. We could do it nationally, such as with HR 676. Or, like Canada, we can start at the state level.

So check out HR 676. See if your Representative is one of the 40 current co-sponsors. If not, meet with him/her, tell your personal story about why you support an expanded and improved Medicare for All, and ask them to co-sponsor the bill. If he/she is already a co-sponsor, ask your Representative to take the next step. They can hold a town-hall meeting on universal healthcare to hear from their constituents. They can also call on the chairs of the three committees reviewing HR 676 to hold Congressional hearings on HR 676. These three committees are the House Energy and Commerce Committee, the House Ways and Means Committee, and the House Natural Resources Committee.
Also get active with your state-based single-payer organization. These local and state-based single-payer health care groups will let you know how can help with your state-based legislation. Healthcare NOW has a full listing of state- and local-based organizations. If your state does not have a single-payer chapter yet, contact Healthcare NOW at their national office in Philadelphia, PA; they can help you to organize a plan for your state.

All other “advanced” nations have already adopted comprehensive healthcare systems. All deliver better health outcomes at a lower per capita cost than the USA. Let’s get cracking. Let’s do it here in the US of A as well.

**Related Post**

Joanne Tosti-Vasey's Bone Marrow Transplant Story

Medicaid Expansion Update

On Thursday, the Pennsylvania Health Access Network and Families USA issued a report on the economics of Medicaid expansion in Pennsylvania. The report and the reaction of Governor Corbett's spokesperson address some previously unanswered questions.

The cost of Medicaid expansion. The Governor estimated that Medicaid expansion would cost PA $4.1 billion over 10 years while the nonpartisan Kaiser Family Foundation put the cost at $2.8 billion. Department of Public Welfare spokesperson Anne Bale stated three items that went into the Governor's estimate.

• Staffing and administrative costs to serve 800,000 new Medicaid recipients.
• The woodwork effect: This refers to the possibility that people currently eligible for  Medicaid in PA who have not signed up will do so because of the publicity surrounding Medicaid expansion and the individual mandate requiring everyone to have health insurance. If their income is below 46% of the Federal poverty level, the state would have to cover 46% of their Medicaid costs. However, the woodwork effect will occur regardless of whether PA expands Medicaid and should not be counted as a cost of expansion.
• The possibility that people currently eligible for Medicaid but who have either private insurance or are insured through their employer might drop that coverage in favor of Medicaid. However, in order for PA to be responsible for 46% of their costs, they would have to be making less than 46% of the poverty level. How many Pennsylvanians who are that poor have private insurance or are insured through an employer?

The "flexibility" issue. The Governor has stated that he opposes Medicaid expansion because it does not afford PA the flexibility it needs to design a Medicaid system that is financially sustainable, and that he would like Medicaid to include incentives for recipients to seek employment. I previously speculated that he might want PA to provide less coverage than required by the Affordable Care Act, or to place some time limit on coverage.

On Wednesday, Florida's Governor Rick Scott accepted Medicaid expansion after negotiating an agreement with the Feds to allow Florida to privatize Medicaid by placing recipients in private, for-profit HMOs and managed care plans. This plan could, in theory, cut costs by reducing the incentive for unnecessary medical treatments. Florida has already embarked on a pilot program of Medicaid privatization. It has not yet been evaluated, but it is said to be filled with exactly the kinds of problems that already plague for-profit health insurance:

Critics worry for-profit providers are scrimping on patient care and denying medical services to increase profits. Some doctors have dropped out of the pilot program, complaining of red tape and that the insurers deny the tests and medicine they prescribe. Patients have complained they struggled to get doctor's appointments.

Gov. Scott's agreement with the Feds requires that the program be evaluated in real time.

Given Governor Corbett's devotion to privatization, it seems possible that he is negotiating to bring a similar disaster to PA's working poor. We might at least want to be aware of that possibility.

The Families USA report allows us to give better answers to two financial questions about Medicaid expansion in PA.

How much is Medicaid expansion actually worth to PA's economy? I previously indicated that PA will receive $37.8 billion in health insurance from the Federal government over ten years, and that this money will benefit the economy. Families USA hired Regional Economic Model, Inc., an economic think tank, to estimate the direct and indirect effects of this cash infusion in a target year, 2016. Direct effects would be new money spent on health care. Indirect effects would be items like the construction of new hospital facilities or the money spent by new health care workers on groceries and entertainment—the so-called multiplier effect. The estimate was that these federal dollars would support 41,200 new jobs in 2016. They also estimated that the $3.3 billion in additional health care spending that would occur in 2016 would, through the multiplier effect, bring $5.1 billion additional economic activity to PA in that year. Some of this money would come to the state in the form of additional taxes.

