On Monday there will be a Rally for Medicaid expansion in Harrisburg. There will be a meeting with Legislators at 11:30 followed by the Rally in the small rotunda in the Capitol Building near the Cafeteria. Along with Iowa, Arkansas, and Michigan, Pennsylvania is now proposing it's own version of expansion. Utah is still undecided as can be seen in the map below.
Gov. Corbett has proposed an expansion of Medicaid which differs from other states because it adds additional requirements such as a job search requirement and adding premiums and cutting services. For a year, his administration has been in negotiations with the Federal Department of Health and Human Services to accept his plan but they appear to be foundering with a rejection of the plan likely. Iowa's and Arkansas' plans have been approved by the Federal Government.
Healthcare for All PA board member Will Ferrell (not the star of Anchoman 2) has shared the great clip above of NBCs medical analyst Dr. Nancy Snyderman endorsing single payer. I had to share with you all. Will Ferrell has also had an Op/Ed posted in the Delaware County Times on Dec 13 seen at the bottom. Below is comedian Larry the Cable Guy telling Sean Hannity his opinion of the Affordable Care Act. Unlike other rantings and ravings on Fox News, this is actually funny.
SINGLE-PAYER, MEDICAL INSURANCE, and the CORBETT PLAN
Recently, Governor Corbett unveiled a Medicaid expansion plan called Healthy Pennsylvania. Few would disagree with the Governor’s objectives of increasing access, improving quality and making healthcare affordable for all Pennsylvanians.
Medicaid is a healthcare program funded by both the state and the federal government that provides direct care to individuals with limited income. The fastest growing population group in this category are seniors whose income falls within the threshold of income limits for Medicaid. In effect Medicaid supplements Medicare which is for all people over the age of 65. Medicaid has income limits, while Medicare does not. Most of the Medicaid supplement is used for long term care facilities.
Under the Affordable HealthCare Act, states may expand the eligibility for Medicaid, with the Federal Government picking up much of the cost. This expansion is optional for the states, although many states have already agreed to sign on.
Note, it is important to distinguish between health insurance and healthcare. Healthcare programs such as Medicaid and Medicare pay directly the doctors and hospitals that provide healthcare services to people.
With health insurance, people pay premiums to private insurance companies, who then pay the doctors and hospitals for healthcare services provided to those paying the premiums. Under Governor Corbett’s plan federal Medicaid funds would be used to buy health insurance for eligible participants, rather than providing direct healthcare.
HealthCare 4 All PA (HC4APA) believes this is a poor use of money that only increases the cost and limits the funding pool available to pay for actual healthcare. The reasoning is simple-health insurance has administrative costs in excess of 15%, meaning that 15 cents of every dollar does not go to pay for healthcare. Contrast this with Medicare and Medicaid where administrative costs are about 3%.
Therefore, under the Governor’s plan to turn Medicaid healthcare into an insurance program, more money will be spent and fewer people will be treated due to this disparity in administrative costs. HC4APA also believes that decisions about your healthcare should be made by you and your doctor, not by an insurance company whose primary motivation is to receive more money in premiums than they must pay out to doctors and hospitals.
HC4APA does agree with the Governor that the best healthcare delivery solutions are developed at the state and local government levels. States have often been called the laboratories of the nation. Following this ideal, HC4APA has developed a Single-Payerhealthcare delivery system. Single-Payer simply means that Pennsylvania would develop a healthcare delivery system modeled after Medicare, meaning doctors and hospitals would be paid directly for healthcare services provided to each of us.
The system would be funded by taxes paid by all businesses and by all individuals. It is clear, however that such taxes would be significantly lower than individuals and businesses are already paying in insurance premiums, deductibles and co-pays for healthcare. We can be confident of this because HC4APA contracted and paid for an Economic Impact Study (EIS) performed by several leading healthcare economists. This study demonstrated that Pennsylvania’s healthcare costs could be reduced by some $17 billion each year under a single- payer plan.
Currently, the costs of healthcare are very high and growing well ahead of the rate of inflation. If we, collectively, do not address these costs, the healthcare system will become unsustainable in its present configuration. A single-payer plan attacks those costs.
In addition, many other forms of business and personal insurance include healthcare cost components. These include vehicle and homeowners insurance and for businesses, workers compensation and liability insurance. The costs of these insurance policies would also decline when the state implements single-payer.
The bottom line is that a single-payer healthcare plan costs less and fosters free and open market competition. Single-payer moves the marketplace competition from the insurance company to the medical providers who will have to compete directly for your healthcare needs.
We encourage you to visit www.healthcare4allpa.org to learn more about the single-payer plan and to read the EIS that will document the value of the plan. Then become an activist by networking with family and friends, asking them to support the bill by calling their Legislators and ask them to vote for Senate Bill 400 and House Bill 1660. This will only happen if we the people want it to happen. We have the power.
