When Is an Entitlement Not an Entitlement?

When Is an Entitlement Not an Entitlement?
April 22, 2013

Benjamin Domenech

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

Consumer Power Report #370

Last week, the Arkansas legislature finally approved the Medicaid waiver request that makes up their appeal for a “private option” within President Barack Obama’s Medicaid expansion:

After three tense days, an initially-failed vote in the state House, and an unexpected amendment in the Senate, the Arkansas legislature has finally taken ownership of their contentious private Medicaid expansion plan. A quick – and potentially enormous – caveat: if CMS doesn’t accept Arkansas’s plan as is, the deal falls apart, courtesy of a severance clause. … The state is no longer pursuing this under the obscure 1905(a) provision of the Medicaid statute as they’d initially planned; instead, they’ll apply for an 1115 demonstration waiver.

There are a number of ramifications from this, but I won’t bore you with them now – more important is this bit:

[Arkansas’] calculations assume that they would need to hike Medicaid reimbursement rates 14% to match private rates, but they also argue that competition on the exchanges should bring private premiums down to near-Medicaid levels. Huh? At any rate, this argument seems inconsistent with the legacy of Medicare (which reimburses below private levels, though above Medicaid) and the experience in Massachusetts (whose Medicaid rates are still below private and Medicare rates, even with exchanges that have been operating since 2006).

Sarah Kliff notices an odd passage in the final legislation:

The bill ... contains one of the more unusual provisions I’ve ever seen in health-care legislation. It requires those enrolling in the Medicaid expansion to acknowledge that they’re not enrolling in an entitlement program. The relevant section:

“(i) An eligible individual enrolled in the program shall affirmatively acknowledge that:

“(1) The program is not a perpetual federal or state right or a guaranteed entitlement;

“(2) The program is subject to cancellation upon appropriate notice; and

“(3) The program is not an entitlement program.”

To use an impartial source, the Merriam Webster dictionary defines an “entitlement” as “a government program providing benefits to members of a specified group.” The Arkansas Medicaid expansion – and the Medicaid program in general – fit pretty well into that category. The program provides health benefits to a specific group of people, generally those with lower incomes, pregnant women and the disabled. …

I called Arkansas State Sen. Jonathan Dismang, a sponsor of this bill, to ask him to explain this provision to me.

“The point of this language is to ensure that the individual does not think he has a perpetual right to the program,” he explained, adding that there has been some case law in Arkansas where the state has had issues ending programs that are entitlements.

“We want to protect ourselves at some future point,” he said.

That doesn’t quite answer how this program, which serves a specific set of people, is anything other than an entitlement.

Indeed. At the end of the day, this is looking less like a game-changer and more like a potentially cautionary tale about the vagaries of Medicaid expansion. Arkansas will still be dealing with a Medicaid program where everything is dictated by the federal government, on cost-sharing and everything else. It won’t have any control over the program, and it will push the 100–138 FPL population onto Medicaid instead of the exchanges.

Here’s the real kicker: When the waiver expires, based on these extremely optimistic assumptions, HHS already has laid the groundwork for denying waiver renewal. The Good Friday memo from HHS explicitly said that any approach would have to match up in terms of cost expectations for Medicaid, not exchange subsidies – which is all the justification HHS would need to pull the waiver and realistically just leave the state with just a normal Medicaid expansion. And that, my friends, is an entitlement by any definition.

-- Benjamin Domenech


IN THIS ISSUE:


NO, OBAMACARE IS NOT SLOWING THE GROWTH OF HEALTH SPENDING

A new study out today from the Kaiser Family Foundation concludes the economic downturn is primarily responsible for reduced health care spending, finding that 77 percent of the slowdown is due to poor economic conditions.

A new Kaiser Family Foundation analysis of how the economy affects the nation’s health spending concludes that the record slow growth rate of recent years stems largely from economic factors beyond the health system, with the economy explaining 77 percent of the slowdown, and more rapid growth expected in coming years if the economy strengthens as expected.