What is the financial cost of not expanding Medicaid, and who would bear it? As you know, hospitals must treat people without health insurance (“forced charity”) and that someone must pay for this uncompensated care. The report gives the following estimates of how this uncompensated care will be distributed between 2013 and 2022.

• $878 million will be paid by state and local governments, and ultimately by taxpayers.
• $891 million will be absorbed by hospitals and medical facilities.
• $1017 million will be added to the cost of health insurance paid by Pennsylvanians who have private insurance.

None of these things matter as much as the 4000 lives per year that would be saved by Medicaid expansion. However, it's possible that the Governor and his cronies will find these economic arguments more persuasive.

New Time Magazine Article on Healthcare Costs with Stewart Discussion

The Daily Show with Jon Stewart
Get More: Daily Show Full Episodes,Political Humor & Satire Blog,The Daily Show on Facebook

 
The Daily Show has an extended interview with Steven Brill of Time Magazine who has written an extensive article on healthcare costs.  I need to warn you that in parts 2 and 3 Stewart has salty language.  Florida Gov. Rick Scott has announced that he is expanding Medicaid in his state (one Confederate state that is) which picks up the tab for the poorest patients in the nonprofit system and helps keep their profit margins high. 

The Daily Show with Jon Stewart
Get More: Daily Show Full Episodes,Political Humor & Satire Blog,The Daily Show on Facebook

The Daily Show with Jon Stewart
Get More: Daily Show Full Episodes,Political Humor & Satire Blog,The Daily Show on Facebook

**Related Posts**

Real Reasons for High Medical Costs

Those Rapacious Health Insurers Raise Premiums 9% This Year for Job Based Health Insurance

WaPo Interactive International Cost Graphic

Tom Corbett to PA's Working Poor: "Drop Dead!" Pt. 4

Part 4. What We Can Do

On Tuesday, February 5, PA Governor Tom Corbett stated that at this time he cannot recommend accepting $38 billion in federal funding to expand Medicaid, thereby denying medical assistance to more than 700,000 Pennsylvanians. So far, I've discussed empirical studies demonstrating that Medicaid improves health and saves lives, the costs and benefits of Medicaid, how those costs and benefits are distributed in Pennsylvania, and the governor's stated reasons for rejecting Medicaid expansion.

The conclusion to this series has proven to be the most difficult to write. I've already had to change the “tomorrow” in part 3 to “next time.” It's time to tie the loose ends together.

First, let me try to justify the rude title of these posts. As previously noted, the Sommers, et al, study contains an estimate of the number of lives saved by Medicaid expansion.

Results correspond to 2840 deaths prevented per year in states with Medicaid expansions, in which 500,000 adults acquired coverage. This finding suggests that 176 additional adults would need to be covered by Medicaid in order to prevent one death per year.

Granted, this is just an estimate. The real number may be somewhat higher or lower, but both mortality and Medicaid enrollment statistics in this country are usually pretty accurate. Corbett's decision will deny health insurance to 719,000 Pennsylvanians whose income is between 46% and 100% of the Federal poverty level. This too is an estimate based on 2010 census data. Using these two estimates, we can compute the number of lives per year that would be saved by Medicaid expansion.

719,000/176 = 4085

I think we can safely estimate that Corbett's decision sentences approximately 4000 Pennsylvanians to death per year, at least for the first five years (the duration of the Sommers study). These lives will be lost in order to save the state (by Corbett's estimate) $4.1 billion over eight years, while simultaneously turning down $37.8 billion in Medicaid funds from the Federal government.

Gov. Tom Corbett

As if to add insult to injury, Corbett has been extremely generous to Pennsylvania's corporate class. His budget projects that corporate tax revenues will drop $311 million (-5.9%) in 2013-14, due mostly to rate cuts in the capital stock and franchise tax beginning in 2014. He proposes to gradually phase out this tax. He also proposes to gradually eliminate the corporate income tax beginning in 2015. Corbett has pledged $1 billion in corporate welfare to Shell Oil to attract a $5 billion ethane cracker plant to Western Pennsylvania. (These are not saltines; they are dirty petrochemicals.) This plant will create hundreds of jobs, far fewer than Medicaid expansion. And Act 13, which imposes a minimal “impact fee” on natural gas drillers, has been described as “the nation's worst corporate giveaway.” Meanwhile, the Governor is not proposing to close tax loopholes, such as the Delaware loophole, which allows two-thirds of Pennsylvania corporations to completely avoid income tax.