This coming Sunday, January 26 the Pittsburgh 14th Ward Independent Democratic Club will be holding a forum of the eight candidates for Governor of PA, It will be held in McConomy auditorium on the Carnegie Mellon Campus from 1-4 PM. Below is information from the Facebook event page. As a 501(c)4 organization, Healthcare for All PA/PUSH does not endorse candidates but encourages everyone to gather information on the process.
Pittsburgh 14th Ward Independent Democratic Club's Annual Meeting and Board Elections - We are taking this opportunity to also hold a forum for the eight candidates who have thrown their hats into the ring so far for Governor.
The event is co-sponsored by the 14th Ward Democratic Committee, the 7th Ward Democratic Committee, and the CMU Young Democrats.
This will be an excellent opportunity to hear about their stands on issues and state business that is important to you.
The membership drive and Board elections will be going on in the background; the main attraction is the Gubernatorial Candidates' Forum. The Forum is open to the public, but registered Democrats in the 14th Ward (Squirrel Hill, Point Breeze, Park Place, Swisshelm Park, and Regent Square) of Pittsburgh are welcome to join the Club.
If the Obama administration agrees to the Medicaid "reforms" described in Part 1, then Pennsylvania will accept its gift of virtually free money. However, there is an important catch. People who make up to 133% of the Federal Poverty Level (FPL) will be given this money to purchase private insurance policies through the national health insurance exchange. (Corbett refused to establish a PA exchange, so Pennsylvanians will be using the national exchange.) This means that people who would have been eligible for Medicaid expansion under the Affordable Care Act (ACA) will now be exposed to all the disadvantages associated with the private insurance market, including copayments that are likely to be considerably higher than PA Medicaid's current copayments. An exception is made for people in this income group deemed to be “medically frail,” who will be allowed to enroll in PA Medicaid.
Moreover, there is ambiguity in the meaning of this proposal. Most of you probably know that private health insurance offering comparable coverage is significantly more expensive than Medicaid—about $3000 more per person per year, according to the Congressional Budget Office. It is possible that Corbett is asking the federal government to pay the full cost of these private policies, in which case it will be paying more for Medicaid expansion in PA than in other states. The other possibility is that Pennsylvanians will be given a sum of money comparable to the cost of Medicaid, and they will either have to pay part of the premium themselves or accept less comprehensive coverage. A similar plan proposed by Arkansas asks the federal government to pay the full cost of Arkansans' private insurance, but it's not certain if this is legal. If this is what Corbett is proposing, people from other states are being asked to pick up part of the tab for PA's more expensive private health insurance! Since conservatives claim to be concerned about the high cost of providing health care to poor people, this seems like an odd stance for them to be taking.
Not mentioned is the fact that adding so many low income people to the exchanges will almost certainly drive up the cost of insurance premiums for everyone, since they are likely to be in poorer health than the general population.
There is no timetable for when Corbett's plan will take effect, but since it was not submitted to the Obama administration until now, it's unlikely to be available in January 2014.
People who are committed to health care for all Pennsylvanians will find obvious drawbacks to Corbett's Medicaid “reform” package. It significantly weakens the Medicaid program. It increases costs and reduces benefits for the poorest Pennsylvanians, and is almost certain to result in less actual health care being received. The job search requirements are unnecessarily punitive in an economy that falls far short of providing full employment and seem designed to force Pennsylvanians to accept jobs that fail to provide a living wage.
The “expansion” component of the package is likely to drive a wedge between progressive groups. On the one hand, it's just more corporate welfare for the private health insurance companies, corporations that are almost certainly among Corbett's and the Republicans' more generous contributors. On the other hand, if the proposal is accepted, 500,000 to 700,000 working class Pennsylvanians who are presently uninsured will receive some health care. It won't be as good as what they would have received under the ACA, but many progressives will argue that something is better than nothing.
Compared to Medicaid expansion under the ACA, The two parts of Corbett's plan represent a significant transfer of wealth from PA's poor and working class citizens to some of its largest and most profitable corporations.
Single-payer health care advocates are faced with a similar conflict to the one they faced with the ACA. Is half a loaf better than none? As the loaf gets progressively smaller, at what point do we withdraw our support and say, “No more!”?
Whether Corbett's plan will be implemented depends on whether it is accepted by the Obama administration. How “flexible” is the President willing to be? Similar plans have been advanced by Arkansas and Iowa, but Health and Human Services has not yet announced whether they will be approved. One feature of Corbett's plan that is unprecedented is the job search requirement as a condition of receiving Medicaid. Some states charge monthly premiums for Medicaid, but only for people with incomes above 100% of FPL. Are there any health care principles that Obama will not compromise? Having already moved pretty far to the right, Corbett's plan may seem to the White House to be just a baby step further.
