Two Perspectives on Obamacare’s Medicaid Expansion

Two Perspectives on Obamacare’s Medicaid Expansion
February 25, 2013

Benjamin Domenech

Benjamin Domenech (bdomenech@heartland.org) is a senior fellow at The Heartland Institute. Domenech... (read full bio)

Consumer Power Report #362

There are, it seems to me, two basic perspectives on the right regarding the Medicaid expansion under Obamacare. Last week saw one perspective from Wisconsin Gov. Scott Walker, who understands that it is enormously important to keep from expanding Medicaid, announcing a policy that will shift many in Wisconsin onto the federal health insurance exchanges instead.

But last week also saw the perspective of Florida Gov. Rick Scott, who embraced the Medicaid expansion after promising he would not.

There’s a meme being pushed on the right by a few Rick Scott supporters that he waved the white flag on Medicaid expansion as a quid pro quo for “privatizing Medicaid,” which amounts to a waiver for managed care. As Phil Klein notes, that’s Scott’s claim: “[Scott] said he was swayed to back the expansion by the Obama administration’s agreement to grant the state more flexibility in administering Medicaid.” … But no one who follows these matters believes that this is the way the negotiation happened or is the real reason why Rick Scott flipped on the issue. Scott has low approval ratings, is scared of Charlie Crist, has been targeted by heavy lobbying efforts from his former colleagues in the hospital industry, and saw an opportunity to use the waiver as political cover. There was no need to tie reform to expansion, and that’s not what was going to happen in this case. Florida had expected their waiver request to be approved this year anyway – the Obama Administration had shown a willingness to do so – and while the state was hamstrung by its own statutes (which require reform to be done by waiver method, not the SPA process) in that regard, not even the infamously cold Sebelius was going to block this one. They had just approved a very similar waiver for Kansas in December, despite the fact that Gov. Sam Brownback isn’t expanding Medicaid.

And the perspective of Virginia Gov. Bob McDonnell, who used Medicaid as a bargaining chip to pass a transportation tax hike:

Mr. McDonnell even cut an 11th-hour deal with Democrats over the expansion of Medicaid under ObamaCare. Last Wednesday Mr. McDonnell issued a press release declaring: “I cannot and will not support consideration of an expansion of Medicaid in Virginia until major reforms are authorized and completed, and until we receive guarantees that the federal government’s promises to the states can be kept without increasing the immoral national debt.”

 

Two days later, to secure Democratic votes on his tax increase, he agreed to let a bicameral commission decide if the state will expand Medicaid. He agreed even though his attorney general, Ken Cuccinelli, issued an opinion that this is an unconstitutional delegation of authority. Mr. McDonnell says the commission means Virginia won’t expand Medicaid as long as Republicans control the legislature, but wait until the hospital lobby gets done working the same Republicans who raised taxes.

This fits into a broader disagreement with commentators like Charles Krauthammer, who are fine with the expansion, pitted against conservatives, even mainstream ones like Jeb Bush, who oppose the Medicaid expansion. Those who oppose this expansion do so because they understand it is a failed entitlement program, one notoriously resistant to improvement, one that will necessitate higher taxes in future years, and that its expansion will be nearly impossible to roll back once enacted.

But as I said, this is all part of a broader argument. Those like Krauthammer for whom entitlement programs have never been a major political issue are tired of arguing these points and are prepared to go along with Obamacare’s enactment. On the other side are those of us who view Obamacare as a major step toward socialized medicine; a costly and unworkable policy; one that will hike premiums, grow the debt, damage the doctor-patient relationship, and increase the power and scope of government. We believe it ought to be fought like any other bad government policy: resisted to the maximum allowed by the law. The Supreme Court allowed states to reject this Medicaid expansion, and conservatives and libertarians believe fiscally responsible governors have a duty to do just that.

Walker, Scott, and McDonnell have been picking their side in this debate in the past few weeks. Expect more to do so in the weeks ahead.

-- Benjamin Domenech


IN THIS ISSUE:


INSURERS: NEW RULES WILL CAUSE PREMIUMS TO SPIKE

The latest regs will work their magic:

America’s Health Insurance Plans (AHIP) criticized the Health and Human Services Department for moving ahead with new restrictions on how insurers set their premiums.

AHIP wanted HHS to delay rules that say premiums for older patients can only be three times higher than the price for younger customers. But HHS said in final regulations Friday that it would not delay or phase in that requirement.

AHIP said that will contribute to “rate shock” for young people -- a sudden jump in costs as several provisions of the healthcare law take effect all at once.

“Coverage needs to be affordable for individuals and families in order to achieve broad participation in the health care system,” AHIP President and CEO Karen Ignagni said in a statement. “The new restrictions on age rating will result in an overnight increase in health care costs for people in their 20s, 30s, and early 40s.”

The healthcare law offers new protections for older, sicker patients -- including the limits on age rating as well as the ban on charging higher prices because of pre-existing conditions. It aims to offset those expensive provisions by bringing younger, healthier people into the system.

But that system will fall apart if coverage becomes so expensive for young people that they choose to remain uninsured, AHIP warned. And it said immediate limits on age rating will have that effect.