Based on statistical modeling and analysis by health cost experts at the Foundation and Altarum Institute’s Center for Sustainable Health Spending, the analysis assesses how much the economy is driving the nation’s recent slowdown in national health spending, a category encompassing what individuals, employers and governments collectively spend.

Government statistics show that health spending grew by 3.9 percent each year from 2009 to 2011 – the slowest growth since the government began tracking it in 1960. Estimates suggest that slow growth in health spending continued into 2012. On average, health spending grew by 4.2 percent per year from 2008 to 2012, down from the recent peak of 8.8 percent from 2001 to 2003.

Based on statistical analysis of 50 years of health spending and economic trends, the study finds that the economy, including factors such as Gross Domestic Product growth and inflation, produces a major but delayed effect on the nation’s health spending. This effect stretches over a period of six years, meaning that the recession that ended in 2009 will continue to dampen health care spending for several more years and that spending will increase gradually as the economy strengthens.

Economic factors alone account for 77 percent of the reduced growth in national health spending from its 8.8 percent peak in 2001 to 2003. The remaining 23 percent result from changes in the health care system, potentially including higher deductibles and other cost-sharing that dampen patients’ use of services, as well as various forms of managed care and delivery system changes. This study cannot determine the separate impact of these factors.

SOURCE: Kaiser Family Foundation


HOSPITALS LOBBY HARD FOR MEDICAID EXPANSION

Hospitals gain on taxpayer pain:

With billions of dollars at stake, hospitals are lobbying hard for Medicaid expansion in Columbus, Tallahassee and other state capitals where state legislators oppose the extension of the program to some 17 million Americans.

Hospital associations have paid for television and newspaper ads, organized rallies, and choreographed legislative testimony in support of the Medicaid expansion, which is part of the Affordable Care Act. They also have united disparate groups which are used to being on opposite sides of legislative debates. In Columbus, for example, Ohio Right to Life and Planned Parenthood Advocates of Ohio are working side-by-side to persuade state lawmakers to approve the expansion. Both groups say they want to make health insurance available to the poor.

In making their case, the hospitals tout the economic benefits that an influx of federal money will bring to the states. The federal government will cover 100 percent of the cost of the expansion for the first three years, gradually tapering off to 90 percent in 2020. And they point to the public health dividends that will come from providing health care to people who can’t afford it now.

But the hospitals also acknowledge that the expansion is vital for their own financial health. “For many hospitals it’s existential; it’s really talking about the future viability of their institutions,” said Shawn Gremminger of the National Public Hospital Association.

Democratic Sen. Christopher Smith, the minority leader in the Florida Senate, believes the precarious condition of hospitals has the best chance of winning over resistant Republicans. “It’s the plight of the hospitals that is bringing everyone to the table,” he said. “Do they want to be responsible for the shutting of Jackson Memorial? Or closings in the South Broward Hospital District?”

It is a fight that only 10 months ago, the hospital industry had hoped to avoid.

The ACA is expected to cost hospitals more than $300 billion over 10 years by reducing fee-for-service Medicare reimbursement and cutting federal payments that compensate hospitals for providing free care to the poor. In Ohio, for example, those federal changes would cost hospitals about $7.4 billion over the next 10 years.

Nevertheless, hospital associations agreed to back the law. That’s because by expanding Medicaid to some of the uninsured and requiring the rest to purchase insurance from health exchanges, the ACA promised to increase the number of people able to pay for hospital services by about 48 million. The Medicaid expansion envisioned under the ACA would cover all adults younger than 65 earning less than 138 percent of the federal poverty level.

The U.S. Supreme Court poked a stick in the spokes by upholding the ACA but making the Medicaid expansion optional for the states. Now hospitals in states that opt out of expansion will have to contend with the ACA cuts without the influx of new Medicaid patients they had expected.

You can see this dynamic playing out in Maine in particular.