I would argue that the humanitarian and economic arguments in favor of Medicaid expansion are overwhelming. In addition, Medicaid expansion would be easy to incorporate into a single-payer system, should the state or the nation move in that direction. I suggest that as health care advocates we immediately begin to lobby for Medicaid expansion with all the enthusiasm we can generate.

The economic logic of Medicaid expansion is so strong, and there are so many powerful economic interests that support it, that I think we will ultimately find ourselves on the winning side of this debate. Here are some of the reasons to be optimistic:

• Governor Corbett's announcement rejecting Medicaid expansion contained the hedge words “at this time,” suggesting that he may be open to changing his mind.
• He will face serious pressure from hospitals that, instead of gaining new customers, face financial losses as a result of having to provide medical services to the uninsured (“forced charity”). Other segments of the health care industry, such as pharmaceutical and medical equipment companies, are also seeing dollar signs disappearing.
• Since Medicaid expenditures ultimately circulate throughout the economy, it's likely that Chambers of Commerce and other business interests will come out in favor of expansion.
• Public opinion data collected last Summer showed 49% of Americans favor of Medicaid expansion in their state and 43% opposed. The number in favor should increase as the costs and benefits become more clear.
• The fact that several other Republican governors who initially opposed expansion, such as Govs. Brewer of Arizona, Kasich of Ohio and Snyder of Michigan, have decided to accept it has cast Corbett in the role of an ideological extremist.
• Since Pennsylvania Democrats who have spoken out so far seem to be unanimous in their support of Medicaid expansion, it may take only a few high profile Republican defectors to convince the Governor that he doesn't have majority support.
• I hedged my statement by saying “ultimately.” Even if it isn't decided to expand Medicaid this year, there is nothing to prevent Pennsylvania from accepting it in the future, should Gov. Corbett not be re-elected and the political balance of power in Harrisburg change.

However, there is no justification for complacency. The stakes for Pennsylvania's working poor are too high.

I've previously reviewed research showing that wealthy people have the greatest influence on political decisions in this country, the influence of the middle class is much less, and the influence of the poor is virtually nonexistent. This suggests that the occasional successes progressive activists have are usually due to our interests temporarily coinciding with those of much more powerful economic forces. For example, passage of the Affordable Care Act itself may have had little to do with providing health care to uninsured Americans, except insofar as this provided the cover story for a massive transfer of wealth from the government to health insurance, pharmaceutical, and other health care corporations.

Medicaid expansion is another instance in which our preference coincides with that of important segments of the economic ruling class. Our support may make a difference; we will never know for sure. But even if Medicaid expansion occurs for reasons having nothing to do with anything we say or do, this is an excellent opportunity for health care advocates to renew their faith in the effectiveness of progressive activism.

I expect more sophisticated analyses of the costs and benefits of Medicaid expansion to become available soon. Meanwhile, if you would like to reprint this analysis or if you want me to edit it down to meet your needs, please let me know.

Tom Corbett to PA's Working Poor: "Drop Dead!" Pt. 3

Part 3. What Medicaid Expansion Would Mean to Pennsylvania

On Tuesday, PA Governor Tom Corbett stated that at this time he cannot recommend accepting $38 billion in federal funding to expand Medicaid, thereby denying medical assistance to more than 700,000 Pennsylvanians. This series of posts will consider the implications of that decision. My first post presented evidence that Medicaid improves health and saves lives. The second examined the costs and benefits of Medicaid expansion under the Affordable Care Act (ACA). This time, I'll look at how these costs and benefits apply to Pennsylvania.

I attended a webinar on Corbett's budget sponsored by the Pennsylvania Budget and Policy Center on February 6. Some of the figures in this post come from that discussion.  If it becomes available on the web, I will add a reference to it.

First of all, let's look at the 719,000 Pennsylvanians who will be denied coverage. Pennsylvania is one of the least generous states in the country when it comes to providing Medicaid coverage for adults. To qualify for coverage you must make 46% of the federal poverty level or less. For a family of three, that's less than $8781 per year. (You'll recall that children under six are covered up to 133% of the poverty line, and older children up to 100%.) If the governor had agreed to Medicaid expansion, all adults (and children) would have been eligible for Medicaid if they made up to 133% of the poverty level—$25,390 for a family of three.