Watch this space. Further details of the plan and data describing its financial impact are likely to become available soon. I will update this report as soon as they do.
With his reelection campaign coming up next year, PA Governor Tom Corbett is apparently no longer able to resist the pressure to accept Medicaid expansion under the Affordable Care Act (ACA). Yesterday he unveiled the bare bones of a plan to expand Medicaid, while claiming that he is not. The plan lacks critical details and leaves many questions unanswered. It has not yet been accepted by the Obama administration, and should they not agree to it, it would fall through. It has, however, been endorsed by two powerful health care lobbies, the Pennsylvania Medical Society and the Hospital and Health System Association of Pennsylvania.
The plan is called “Healthy Pennsylvania,” and is described in official propaganda as “Governor Corbett's vision” for Pennsylvania. Much of the plan is empty rhetoric, referring to health care policies that are already in place, or new initiatives that appear not to be accompanied by any proposed legislation. Some of the new initiatives—such as “reform” of the medical liability system—are not good ideas, but I'll save that argument for another day. Of the four documents the Corbett administration has released, those parts of the plan that refer to Medicaid reform or expansion are described most clearly in this document.
We can think of the plan as having two parts—the carrot and the stick. The stick is “reform” of PA's existing Medicaid program, which Corbett says is too costly. These changes have the effect of reducing Medicaid benefits to healthy adult recipients, and increasing costs for most recipients. The carrot is a flawed version of Medicaid expansion through private insurance, which Corbett insists is not Medicaid expansion at all. (He's right.) He will agree to expand health insurance availability if and only if he gets his way and the feds agree to his “reform” plan.
The Stick
PA's existing Medicaid program is one of the stingiest in the country. Healthy adults only qualify for Medicaid if they earn less than 46% of the Federal Poverty Level (FPL). Children under six are covered up to 133% of FPL, and older children up to 100% of FPL. The aged, blind and disabled are also eligible up to 100% of FPL, but only if they have assets of less than $2000 per individual or $3000 per couple.
Corbett repeatedly refers to PA's Medicaid program as one of the most expensive in the nation. It's true that PA spends 34% more than the national average per enrollee. However, PA has fewer enrollees per capita than most other states. The chart below compares PA's Medicaid recipients to those of the US generally. PA has fewer healthy adults, who are the cheapest to cover, because of its strict eligibility requirements for this group. A higher percentage of its enrollees are seniors and people with disabilities, who require more expensive long-term care. Moreover, only 22% of PA's long-term care budget is spent on community and home-based care. The national average is 40%.
Here is what Corbett is proposing. To avoid confusion, remember that these “reforms” only apply to people who are currently eligible for PA's traditional Medicaid.
Changes in benefits. Proposed changes in benefits only apply to healthy adult recipients; benefits for children, seniors and people with disabilities will remain unchanged. Medicaid benefits are to be aligned with the benefits provided by private, commercial insurance available in PA's workplaces. What these benefits will be, of course, depends on what private policies they use as their standard. Will they more closely resemble the corporate executive package or the Wal-Mart package? They don't say. But since the goal of the plan is to save money, it is reasonable to assume that they are planning to reduce benefits below what Medicaid enrollees currently receive.
Cost-sharing. Cost-sharing is to be achieved by charging a monthly premium. The premiums begin for people who are above 50% FPL. These minimum premiums are not stated. However, they increase on a sliding scale up to a maximum of $25 per month per individual and $35 per household at 133% of FPL. Although it is not explicitly stated, presumably everyone, including children, seniors and the disabled, will pay these premiums. (Healthy adults are only covered up to 46% of FPL, so there would be no need for this cost-sharing plan if it only applied to healthy adults.) Premiums will be indexed to inflation, so they will go up each year.
Copayments. Medicaid copayments, which are not particularly high, are eliminated entirely, with one exception. There is a $10 copayment for “unnecessary” or “inappropriate”—as yet undefined—emergency room use. This latter proposal has long been part of the hospital lobby's wish list.
Work search requirements. Healthy adult recipients will be treated just like people who apply for unemployment. All working age, unemployed recipients will be required to engage in a job search through PA JobGateway program. There is a premium reduction—amount unspecified—for people participating in job training and work search.
Corbett says his Medicaid “reform” package will result in “significant cost savings.” Will it actually save money? The monthly premium seems to be the only financially significant part of the package. Most of the rest of the plan only applies to healthy adult recipients, which limits its ability to save money, since so few current enrollees fall into this category.