SOURCE: Stateline


MICHIGAN LEGISLATURE RESISTS RICK SNYDER ON MEDICAID

It’s true that the state is likely to enjoy a short-term fiscal windfall if it expands Medicaid. But by 2020, the expansion will sink into the red, and lose money for the state thereafter.

The good news is that Michigan’s Republican-controlled legislature is displaying a responsible level of skepticism to Gov. Snyder’s proposal. In March, the House Appropriations subcommittee excluded funding for the Medicaid expansion from its relevant fiscal legislation. Rep. Matt Lori, the chairman of the subcommittee, actually supports the expansion, but his colleagues do not. “The short-term economic benefit is very appealing,” said Rep. Robert VerHeulen. “But I generally don’t support expansion of government.”

A big sticking point for VerHeulen is that the 1965 Medicaid law forbids states from asking Medicaid beneficiaries from contributing meaningfully to the cost of their own care. “Even if it’s 50 cents, it’s something contributing to one’s own health care or well-being,” says VerHeulen. “I think that’s a healthy objective.”

Lori, for his part, seems optimistic that he can persuade House Republicans to go along with the expansion. “People just need to be educated on the whole thing,” he said. “It’s very complicated.” “We don’t have the votes for what the governor put out,” said Senate Majority Leader Randy Richardville, “but that doesn’t mean we don’t have the votes to get something done that would expand Medicaid.”

It’s just as likely, however, that as Michigan legislators get more educated about the expansion, their skepticism will increase. That’s what’s happening in other GOP-controlled states.

SOURCE: Forbes


MISSOURI MEDICAID EXPANSION DEAD FOR NOW

Nixon foiled:

Addressing a revved-up audience at the Missouri Capitol, Gov. Jay Nixon this past week passionately implored the masses to make their desires for Medicaid expansion known to reluctant state lawmakers.

The crowd, which Nixon estimated between 1,000 and 2,000, enthusiastically applauded.

Two days later, a total of just five people testified before a Senate committee in support of a Medicaid expansion. And one of those essentially conceded defeat.

With time running short in Missouri’s legislative session, what many presumed at the start now seems increasingly clear: Missouri will not expand Medicaid health care coverage for the poor, at least not during the annual session that ends May 17.

“I think it’s safe to say that Medicaid transformation is not happening this year,” said Rep. Jay Barnes, of Jefferson City, the sponsor of a Republican alternative to the Medicaid expansion backed by the Democratic governor. …

Over the ensuing four-and-a-half months, Nixon held more than 30 news conferences around the state promoting the Medicaid expansion. He teamed up with doctors and hospital administrators, local Chamber of Commerce officials and law enforcement officers, and advocates for the poor and mentally ill to build a coalition of around 200 organizations. Those efforts climaxed last Tuesday, when a crowd converged on the Capitol for a massive lobbying effort capped by a nearly one-hour pep rally with Nixon as the keynote speaker.

“This is our clarion call. This is our moment,” Nixon declared. “With your help, we will look back on this day as the beginning of a brighter, healthier opportunity for our state – not an opportunity that passed us by.”

And yet at that very moment, the prospects of passing a Medicaid expansion this session already had faded. In another part of the building, House Speaker Tim Jones, R-Eureka, had just told reporters that he believed a supermajority of Missourians “do not want us to implement any form of Obamacare in this state.”

More on Missouri’s situation here.

SOURCE: Atlanta Journal-Constitution


PENNSYLVANIA, IOWA GOVERNORS FEEL EXPANSION HEAT

Corbett is the next target:

Supporters of Medicaid expansion in Pennsylvania are turning up the pressure on Gov. Tom Corbett and legislators to accept the expansion, which is part of the new health law championed by President Obama.

They planned on holding eight events across Pennsylvania on Thursday to promote the expansion, which they say will give health insurance to 700,000 uninsured Pennsylvanians who are mostly working adults. The theme is “don’t leave our money on the table.”