This is where it gets complicated. Under the ACA, people who make between 100% of the poverty level ($19,090 for a family of three) and 133% are eligible for subsidized health insurance purchased through the federal exchange. (Pennsylvanians will be using the federal exchange because Corbett has refused to implement a state exchange.) This subsidy should, in theory, reduce the cost of private insurance to approximately what they would pay in Medicaid premiums and co-payments. However, this leaves a huge coverage gap for Pennsylvanians making between 46% and 100% of the federal poverty level. They will not be eligible for either Medicaid or subsidized private insurance.

These are the 719,000 adult Pennsylvanians who will be denied health care coverage as a result of Corbett's decision. In effect, Corbett has created a new “doughnut hole” for Pennsylvanians making between 46% and 100% of the poverty level. Most of them fall into the category of the working poor. These are the people who work at Walmart or McDonald's. The graph below illustrates this problem.  (You can click on it to expand it.)

The Kaiser Family Foundation has estimated that Medicaid expansion is worth $37.8 billion in health care coverage for Pennsylvanians to be paid by the federal government between 2014 and 2022. The governor gave as his main reason for refusing the coverage that it will cost Pennsylvania $4.1 billion to implement the program between now and 2022. Most of this is backloaded, when the state is required to cover 5% (in 2017) or 10% (in 2020) of Medicaid costs. This $4.1 billion figure is contested. Kaiser puts it at $2.8 billion. The governor has not realeased any data to show how he arrived at his figure. However, even if it turns out to be accurate, the governor is turning down $38 billion in order to save $4 billion.

Furthermore, this neglects other costs to Pennsylvania if it rejects Medicaid expansion. For example, it is estimated that, if Medicaid is not expanded, Pennsylvania hospitals will be faced with $1 billion per year in uncompensated costs for the care of uninsured people. Some of these costs are shifted to people with insurance through higher premiums, or are paid for by state and local taxes.

In Governor Corbett's letter to Health and Human Services Secretary Kathleen Sibelius, he gives two other reasons for rejecting Medicaid expansion in addition to the alleged $4.1 billion cost.

He refers to the current Medicare as a “broken system” plagued by waste and fraud, and states that it makes no sense to expand such a system. He claims that in 2009, $43 billion “could not be traced directly back to Medicaid beneficiaries.” He does not cite a source and I'm unable to evaluate this claim.

He also calls for granting states greater flexibility “to successfully reform and build a system that works for them.” He calls for aligning benefits “to meet individual needs and closer (sic) resemble coverage provided by employers.” He calls for a Medicaid program that “promotes personal responsibility” and provides “appropriate incentives for participants to seek and retain employment.” This is vague, but bear in mind that Pennsylvania is already one of the country's stingiest Medicaid states. It appears that Corbett wants the flexibility to reduce coverage below the amounts specified in the ACA, or to place some time limit on Medicaid enrollment.

Next time, I'll speculate a bit about the politics of Medicaid expansion in Pennsylvania, and what health care activists can (and cannot) do to persuade the governor to change his mind.

Tom Corbett to PA's Working Poor: "Drop Dead!" Pt. 2

Part 2. Medicaid Expansion is a Huge Bargain for the States

On Tuesday, PA Governor Tom Corbett stated that at this time he cannot recommend accepting $38 billion in federal funding to expand Medicaid under the Affordable Care Act, thereby denying medical assistance to more than 700,000 Pennsylvanians. This series of posts will consider the implications of that decision. Yesterday, I wrote about the evidence that Medicaid is effective in improving health and saving lives. Today, I will look at Medicaid's costs.

I have previously discussed the circumstances which caused Medicaid expansion to become a political issue. To summarize: Medicaid expansion is a critical part of the Affordable Care Act (ACA). Of the approximately 30 million people who were scheduled to be insured for the first time under the ACA, fully half of them—the poorest half—were going to be insured through Medicaid expansion.

Traditional Medicaid is jointly administered by the state and federal governments. Federal law requires that all children be covered if their family makes less than the federal poverty level. Children under six are covered up to 133% of the poverty line. The eligibility rules for adults are determined by the states. In most states, adults without children don't qualify for Medicaid no matter how poor they are. The income level at which parents with dependent children qualify for Medicaid varies from state to state. In the least generous states, parents only qualify if they make less than 40% of the federal poverty level—$4850 a year for two parents with a single child. The most generous states cover all adults making up to 133% of the poverty level. But on the whole, Medicaid is not much of a safety net for the poor. Right now the federal government pays on average 57% of the cost of traditional Medicaid—between 50% and 75% depending on state eligibility rules.

