Rise of the Medicaid Truthers

Rise of the Medicaid Truthers
May 7, 2013

Benjamin Domenech

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

Consumer Power Report #372

This week, the incredible health policy story was the new study published in the New England Journal of Medicine concerning Oregon’s Medicaid experiment.

In 2008, Oregon expanded its Medicaid program, but because the state could not cover everybody, lawmakers opened up a lottery that randomly drew 30,000 names from a waiting list of almost 90,000 and allowed them to apply for the program. This created a unique opportunity for health researchers, ultimately allowing them to compare the health outcomes of 6,387 low-income adults who were able to enroll in the program with 5,842 who were not selected. Contrary to liberal assumptions, researchers found that those who enrolled in Medicaid spent a lot more on medical care than those who weren’t able to enroll, but didn’t significantly improve their health outcomes …

Ultimately, the authors concluded that, “This randomized, controlled study showed that Medicaid coverage generated no significant improvements in measured health outcomes in the first two years, but it did increase use of health services, raise rates of diabetes detection and management, lower rates of depression, and reduce financial strain.” So, the study suggests that expanding Medicaid is one way of reducing financial pressure on low-income groups, but it’s costly and does not improve their health. Another interesting finding was that though medical spending increased among Medicaid enrollees due to more prescription drug usage and doctors’ visits, the study “did not find significant changes in visits to the emergency department or hospital admissions.” This undercuts another favorite talking point of liberals, which is that expanding insurance actually saves money by reducing costly emergency room visits.

The study itself is here. I’d like to say that it’s rocking liberal assumptions about health entitlements:

Conservative and libertarian health wonks have long doubted the claims that more Medicaid equals more lives saved in part because the numerous problems in the Medicaid system prevent and delay timely access to care. If anything, the Oregon study, the only one of its kind, ought to have been biased in favor of improved outcomes from Medicaid: the participants in the lottery to gain access to the program were likelier to be sicker and to have more needs for care (where presumably Medicaid could make a positive difference), and Oregon’s program is far less broken than those in other states (it pays doctors more, and only 21 percent of them won’t see Medicaid patients, as opposed to 31 percent on the nationwide average). So with better access and a sicker population, if there was any health benefit to being on Medicaid, you should’ve found it here.

But the truth is, most people are hewing closely to their long-held ideological beliefs instead of the data right in front of them.

Many of the individuals who wrote about the study’s initial round of results, released in July of 2011, were quick to tout the study’s robust design, and the certainty of its conclusions. … It’s notable that the findings from the first round of study results were actually less robust than this week’s results. Not only did the first round only measure a single year, there were no objective physical measures of health at all. Instead, the researchers did find big improvements in self-reported health. People who got Medicaid merely said they felt a lot better. And about two-thirds of that self-reported improvement appeared before any medical treatment had been obtained. Yet that was enough for many Obamacare backers to declare that certain victory was at hand. Indeed, despite the lack of objective measures, it was even enough for many reports to declare that we now had irrefutable evidence that Medicaid definitely does improve health.

Indeed, the Medicaid Truthers are just getting louder.

Yet liberals are proclaiming the results a great success and a reason to expand Medicaid under ObamaCare. They point to a side finding that Medicaid increased economic security and led to “a reduction in financial strain,” the share of personal income going to care. “Here Medicaid shined. It hugely reduced out of pocket spending,” noted Aaron Carroll of Indiana University and Austin Frakt of Boston University.

Richard Kronick and Andrew Bindman of the Health and Human Services Department praise Medicaid for providing “a low-income population with considerable financial protection” and increasing access to care, even if it is “less clear how well Medicaid accomplished the third goal--improving health.”

So when liberals are confronted with robust empirical evidence that Medicaid offers little benefit for the money, they emerge to rationalize the program’s failures as, well, at least they spread the wealth.

Medicaid in Oregon did nearly eliminate catastrophic medical expenses, compared to 5.5% of the uninsured control group that experienced a ruinous illness or injury. But that sure sounds like an argument for reforming Medicaid to extend basic catastrophic coverage to more poor people, instead of holding Medicaid lotteries. Sorry. Federal Medicaid rules require states to offer all-you-can-eat benefits to everyone rather than targeting public assistance to those most in need. These mandates often force states to squeeze provider payments to pennies on the private dollar, further harming quality and access for the poor.

It’s high time that fans of government health entitlements recognized what insurance can’t do. Frankly, if the only thing Medicaid does is insulate you from financial concerns and makes you happier because of that, I wonder whether we’d be better off replacing the expansion with a program that hands out $500 in cold hard cash and a free puppy.

-- Benjamin Domenech


IN THIS ISSUE:


FLORIDA REJECTS MEDICAID EXPANSION

The state runs out of time and won’t expand.

The question of whether Florida would expand its Medicaid program to cover more low-income people has been answered, and it’s a “no” – at least for now. The state Legislature closed its regular session Friday without reaching an agreement to expand access to the program under the Affordable Care Act.

