Healthcare Reform Blog > December 2012 > Governors rejecting Medicaid expansion will likely feel the heat

Governors rejecting Medicaid expansion will likely feel the heat

Lyda PhillipsContributor: Sheri Sellmeyer
Topic: Medicaid, states

As state legislative sessions begin to crank up in early 2013, look for some backtracking on the part of politicians who have vowed they won’t expand Medicaid.

Officially, there are now eight states that say they will not expand Medicaid.

But behind the scenes, hospitals that care for indigents and managed care organizations are lobbying heavily for all states to expand eligibility to 133 percent of the poverty level, which could add about 17 million to the Medicaid rolls.

Medicaid expansion is one of two ways the Accountable Care Act aims to cover the uninsured; the other is the state exchanges that will offer subsidized premiums for low-income people. The Supreme Court ruled last summer that Medicaid expansion was optional for states. Texas Gov. Rick Perry, whose state has the highest rate of uninsured in the country, has vowed that Texas will not expand Medicaid.

But hospitals such as Parkland in Dallas and Harris Health System in Houston, which care for indigents, find such talk foolhardy. The Accountable Care Act phases out federal Disproportionate Share Payments that help hospitals pay for indigent care. Both public and private hospitals that provide charity care were counting on expanded Medicaid programs and the state exchanges to provide coverage.

It’s not just hospitals arguing for Medicaid expansion in Texas. A business-friendly economic and financial analysis firm, The Perryman Group, issued a report saying Medicaid expansion is good for the Texas economy as a whole. The Perryman Group projects that every dollar spent by the state of Texas to expand Medicaid coverage will return $1.29 in state government revenue over the first 10 years of the expansion. According to the Perryman Group, Medicaid dollars will spur economic activity, reduce costs for uncompensated care, and boost productivity from a healthier population. “When these outcomes and the related multiplier effects are considered, the program actually far more than pays for itself and provides a notable economic stimulus,” the Perryman Group says.

Texas has an uninsured rate of 25 percent and one of the most restrictive Medicaid programs in the country. Adults with children can earn no more than 26 percent of the federal poverty level ($5,993) to qualify. (No coverage is provided for childless adults.) Expansion to 133 percent of the federal poverty level would extend eligibility to $30,656 for a family of four and cover an additional 1.2 million newly eligible enrollees in Texas in the first year.

The federal government pays all Medicaid expansion costs for the first three years and then 90 percent after that. A joint report from the Kaiser Family Foundation and the Urban Institute found that expanding Medicaid to over 20 million more people will cost $1 trillion from 2013 to 2022, with states paying just $76 billion of that and the federal government picking up the rest. Still, some governors say coming up with the 10 percent after the federal money dries up will be all but impossible given other demands on their state budgets.

In a letter to Health and Human Services Secretary Kathleen Sebelius last summer, Gov. Perry said, “Neither a ‘state’ exchange nor the expansion of Medicaid under the Orwellian-named P.P.A.C.A. would result in better ‘patient protection’ or in more ‘affordable care. What they would do is make Texas a mere appendage of the federal government when it comes to health care.”

He may still be proclaiming the same rhetoric when the legislature meets in January, but he will likely face a growing chorus of legislators who are hearing a very different view from their district’s hospitals, business interests and advocacy groups.


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Posted on: 12/7/2012 1:22:10 PM | with 0 comments


Tags: Medicaid, states

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