“This increases the likelihood that younger, healthier people forgo purchasing insurance until they are sick or injured,” Ignagni said. “When this happens, costs go up for everyone, young and old.”

SOURCE: The Hill


THE FUTURE OF FREE-MARKET HEALTH CARE

Douglas Holtz-Eakin and Avik Roy weigh in on what’s next:

There is, indeed, a way to use health-insurance exchanges to both reform our healthcare entitlements and reduce premiums for those with private insurance. This transition could take four steps.

The first is to replace or reform Obamacare’s exchanges, which are larded with costly mandates and regulations. These drive up the price of insurance, while limiting insurers’ ability to come up with more innovative, cost-efficient products.

“Community rating,” for example, will dramatically increase premiums for young people, a counterproductive approach when one considers that most uninsured Americans are in their 20s and 30s. States should build free-market exchanges with affordable health plans -- as Utah has done -- and demonstrate their superiority to Obamacare’s costlier approach.

Second, Republicans in Congress should put the size, scale and growth of Obamacare’s insurance subsidies on the table in all current and future budget talks. The subsidies should end at 300 percent of the federal poverty level, as they do in Massachusetts, instead of 400 percent. And they should not grow at a faster rate than the economy, as they are now designed to do.

Third, we should use the insurance exchanges in the service of Medicare reform. Instead of bothering with complex legislation, Congress should raise the eligibility age for traditional Medicare by three months each year -- for the foreseeable future. Retirees will then gradually migrate into the exchanges’ premium-support systems. Medicaid-eligible seniors should also be offered exchange-based coverage, to improve the quality and coordination of their care.

Fourth is to gradually shift the remainder of Medicaid’s low-income enrollees into the exchanges. Today, Medicaid recipients face a strong disincentive to seek work, because entry-level jobs can force them to give up their health coverage in exchange for modestly higher income. The exchanges would allow these workers to climb up the income ladder while maintaining their insurance.

The end result would be a fiscally sustainable, fully reformed set of entitlement and insurance programs that place American families in charge of their own health dollars. In other words, everything that conservatives have always wanted. And we’d have Obama, in part, to thank.

SOURCE: Reuters


INDUSTRY PROFITS AS DATA SWELLS

The New York Times reports:

While proponents say new record-keeping technologies will one day reduce costs and improve care, profits and sales are soaring now across the records industry. At Allscripts, annual sales have more than doubled from $548 million in 2009 to an estimated $1.44 billion last year, partly reflecting daring acquisitions made on the bet that the legislation would be a boon for the industry. At the Cerner Corporation of Kansas City, Mo., sales rose 60 percent during that period. With money pouring in, top executives are enjoying Wall Street-style paydays.

None of that would have happened without the health records legislation that was included in the 2009 economic stimulus bill -- and the lobbying that helped produce it. Along the way, the records industry made hundreds of thousands of dollars of political contributions to both Democrats and Republicans. In some cases, the ties went deeper. Glen E. Tullman, until recently the chief executive of Allscripts, was health technology adviser to the 2008 Obama campaign. As C.E.O. of Allscripts, he visited the White House no fewer than seven times after President Obama took office in 2009, according to White House records.

Mr. Tullman, who left Allscripts late last year after a boardroom power struggle, characterized his activities in Washington as an attempt to educate lawmakers and the administration.

“We really haven’t done any lobbying,” Mr. Tullman said in an interview. “I think it’s very common with every administration that when they want to talk about the automotive industry, they convene automotive executives, and when they want to talk about the Internet, they convene Internet executives.”

Between 2008 and 2012, a time of intense lobbying in the area around the passage of the legislation and how the rules for government incentives would be shaped, Mr. Tullman personally made $225,000 in political contributions. While tens of thousands of those dollars went to the Democratic Senatorial Campaign Committee, money was also being sprinkled toward Senator Max Baucus, the Democratic senator from Montana who is chairman of the Senate Finance Committee, and Jay D. Rockefeller, the Democrat from West Virginia who heads the Commerce Committee. Mr. Tullman said his recent personal contributions to various politicians had largely been driven by his interest in supporting President Obama and in seeing his re-election.

Cerner’s lobbying dollars doubled to nearly $400,000 between 2006 and last year, according to the Center for Responsive Politics. While its political action committee contributed a little to some Democrats in 2008, including Senator Baucus, its contributions last year went almost entirely to Republicans, with a large amount going to the Mitt Romney campaign.

Current and former industry executives say that big digital records companies like Cerner, Allscripts and Epic Systems of Verona, Wis., have reaped enormous rewards because of the legislation they pushed for. “Nothing that these companies did in my eyes was spectacular,” said John Gomez, the former head of technology at Allscripts. “They grew as a result of government incentives.”

SOURCE: New York Times


WHY YOUR BOSS IS DUMPING YOUR WIFE

Employer dumping isn’t just for employees:

By denying coverage to spouses, employers not only save the annual premiums, but also the new fees that went into effect as part of the Affordable Care Act. This year, companies have to pay $1 or $2 “per life” covered on their plans, a sum that jumps to $65 in 2014. And health law guidelines proposed recently mandate coverage of employees’ dependent children (up to age 26), but husbands and wives are optional. “The question about whether it’s obligatory to cover the family of the employee is being thought through more than ever before,” says Helen Darling, president of the National Business Group on Health.