To be revived in the near term, Gov. Rick Scott would have to call a special session of the Legislature. There has been no indication that he is willing to do that – or that he is close to a deal with state House Republicans that would warrant such a session.

Scott, a Republican, stunned supporters and critics alike in February when he flipped from being a staunch opponent of the federal health law to endorsing its Medicaid expansion.

The health care overhaul gives states the option to expand their existing Medicaid programs with the federal government footing the full cost of the expansion in the first three years and paying 90-percent thereafter. In Florida, the raw numbers were persuasive to Scott, who is a former executive with hospital giant, HCA. Medicaid expansion would bring $50 billion in federal money to the state over the next ten years and cost Florida $3.5 billion in the same time frame.

State Sen. Joe Negron, a Republican, was the architect of a bill that passed the Senate. He laid out the differences between members of the two chambers within his own party.

“I have a view that when it comes to providing health care to people who get up and go to work every day, there is a role for government to provide assistance for their premiums,” Negron said. “And in the House, there’s a concern that we’re becoming too reliant on federal funds and [that] we could be setting up a program that’s too expensive for us to afford.”

Negron’s proposal, which is similar to a plan that has passed in Arkansas, would use the federal money to help eligible Floridians purchase private plans. That was a non-starter for House Republicans. Instead House lawmakers pitched a separate plan to insure far fewer people using state funds. The back and forth between the two sides got heated, culminating in a protest by House Democrats that required every single bill to be read aloud before the chamber, line-by-line, and in full. That prompted Republicans to employ “Mary” the House’s auto reader, stalling all House business for two days as “she” read.

At one point, there were talks of a compromise between the two chambers. But Senate President Don Gaetz said, “It appears the shot-clock has run out on the health care issue for this session. But that doesn’t mean we’re going to stop working.”

Scott is unlikely to call a special session, and this challenge is playing out in other states.

In Ohio, Gov. John Kasich (R) is having trouble moving the Medicaid expansion he supported through the state’s Republican controlled-legislature. Similar fights are playing out in Arizona and Michigan, where Republican governors find themselves in the relatively odd position of trying to sell Obamacare to state legislators of their own party.

SOURCE: Kaiser Health News


IN RED STATES, MEDICAID EXPANSION STALLS

Another battle where the establishment loses:

Conservative state legislators have thwarted Republican governors who broke with their base in favor of Obamacare’s massive expansion of Medicaid.

Governors such as John Kasich in Ohio, Rick Scott in Florida and Jan Brewer in Arizona spent political capital but saw their Medicaid expansion plans stall, the latest glitch in implementing the sweeping 2010 health law.

“I believe that there is a strong interest in doing something but there is a resistance to capitulating to a federal straitjacket,” Florida state Senate President Don Gaetz told POLITICO in a phone interview after Republicans in the state House and Senate failed to agree on an approach this week. “It certainly would be helpful if the federal government was a partner rather than an obstacle.”

Although the Obama administration maintains that its Medicaid plan is a good deal for the states, Florida is just the latest state to battle itself into a stalemate. As state legislatures wind up their 2013 sessions, the governors’ business is unfinished. Some are talking about bringing lawmakers back for special sessions. Others insist they’ll take a fresh look next year. Advocates in Montana are talking about a ballot initiative, but that’s more than a year away.

Nine Republican governors were ready to take billions of federal dollars to cover more low-income people under the president’s health law. But most have to date failed to win over fellow conservatives in their legislatures, whose determination to resist Obamacare runs deep.

Of the nine, only North Dakota Gov. Jack Dalrymple has succeeded in pushing legislation through a GOP-dominated state Legislature. GOP governors in more Democratic states, like New Jersey’s Chris Christie, have allies on Medicaid in their state governments.

Elsewhere it’s a mix of dogged anti-Obamacare politics, state concerns that they’ll end up with staggering costs no matter what the feds now promise, and a reluctance to expand a Great Society-era entitlement that they’d rather refashion with a healthy dose of private enterprise and spending caps.

“The reaction of some of the Republican state legislators really caught everyone off guard with regard to how strongly they feel,” Bob Blendon, a health politics expert at Harvard, said.

Governors may be trying to be pragmatic; states rarely walk away from a big pile of federal money. But Blendon noted that two out of three state legislators will be up for reelection next year and the “really hardcore conservative Republicans” who turn out for primaries don’t want anything to do with the health law.

“Many of these legislators feel that their constituents want to keep the battle going … at least through this election cycle,” he added.

Governors like Scott, Kasich and Brewer, who shocked their bases when they backed expansion, have quieted down of late, taking a backseat while their Legislatures skewered the proposal and battled to stalemates. A number of governors declined POLITICO’s request to comment on the logjams in their states.

This has been the case throughout the country, with a few notable exceptions.

SOURCE: Politico


INSURERS BEGIN HAWKING OBAMACARE

Sign up for your share!

No one has a greater financial stake in the rollout of the new online markets known as exchanges than the insurers. It potentially means millions of new customers for health plans – many of whom would get tax credits to help them pay for insurance.