The Rand Corporation has published a study of the predicted effects of the Affordable Care Act (ACA) on private insurance markets in 2014. Like several other recent reports, they conclude that the claims of ACA opponents that insurance premiums would increase dramatically are not justified. However, one aspect of their report is of special interest to Pennyslvanians. It concerns the effect of Governor Tom Corbett's decision not to expand Medicaid on the costs to those Pennsylvanians who purchase their health insurance as individuals—that is, who do not purchase health insurance through their employer. First, let's review a few facts.
The ACA expands eligibility for Medicaid to all legal residents whose income is less than 138% of the federal poverty level (FPL). Medicaid is administered by the states. However, the federal government will pay the full cost of Medicaid expansion in 2014. The feds' share declines to 90% by 2020.
The Supreme Court ruled that the ACA's Medicaid expansion was coercive, and that states can decide whether or not to expand eligibility for Medicaid beyond their current limits. Governor Corbett has announced that Pennsylvania will not participate in Medicaid expansion.
Pennsylvania is currently one of the least generous states in providing Medicaid. Adults only qualify for Medicaid if they earn less than 46% of FPL. Children under six are covered up to 133% of FPL, and older children up to 100% of FPL.
To encourage people to buy private insurance, the ACA provides subsidies, known as advance premium tax credits, to people making between 100% and 400% of FPL. The lower their income, the greater the subsidy.
This means that Pennsylvanians making between 46% and 100% of FPL are screwed. No Medicaid and no subsidy means that most of them will be uninsured. They will simply die at a higher rate than they would if Medicaid were expanded. (See my earlier series of four posts for estimates of the effect of Corbett's decision on mortality in Pennsylvania. Here's part 1.)
However, people making between 100% and 138% of FPL will be eligible for fairly generous subsidies. Many of these folks are currently uninsured. It is anticipated that most, though not all, of them will purchase private insurance.
The Rand study looked at the effect of the entry of this group—people between 100% and 138% of FPL—into the non-group private insurance market. They analyzed it in three states, Florida, Louisiana and Texas, chosen they said because these states were least likely to expand Medicaid. Rand estimates that the effect of rejecting Medicaid expansion in these will be to increase private insurance premiums by 8-10%. There are two reasons for this:
Extensive research shows that there is a positive relationship between income and health. The higher your income, the healthier you tend to be. Thus, people between 100% and 138% of FPL are sicker than the average adult and will require more medical care. This will drive up insurance premiums for everyone in the risk pool.
Not all of the people between 100% and 138% will try to buy insurance. Some will decide they can't afford it, even with the subsidy. When not everyone purchases insurance, adverse selection occurs. Adverse selection refers to the fact that sicker people are more likely than healthy people to buy health insurance. This adds further to insurance costs.
Rand is confident that premiums will go up, but admits that their estimate of 8-10% is uncertain, primarily because it's hard to predict what percentage of the people between 100% and 138% of FPL will purchase insurance. Unfortunately, they didn't include Pennsylvania in their analysis. My guess is that our premium increase will be less dramatic because we have a slightly lower percentage of poor people than the three states they analyzed.
The ACA requires firms with 50 or more employees to provide health care coverage for their workers or pay a fine. Gov. LePage stated that he is actively encouraging Maine businesses to break the law in the hope that the ACA will fail. “I tell Maine businesses to pay the penalty,” he said. “It would be cheaper by just writing a check for the penalty and then let Obamacare fall on its own weight.” Gov. Corbett was more circumspect. He said he didn't have to encourage Pennsylvania businessmen to defy the law, as they had already arrived at that decision on their own.
Gov. Tom Corbett
The Governor went on to suggest that the ACA was designed to fail, the motive being to pave the way for a single payer health care system. “I see the whole thing collapsing and, potentially, in the long run that may have been the plan,” he opined. “I'm a prosecutor. I believe in conspiracies.”
A lot of us probably wish the Governor's speculation were correct. However, I've completed five weeks of an eight-week course, “Health Policy and the Affordable Care Act,” taught by Dr. Ezekiel Emanuel, one of the architects of the ACA, now teaching at the University of Pennsylvania. If Dr. Emanuel is typical of the policy makers who wrote the bill—and I believe he is—they were a lot more interested in saving money than saving lives. Of course, they expect it to do both, but he emphasizes the fact that only two of the ten titles in the act deal with expanding access to health care. The majority of the bill is about improving efficiency and lowering cost. It is clear from his lectures that he expects the ACA to be successful, and that he has no interest whatsoever in moving the country to a single payer health care system.
In one respect, I agree with Gov. Corbett. I believe in some conspiracies, too. For example, I believe there was a conspiracy to delay the Jerry Sandusky indictment until after the 2010 gubernatorial election.
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.
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.
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.
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.
