Saturday, December 15, 2012

Let Uncle Sam Do Health Care Exchanges

When Congress approved the Affordable Care Act, it allowed states to set up insurance exchanges to help their uninsured residents shop for health insurance. Ironically, 18 states, largely run by Republicans, have opted to leave the exchanges up to the federal government. The punting governors probably are doing their insurance consumers a favor.

An estimated 25 million people who don’t get insurance through their job are expected to get insurance coverage through the exchanges, once the system is set up in October 2013 to start signing up people for new insurance plans that will take effect in January 2014. The exchanges also will help people find out if they qualify for insurance tax credits, which are available to uninsured people who earn up to $44,680, or four times the federal poverty level, which is $11,170 this year.

As of Dec. 9, 17 states and D.C. have decided to establish their own state-based exchanges; five states will partner with the federal government to set up their exchanges; and 18 states have indicated they will leave the exchange up to the federal government, Melissa Harris-Perry noted on her MSNBC show.

Jay Engoff, a former official with the federal Health and Human Services Department, told Harris-Perry that a federal exchange is more likely than state exchanges to provide individuals with the sort of bargaining power against insurance companies that they would have if they worked for a large business. The exchanges will offer “apples to apples” comparisons that will make it easier to find the best deal, Engoff said. Insurance companies and hospitals actually would prefer that states run the exchanges because they “will not standardize benefits packages, will not really enable people to make apples to apples comparisons,” whereas federally created exchanges will do so, Engoff said, according to (Dec. 9).

“So the insurance companies, ironically, they want the governors and the states to elect to do the state exchange, whereas the other part of the Republican’s constituency, the Tea Party people, they just want the state to do nothing, and to allow the federal government to do it,” he said.
Rep. Donna Edwards (D-Md.) said that some in Congress originally wanted more “universality” in the system and the option for state control was a compromise. But now, she said, a large state like Texas, where Gov. Rick Perry has publicly dismissed the exchanges, “becomes a major major marketplace for experimentation.”

Texas has a miserable record on health insurance regulation, which consists largely of clerks filing rate increase announcements from the insurance companies. Anybody who shops for individual insurance coverage in the past few years, as this editor has, has wondered over a bewildering array of choices with little recourse. We ended up with a policy with a large deductible, a few exceptions for pre-existing conditions and a bunch of riders that leave us wondering what, if any, coverage we actually would get if we got sick. We have more confidence in Obama’s administration than we do with Perry’s administration to drive hard bargains with the insurance companies and to hold those companies accountable.

The Affordable Care Act also offers states the option to expand Medicaid to cover the working poor who earn up to 133% of the poverty level. That is $14,484 for a single person and $29,726 for a family of four and the expansion would cover many of those unfortunates who work, usually part-time, for skinflint organizations such as Papa John’s, the Olive Garden, the Red Lobster and Walmart, which have suggested that they would reduce the hours of part-timers to avoid being required to provide insurance for them. If all states implemented the expansion, Medicaid would cover an additional 21.3 million people by 2022, including one million uninsured low-income adult Texans who don’t qualify under the current program. The expansion costs the states nothing for the first three years. After that, the states would pay 5% of the Medicaid cost in 2017, and up to 10% in 2021. But that’s too much for nine Republican governors, including Perry of Texas, which has the highest rate of uninsured at 24%; Florida’s Rick Scott, Georgia’s Nathan Deal Louisiana’s Bobby Jindal and South Carolina’s Nikki Haley, whose states are tied for fourth on the list of uninsured with 20% each; Alabama’s Robert Bentley (14% uninsured); Maine’s Paul LePage (10%); Mississippi’s Phil Bryant (19%); South Dakota’s Dennis Daugaard (13%); and Oklahoma’s Mary Fallin (17%). They are rejecting the Medicaid expansion because it would increase their states’ costs in future years. In fact, they just don’t care about the working poor. The cost of caring for the uninsured will fall on hospitals who must treat those who show up at their emergency rooms.

According to the Advisory Board Co., which keeps a daily tally at of how each state stands on ACA’s Medicaid expansion, six states are leaning against participating in the Medicaid expansion: Iowa, Nebraska, Nevada, New Jersey, Virginia and Wyoming. States that will participate in the Medicaid expansion include Arkansas, California, Connecticut, Delaware, D.C., Hawaii, Illinois, Maryland, Massachusetts, Minnesota, Missouri, Rhode Island, Vermont and Washington. Four states leaning toward participating are Kentucky, New Hampshire, New York and Oregon; and 18 others are undecided.

Ironically, the states that reject the Medicaid expansion might end up spending more for health care and pass more uncompensated costs on to hospitals and local governments. The Kaiser Family Foundation notes that the individual mandate likely will encourage half a million Texans who qualify for Medicaid but haven’t enrolled to finally sign up, but at a cost of around $7,000 a head, or $3.9 billion over 10 years under the restrictive old plan, where the state pays about 39% of the cost. Or the state could take the extra federal money, expand its eligibility rules and cover 2.4 million low-income residents for $3,300 a head over the decade.

“In short, the state can pay the retail price for its new Medicaid enrollees, or it can pay the bulk rate,” Jordan Weissmann wrote at (Nov. 26).

Weissman also noted that under the expanded program Medicaid would pay an additional $24 billion to Texas hospitals over the decade. “That, in turn, could bring down the overall cost of care, since patients with health coverage won’t need to subsidize those without,” he wrote. “All that, and it would get to reap the benefits of a healthier, presumably more productive workforce, paid for overwhelmingly with tax dollars they’ll be sending to Washington no matter what.

“Maybe governors like Perry don’t believe in higher spending or a bigger social safety net. But surely they believe on getting a good deal on insuring a large number of their residents, rather than a bad deal on insuring just a few of them. Failing that, they have to believe in retrieving as much of their citizens’ tax dollars as they can. Really, that’s just fiscal conservatism.”

But just as Republicans who oppose the implementation of the Affordable Care Act cannot be trusted to run health insurance exchanges and they are resisting expansion of Medicaid which could show that the government insurance program can efficiently provide health coverage to the working poor, President Obama should not agree to Republican demands that the fiscal austerity negotiations in Washington, D.C., result in cuts to Social Security, Medicare or Medicaid. Republicans have floated the idea of raising the Medicare eligibility age from 65 to 67 as one way to reduce senior health care spending, and some Democrats appear to be open to the idea of making some cuts, but raising the eligibility age is a terrible idea. If anything, the Medicare age should be lowered.

The proposal to raise the Medicare eligibility age might just be a trial balloon raised by the White House to draw out the Republicans, but progressives should shoot down this trial balloon. Contact your senators and your Congress member, and/or any senators or members of Congress to whom you may have supported, and tell them that regardless of what President Obama might agree to, if they vote for a “Grand Bargain” that cuts benefits to Social Security, Medicare or Medicaid they will get a primary opponent and you will donate to that challenger. This is no time to give up hard-fought ground to those who would repeal Medicare, privatize Social Security and deny Medicaid to the working poor. — JMC

From The Progressive Populist, January 1-15, 2013
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