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The Medicaid expansion and political choice

If Medicaid isn’t your business, you may be tempted to ignore the implications of the current kerfuffle over whether or not states should accept free money to expand Medicaid. That would be a mistake.
As all-powerful and influential as Medicare has become, the Medicaid expansion will make the joint state-federal program THE payer to reckon with, setting reimbursement, defining “care”, restructuring provider contracts and relationships, and dramatically affecting provider billing patterns and practices.
With the Medicaid expansion now up to invidiual states, we’re hearing some say “no way” and others say “Hell yes”. At first, this split mirrored political lines, but now it’s getting harder to tell which side of the argument a governor is on merely by the color of their political stripes. The indecision on the part of governors who would seem to be natural enemies of federal largesse is telling.
In every state capitol where the decision is uncertain, there’s fierce lobbying on the part of providers attempting to convince governors to take the money and expand Medicaid. Make no mistake – providers have a huge stake in this decision, and are pulling out all the stops. Perhaps the most powerful influence in this is going to come from states’ hospitals and provider communities – but mostly the hospitals. These are the ones most affected by the increase in uninsured’s, and they will be the ones that benefit the most – financially – from a Medicaid expansion.
States such as Florida and Texas are particularly important. 29% of the Sunshine state’s working-age population doesn’t have health insurance; bad as that is, it is better than Texas, where fully a third is uninsured. And these data are from 2010; it is highly likely those percentages have risen as a result of the recession.
Both Governors Scott and Perry say they will turn down the federal money (covers 100% of expansion costs initially, declining to 90% eventually), hospitals and other providers – currently struggling to meet the needs of very large populations with zero ability to pay for care – are going to be in ever worsening shape.
(Governors of Mississippi (27% uninsured), Alabama (22%), and Louisiana (25%) have also said they won’t expand Medicaid.)
They are going to have to make up the revenue loss from somewhere, and that “somewhere” is going to be from privately-insured patients. That will lead to health insurance costs increasing much faster in “non-expansion” states than in the rest of the country, which will lead to employers dropping out of the system, which will lead to more uninsured, which will lead to more uncompensated care…
You get the picture.
There’s already huge cost-shifting in our health care system, in effect a hidden tax on private payers, workers comp, and auto insurance coverage, a tax levied by providers desperate to cover the costs of the uninsured.
What does this mean for you?
If governors stand on principle and refuse the expansion, the result will be more cost-shifting, really unhappy providers, and higher insurance costs for everyone.

4 thoughts on “The Medicaid expansion and political choice”

  1. Well, we already have the higher insurance cost. We have a big Medicaid Population and a bankrupt State. I would say that california is once again leading the Charge. I would also say that the county of Ventura has done a great job in integrating their Medicaid Health care plan with what they offer county employees. Which has allowed them to attract good Doctors and have acceptable health care environment to be treated in. It has long been my thought that if private employers could access this plan on the open market they would as it is a lower cost approach.

  2. This is also why a separate study projects that every state would save money by accepting expansion. The assumption is that with more people covered states would save in two ways: first, by reducing what is currently paid, primarily to hospitals for providing uncompensated care to uninsureds and second, by reducing the cost of covering state (and local) government employees by reducing the “cost shift” – even after the federal share declines to 90 per cent the prediction is that California, for instance, would have a net savings of $2 billion per year. If this projection is reasonably accurate, by rejecting expansion, the governors of Texas, Florida, Louisiana and others are arguably failing to meet their fiduciary obligation to their own taxpayers. The way to avoid that is to rebut the study by ignoring or diminishing the net effect and/or to suggest that the federal share can be reduced by future Congresses and Presidents – which is apparently what is being claimed here by Governors Perry, Scott, Jindal et al.
    If they are wrong, they are actually costing their own taxpayers more in the future.

  3. I heard Elton John interviewed on NPR this morning. Apparently his Aids organization is concerned about cuts in funding in FL for AIDs patients and Elton John wrote our Govenor Scott. The reponse he got (from a Scott reprsentative) was the suggestion that Elton John hold a concert to raise the money! What’s next, car washes and bake sales?

  4. As a private payer, I’m already paying ridiculous rates for everything compared to group plans. I need a hernia operation. I’m shopping that terrible socialist healthcare country, Canada, where it costs $3,00 as opposed to $12,000 here. I used to be able to get my wife’s needed Rx overseas for $65 but the Rx industry cut that system off through ISP regulation. Now she doesn’t get it at all because it costs $715 here.

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Joe Paduda is the principal of Health Strategy Associates



A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



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