While surcharges for spousal coverage are more common, last year, 6% of large employers excluded spouses, up from 5% in 2010, as did 4% of huge companies with at least 20,000 employees, twice as many as in 2010, according to human resources firm Mercer. These “spousal carve-outs,” or “working spouse provisions,” generally prohibit only people who could get coverage through their own job from enrolling in their spouse’s plan.

Such exclusions barely existed three years ago, but experts expect an increasing number of employers to adopt them: “That’s the next step,” Darling says. HMS, a company that audits plans for employers, estimates that nearly a third of companies might have such policies now. Holdouts say they feel under pressure to follow suit. “We’re the last domino,” says Duke Bennett, mayor of Terre Haute, Ind., which is instituting a spousal carve-out for the city’s health plan, effective July 2013, after nearly all major employers in the area dropped spouses.

But when employers drop spouses, they often lose more than just the one individual, when couples choose instead to seek coverage together under the other partner’s employer. Terre Haute, which pays $6 million annually to insure nearly 1,200 people including employees and their family members, received more than 20 new plan members when a local university, bank and county government stopped insuring spouses, according to Bennett. “We have a great plan, so they want to be on ours. All we’re trying to do is level the playing field here,” he says.

SOURCE: Market Watch


JINDAL CALLS FOR DELAYING OBAMACARE TO PAY FOR SEQUESTER

Why not delay a program that doesn’t exist yet?

Gov. Bobby Jindal said Pres. Barack Obama should delay implementing his health care reforms to stave off the looming threat of $85 billion in federal budget cuts during a debate with Democratic Massachusetts Gov. Deval Patrick on NBC’s Meet the Press Sunday. Jindal said the sequester should be an opportunity for the president to show how he would better deal with the budget deficit and shrink government.

“Make some real priorities, real smart spending cuts,” Jindal said.

The cuts in the sequester, which go into effect automatically on March 1 unless a deal is reached, could be avoided by delaying the implementation of the Affordable Care Act, often known as Obamacare.

But Patrick argued the president has already presented options for avoiding the cuts but been rebuffed by GOP for political reasons.

“The plan on the table that has an awful lot of things they say they support,” Patrick said. “Put it up for a vote.”

SOURCE: Times-Picayune


BRANSTAD WON’T EXPAND MEDICAID

Won’t do the Rick Scott waiver deal:

Iowa Gov. Terry Branstad has told a top federal health official he will not support an expansion of Medicaid, re-iterating his opposition to a cornerstone of President Barack Obama’s health care reform effort.

Branstad, a Republican, met with U.S. Health and Human Services Secretary Kathleen Sebelius in Washington, D.C., to discuss potential compromises on adding Iowans to Medicaid, the joint state-federal program providing health care to people with low incomes.

But in an interview Saturday with the Associated Press, the governor said he again rejected an expansion, and pressed Sebelius instead for a federal waiver to continue IowaCare, a health care program that provides limited benefits to 70,000 low-income adults in the state. That program is set to expire later this year.

“I am very comfortable that we have made the right decision and we are going to continue to pursue this waiver and we’re working with them on a partnership exchange, and that’s what I told Secretary Sebelius,” Branstad said between sessions of the National Governors Association meeting in Washington. “We are interested in making Iowa the healthiest state. We have kind of set our direction.”

That’s been Branstad’s position on Medicaid since taking office in 2011.

SOURCE: DesMoinesRegister.com


NEBRASKA SCHOOLS MAY CUT HOURS TO AVOID OBAMACARE

Consequences:

A lawyer for Nebraska public school districts said districts are considering cutting thousands of part-time non-teacher employees’ hours next year to avoid offering them health insurance benefits mandated by the Affordable Health Care Act.

The act requires large employers – those with at least 50 full-time equivalent workers – to cover at least 60 percent of health care costs for employees who works more than 30 hours per week, putting some businesses and government agencies in a difficult position.

Karen Haase, a lawyer who represents about 150 school districts throughout Nebraska, said thousands of non-teaching employees – including teacher aides, bus drivers, custodians, cooks and clerical staff – could be offered extended health benefits, have their hours cut or be laid off. With tight budgets, Haase said she doubts many districts will offer benefits to part-time staff working more than 30 hours.

Some smaller school districts may lay off employees to remain under the 50 full-time equivalent workers cut off, and others plan to not hire additional staff to remain under the threshold, Haase said.

Haase said one Omaha-area district could reduce hours for 108 part-time teacher aides, but she wouldn’t name the district.

School districts in larger cities seem to be focused on cutting hours, while many smaller school districts are considering risking the penalty for not offering benefits because they don’t have enough staff to reassign duties, Haase said.

SOURCE: KearneyHub.com

Benjamin Domenech

Benjamin Domenech (bdomenech@heartland.org) is a senior fellow at The Heartland Institute. Domenech... (read full bio)