The ACA expands Medicaid by making everyone—children and adults—eligible for Medicaid if their family income is 133% of the poverty level or less. This is expensive, so the Feds agreed to pay most of the cost. In 2014, they will pay 100%. This drops to 95% in 2017, and 90% in 2020. States whose current Medicaid eligibility rules are relatively stingy stand to gain more money per capita from Medicaid expansion than states whose current eligibility rules are more generous.

The ACA required states to implement the Medicaid expansion. If they refused, the federal government threatened to withhold its contribution to traditional Medicare. The Supreme Court, in National Federation of Independent Business v. Sebelius, ruled that this was coercive, and that states may opt out of Medicaid expansion. The numbers change every day, but as of this writing 21 states have announced that they will expand Medicaid, 11 states have decided not to, and 18 are undecided. To the extent that states refuse to expand Medicaid, they will frustrate the intent of the ACA and deny medical care to many Americans who need it most.

How expensive is Medicaid? The average annual cost of Medicaid expansion for adults is $6000 per year, although the ACA hopes to implement some cost savings. Recall that the Sommers, et al study I referred to yesterday estimated that one life is saved per year for every 176 people added to the Medicaid rolls. From this we can calculate that the average cost per life saved is 176 x $6000, or slightly over $1 million. This sounds like a lot, but is actually well below what society is ordinarily willing to pay to save a life.

Most health care policy experts point out that Medicaid expansion is a huge financial windfall for the states, and that the logic of expanding Medicaid should be strong enough to overcome any resistance due to ideology. The states that do not expand Medicaid will be turning down “free money.” They will have to explain to their citizens why they can't have health care that is fully paid for by the federal government. The citizens of those states will be paying to expand Medicaid anyway through their federal taxes, so their money will go to the states that have accepted the deal.

Uninsured citizens in the non-expanding states will continue to show up at hospital emergency rooms. Their care will be paid for through cost shifting. Costs are shifted in three ways.

1. Some of the cost is paid by those who have health insurance. Their premiums are higher to cover the cost of treating people without health insurance.
2. Part of the cost is paid by federal, state and local taxes, which provide emergency health care for the poor. The Urban Institute estimated that in 2008, state and local governments spent $10.6 billion providing emergency care for the uninsured. But beginning in 2014, the federal government will no longer subsidize emergency care, so the burden will fall even more heavily on state and local government. If they expand Medicare, state and local governments will have to spend very little on emergency care. This cost savings alone could be greater than the cost to states even when they are paying 10% of the cost of Medicaid expansion.
3. Finally, part of the cost is shifted to hospitals through what is called “forced charity”—uncompensated medical care for the uninsured.

Whatever Medicaid costs the federal government—and our best estimate is $6000 per recipient—this money will be added to the economies of the accepting states. Initially, it will go primarily to doctors, hospitals, pharmaceutical companies and other health care providers. Doctors and hospitals have already agreed to reduce their reimbursement rates under the ACA, in anticipation of having many more customers due to Medicaid expansion. They are also not happy about forced charity. They can be expected to lobby heavily for Medicaid expansion.

These advantages must be balanced against the costs to the states of Medicaid expansion.   

1. The 5% (in 2017) to 10% (2020 and thereafter) of the cost of Medicaid expansion is not exactly pocket change. Some states also claim to be worried that the Feds will play a “bait and switch” game on them and increase their financial obligation in the future.
2. States also claim to be worried about the “woodwork effect.” Many Americans who are eligible for Medicaid in their state don't apply for it. However, the publicity surrounding the ACA and the threat of a fine for violating the individual mandate may persuade more eligible people to sign up. The states will then be responsible for whatever part of the cost they would have had to cover under traditional Medicare. However, the woodwork effect will occur anyway, even if the states do not expand Medicaid.

Health care experts such as Aaron Carroll and Austin Frakt argue that, leaving all humane considerations aside, it's in the overwhelming financial interest of states to implement Medicaid expansion. In the next part, I'll look at how these financial contigencies affect Pennsylvania and attempt to evaluate Governor Corbett's stated rationale for refusing Medicaid expansion.

Tom Corbett to PA's Working Poor: "Drop Dead!" Pt. 1

Part 1. Medicaid Improves Health and Saves Lives

On Tuesday, PA Governor Tom Corbett stated that at this time he cannot recommend accepting $38 billion in federal funding to expand Medicaid under the Affordable Care Act, thereby denying medical assistance to more than 700,000 Pennsylvanians. This series of posts will consider the implications of that decision.