Corbett spokeswoman Christine Cronkright said Thursday he’s still having discussions with federal officials over changes to Pennsylvania’s existing Medicaid program, which Corbett contends is deeply flawed and financially unsustainable. He has said he won’t expand Medicaid without fixes to the state’s existing Medicaid program.

Cronkright had no timetable for deciding whether Pennsylvania should accept or reject the expansion. “I think the governor has said if we are given more flexibility, we would like to cover more people in Pennsylvania,” she said. “It’s a question of can we do it in a sustainable way.”

Branstad, too:

A parade of Iowans took turns at the Statehouse on Tuesday night arguing for expanding the state’s Medicaid health insurance program for the poor or for accepting an alternative plan proposed by Gov. Terry Branstad.

The issue is one of the most controversial issues remaining before the Legislature this year, and could affect whether tens of thousands of poor Iowans have insurance next year.

Supporters of expanded Medicaid noted in the hearing that the federal government has promised to pay almost all the cost of covering roughly 150,000 more poor Iowans.

Kirk Norris, president of the Iowa Hospital Association, said legislators have plenty of room to compromise on the issue. The hospital association has been one of the most prominent supporters of expanding Medicaid, but is open to any plan that provides mental health coverage, allows care at hometown hospitals and provides coverage to everyone who makes up to 138 percent of the federal poverty level, or about $15,415 for a single person.

“You have the authority to achieve all of these initiatives,” Norris said. He urged legislators not to hold low-income Iowans hostage in a political fight.

Sean Yolish, a Merit Resources executive who advises employers on health insurance issues, spoke in favor of Branstad’s Healthy Iowa Plan. He said that plan would encourage Iowans to be responsible for their own health by giving them incentives to take part in activities to prevent chronic problems. “If we want to have a healthy Iowa, we have to contribute to this,” he said.

Yolish and other skeptics of Medicaid expansion agreed with the governor’s doubts about the federal government’s ability to fulfill its promise to pay the hundreds of millions of dollars it would take to broaden the program. “There’s no such thing as free federal money,” said Ed Brown, chief executive officer of the Iowa Clinic.

The Senate, controlled by Democrats, has passed a bill that would accept the Medicaid expansion. The matter is now before the Republican-controlled House.

SOURCE: Penn Live


THE NEXT HOUSE FIGHT ON OBAMACARE

House Republicans want to gut Sebelius’s slush fund and use it for high-risk pools.

In a letter to President Obama obtained by The Daily Caller on Tuesday, congressional Republicans indicated that they plan to use creative tactics to chip away at parts of the law. Citing financial constraints of the law, Republicans are asking Obama to choose which programs he actually wants to fund.

The letter makes an issue out of the news last month that the Centers for Medicare and Medicaid Services is suspending enrollment in Obamacare’s Pre-Existing Condition Insurance Plan because of financial constraints. “This is another reminder that the costs of [Obamacare] are significantly understated,” the letter reads.

“Your Administration’s action will leave thousands of Americans with pre-existing conditions without access to health care,” the Republicans said in the letter, dated March 5.

In order to continue to allow the Pre-Existing Condition Insurance Plan (PCIP) to keep running, the Republicans are proposing that Obama transfer funds from other programs in the health-care law.

“We believe allowing those with pre-existing conditions access to health insurance is another worthy reason to reprogram these funds,” the Republicans write.

The Republicans suggest transferring funds from programs like the Prevention and Public Health Fund, the secretary’s transfer authority to assist with state based exchanges and comparative effectiveness planning.

The letter is signed by Speaker of the House John Boehner, Majority Leader Eric Cantor, Majority Whip Kevin McCarthy and Republican Conference chairman Cathy McMorris Rodgers. Other Republicans who signed the letter include Energy and Commerce committee chairman Fred Upton, Energy & Commerce Health Subcommittee chairman Joe Pitts and Rep. Michael Burgess, a medical doctor.

SOURCE: Daily Caller

Benjamin Domenech

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