But if enrollment next October is difficult, or people don’t know how to do it, the very sick could be the ones who sign up. That would leave the insurers with big health bills – and few young and healthy people to spread the risk and the cost.

Although the law is clearly moving ahead in Obama’s second term, polls show the administration’s messaging hasn’t cut through the opposition and confusion. Even Democrats are throwing around words like “train wreck” to describe their fears if the law isn’t rolled out properly. But train wrecks aren’t good business for health insurers. So they’re gearing up to fill at least a piece of the messaging gap.

“You will see enormous advertising around getting signed up,” Laszewski predicted.

They are starting to lay out plans to spread the word about how to sign up for Obamacare – or even just explain what it is – to existing and potential new customers. The messaging will vary state by state and depend on whether the state or the federal government is running the exchange. And not all insurance companies will be operating in every state exchange.

Insurers plan on being particularly active in states like Louisiana, where Republican Gov. Bobby Jindal opposes the health law and the federal government is stepping in to set up the exchange.

“When we assessed the situation, we saw a need to be proactive in bringing information to the residents of Louisiana,” said John Maginnis, a spokesman for Blue Cross and Blue Shield of Louisiana, which is a founding partner in a new state coalition to educate the public on the new health coverage options.

Spending across the country will vary widely in these advertising efforts.

SOURCE: Politico


CONTINUED OBAMACARE OUTREACH CHALLENGES

This remains a significant challenge:

Enroll America, a prominent outside group aiming to promote President Obama’s healthcare law, has its work cut out for it.

The group’s leaders acknowledged that most of the people who could benefit most from the health law aren’t aware of the new options that will be available to them. Enroll America is trying to boost awareness as new coverage options take effect.

“National surveys and focus groups make clear that the vast majority of uninsured people are simply unaware of the new and significant opportunities that will be available to them through the (Affordable Care Act),” Enroll America leaders wrote on the Health Affairs blog.

They cited a national survey in which 78 percent of uninsured people were unaware of new insurance exchanges being established in every state, to help people find coverage if they don’t get insurance through an employer. Awareness was even lower among people eligible for the law’s Medicaid expansion.

In focus groups of the populations most likely to benefit from the new coverage options – Latinos, African Americans and young adults – “virtually none” of the participants knew about the new coverage options, Enroll America said.

Enroll America is led by Anne Filipic, a former White House official, and Ron Pollack, who leads the advocacy group Families USA. It is an outgrowth of external efforts to get the Affordable Care Act passed, and will focus over the next several months on ensuring that people enroll in the exchanges and Medicaid expansion.

But at least they’ll have a call center.

SOURCE: The Hill


PROVIDERS DODGE THE IPAB BULLET

More carveouts:

With Medicare cost growth under control for the time being, the controversial Medicare Independent Payment Advisory Board (IPAB) is “effectively neutered” until at least fiscal 2016, The Washington Post’s Wonkblog reported.

The IPAB’s power to regulate provider pay activates only if Medicare per-enrollee spending grows faster than the average consumer prices and medical prices based on the Consumer Price Index, the blog’s Health Reform Watch noted.

Medicare’s chief actuary had to determine by April 30 whether that so-called trigger point would be hit in time for the board to act in fiscal 2014 for implementation in fiscal 2015, the first year the board could have acted, the Post noted. The determination by acting chief actuary Paul Spitalnic: No.

“The projected 5-year average growth in Medicare per capita spending is 1.15 percent, and the 5-year average growth target is 3.03 percent,” Spitalnic said in an April 30 letter (.pdf) to Marilyn Tavenner, acting administrator of the Centers for Medicare & Medicaid Services. “Because the projected 5-year Medicare per capita growth rate does not exceed the Medicare per capita target growth rate, there is no applicable savings target for implementation year 2015 (determination year 2013).”

The IPAB is unpopular politically, as well as in the medical community. In an issue brief opposing the board, for example, the American Medical Association worries that because hospitals and hospices are excluded from rate reductions until 2020, “only a few providers, including physicians, will bear the brunt of the cuts.”

The provider group also notes that IPAB target growth rates have been met only four times in the last 25 years.

SOURCE: Fierce Health Care


JUST SIX INSURERS SUBMIT PLANS FOR ILLINOIS EXCHANGE

Unexpectedly:

Only six insurers said they want to sell health plans through the Illinois health insurance exchange, sparking concerns that the online marketplaces will lack adequate competition if the trend unfolds throughout the country.

The state of Illinois announced Wednesday that six insurance companies submitted a total of 165 health plans to be available on the state-operated exchange, called the Illinois Health Insurance Marketplace. That’s far fewer than the roughly 260 plans offered by 16 different insurers the state predicted last fall, according to the Associated Press.

Such a low number of interested insurers leads one industry consultant to wonder if insurers as a whole may be hesitating to fully participate in the exchanges. “I’m hearing that from other carriers in other parts of the country as well,” Robert Laszewski told the AP. “They are terribly fearful that if there’s a poor launch (of the marketplaces) they’re going to get blamed for a mess.”

SOURCE: Fierce Health Payer

Benjamin Domenech

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