It is difficult to arrange a definitive test of whether a social policy such as Medicaid is effective in achieving its goal of better health. In order to demonstrate causality, you must run an experiment with a randomized control group design, in which some people are randomly assigned to receive Medicaid (the experimental group), while others are randomly assigned to not receive it (the control group). Random assignment is critical. You can't compare Medicaid recipients to all non-recipients because to be eligible for Medicaid, you must be poor, and poor people have worse health outcomes. Since Medicaid is voluntary, you can't compare people who sign up and receive Medicaid to other eligible people who don't sign up, because people seek out health insurance when they are ill. While these flaws may seem obvious, you should be careful. Opponents of government health insurance will sometimes cite these flawed comparisons to convince people that Medicaid is counterproductive.

Assuming that a randomized control group design is not possible, there are two general ways to evaluate a social reform such as Medicaid expansion. In a time series design, you measure the outcomes of a group of people from before to after the change is implemented. The main problem with this design is that other events may occur at the same time as the reform, and they may serve as alternative explanations for the results. In a comparison group design, you compare the outcomes of a group of people who receive the treatment to a comparison group that does not receive it. Outcomes are measured at the same time. The problem with this design is that the two groups may not have been equivalent at the beginning of the study. Any irrelevant difference between the two groups can be an alternative explanation for the results. It is possible to combine the good features of both these designs in a time series design with a comparison group. However, it is still possible that some outside event that coincides with the treatment is affecting one group more than the other.

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I will discuss two studies, both published in 2012, that evaluate Medicaid outcomes. Since these two studies are superior to any that have gone before, previous studies are basically irrelevant. A study by Benjamin Sommers and others, published in the New England Journal of Medicine, utilized a time series design with comparison groups. One of its strengths is that it used three experimental groups and four comparison groups. In 2001 and 2002, three states, New York, Maine and Arizona, substantially expanded Medicaid by relaxing their eligibility requirements. For example, in New York, you could previously apply for Medicaid if you were below the federal poverty level. In 2001, people were allowed to sign up if their income was at or below 150% of the poverty level. For each of these states, they selected geographically close and demographically similar comparison states that did not expand Medicaid access. New York's comparison state was Pennsylvania, Maine's was New Hampshire, and Arizona's were Nevada and New Mexico. Since they were interested in whether Medicaid saved lives, the primary outcome measure was the mortality rate, which in this country is reported at the county level. All the outcomes were measured from five years before the change until five years after.

The results showed that prior to Medicaid expansion, there were no significant differences in mortality between the expansion and comparison states. After they implemented the expansion, these states showed a 6.1% reduction in mortality relative to the comparison states. Additional analyses showed that, as you might expect, the decline in mortality was greatest among the poor, minorities and older adults. Survey data showed that Medicaid expansion was associated with a 24.7% increase in Medicaid coverage, a 21.3% decrease in the rate of delayed care due to cost, and a 3.4% increase in number of people saying their health was “excellent” or “very good.” The authors calculated that one life per year was saved for every 176 adults that were added to the Medicaid rolls.

As impressive as these results are, they do not prove that Medicaid caused these health improvements.  A critic might argue that these three states—especially New York, which showed the greatest drop in the death rate—are not typical of the rest of the country, and thus the study exaggerates the benefits of Medicaid. Fortunately, circumstances have given us a randomized control group design with which to evaluate the effects of Medicaid. This is the “gold standard” for social policy research. In 2008, Oregon attempted to expand its Medicaid program, but didn't have enough money. They invited people who were eligible to apply. Ninety thousand people applied, and 10,000 of them were randomly selected to receive Medicaid in a lottery. Amy Finkelstein and her colleagues are conducting an ongoing survey comparing the lucky winners to those who applied but were turned away. They reported some preliminary results last year.

The main finding is that the Medicaid group is 25% more likely than the control group to report themselves in “good” or “excellent” health, as opposed to “fair” or “poor” health. More importantly, 40% fewer people in the experimental group reported a decline in their health over the last six months. (The reason this difference is so much greater than in the Sommers study is that Finkelstein only compared Medicaid recipients to those who were turned away, while Sommers' data estimated the health of everyone in these states regardless of whether they were enrolled in Medicaid.) As you would expect, the Medicaid group reported more doctor and hospital visits, more preventive care, and fewer unpaid medical bills.

The number of people in the Oregon study is too small to detect meaningful differences in mortality. Nevertheless, the two studies converge to give us the best evidence we have ever had that Medicaid improves its recipients' health and saves some of their lives. In the next post in this series, I will look at cost considerations.