• I talked to a college class about Obamacare—this is what they asked me

    A friend, who’s a teaching assistant for an undergraduate political science class, invited me to chat with his discussion sections a few weeks ago; the Affordable Care Act is their last topic of the term. The students had just received an essay prompt on the law, and this was their final discussion (complete with donuts and eggnog to celebrate). We let the sessions take a relatively free-form Q&A structure. Two questions came up in both sections; I figured I share those here, in case you’re curious what—an admittedly very small, specific cross-section of—young adults worry about when it comes to health reform.

    What’s up with states refusing to expand Medicaid? Considering the relative dearth of media coverage, it surprised me that this was the first topic brought up, and it seemed to bother them most. More than the website problems. More than long-run political implications.

    Bracketing the politics for a second—though, with Obamacare, it seems politics can never be sidelined for long—I explained the economic concerns that states have about expanding their Medicaid rolls and taking on the eventual economic burden of paying for 10% of the expansion population. To that, I’d point to a recent report out of the Commonwealth Fund that puts those costs in perspective; Austin blogged on it here. There is also fear of the federal government walking back their commitment to a 90% match after 2020, but extant match levels have remained steady since the program’s inception, even during economic contractions (the federal government actually upped contributions during the most recent recession).

    The political critiques come in two general flavors, though they’re not mutually exclusive: a belief that we oughtn’t subsidize health insurance for low-income but able-bodied adults, and a belief that Medicaid is a broken program that we shouldn’t invest in further. As I’ve written before, the Arkansas model is one answer to the latter point—but conservatives have to grapple with the reality that a “private” expansion will be more expensive than a traditional one.

    I anticipate that the states will eventually all expand; the program took several years to initiate nationwide, as did the CHIP expansion. The recent budget deal delays reductions to DSH payments by two years, though. That was one of the biggest incentives for states to expand, so I expect take-up to lag.

    What’s the worst-case scenario that could unfold over the next year? The one thing that could still be a huge blow to the law is a full delay of the individual mandate, which HHS could maneuver by expanding the recent “hardship exemption” to include those who were uninsured. I’m not confident that’s off the table yet—especially considering that some state exchanges are still struggling—but if the administration does offer a blanket delay, I don’t think we’ll see it until the end of open enrollment. The reasons are both pragmatic and strategic: we can’t know the extent of “hardship” until enrollment wraps, but we also know that people tend to sign up just under the wire. Massachusetts illustrated this, and so did enrollments before the “soft deadline” this week, if the limited data we have so far is any indication.

    A one-year mandate delay is also something the exchanges could probably recover from. I’m more bullish on this than others, but that possibility was the original context of my “risk corridors” post; the risk adjustment mechanisms are in place for three years. Moreover, the penalty is weak enough in the first year ($95 or 1% taxable income, whichever’s higher) that I’m not sure that enrollment will be meaningfully different with or without a mandate in the first year. This is doubly true if a mandate delay were to be announced late in the game, when most of the people who would have signed up will have signed up.

    Adrianna (@onceuponA)

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    • Has the effect on state government coffers beyond the 100% to 90% issue been studied? On the revenue side, hiring one more Medicaid doctor would generate state income taxes on her compensation, assuming she moved into the state or expanded her practice. Similar revenue increases would be expected from income and sales taxes arising from the injection of federal funds into the state from other employees, pharma and medical device suppliers.

      On the government cost side, presumably there are bad debts from not being able to collect income and sales taxes from bankrupt employees and bankrupt businesses. Without knowing whether a particular state has higher funding responsibilities without the federal money, it can’t be healthy for a state economy to have large numbers of very sick people in its population.

      Very much a nose/face gesture.

    • The pages of history chronicle the local versus central dialectic of nationhood. During the evolution of feudalism, local feudal estates would cede authority for their safety from outside invaders to a central authority, i.e., royal family, for their common defense. For a constitutional republic, we now call it federalism. Other than for their common defense, the states prefer their autonomy, especially in the face of long-standing “unfunded mandates” originating from the central government. On the other side, the federal government perceives that state government is often ineffective and inefficient. My own state has a long history of management problems with a large residential facility for developmentally disabled children.

      The desire to maintain state by state authority for the safety net of health care is augmented by the lack of a national strategy to assure equitably available and culturally accessible health care for, at least, the Basic Healthcare Needs of each citizen. No new financing model will be justly efficient or reliably effective without a public health bias for healthcare reform. Amidst the apparent chaos within the ACA of 2010, this is still no strategy for community by community solutions that engage the regional medical schools and public health institutions for solving local needs. Thus, the state by state expression of commitment to the provisions of ACA 2010 are perfectly understandable.

      The national Healthy People Goal 2000 for maternal mortality was set in 1987 at 3.3 deaths per 100,000 (objective 14.3). As of 2006, only four states met that goal. And, in the last 20 years, our nation’s maternal mortality ratio has almost doubled. To rank in the top 10 of the world’s 43 developed nations, our nation would need to reduce our maternal morality ratio by 75%. I hope you told the students about our success in offering equitably available and culturally accessible healthcare to our nation’s most important future asset, women who are pregnant.

    • Regarding the student’s questions about not expanding Medicaid:

      Adrianna, I am going to assume that you teach in a blue state.

      Residents of these states (including me) are seldom aware of the racial hostility that still exists in the South and Southwest. This accounts for some of the reluctance to expand Medicaid.

      A second reason for refusing to expand is that some of the states in question have no income tax. (Florida, Texas) An outside observer looks at their Medicaid situation and says,” You have a lot of wealthy people in this state, therefore paying another $1 billion by 2020 for Medicaid will not kill you.”

      And it won’t. But it might make them have to adopt an income tax!

    • Why is it that the discussion of expansion seldom mentions the “woodwork” problem.

      For states like Florida and Texas there are LARGE numbers people CURRENTLY eligible for Medicaid who have not signed up – the 100/90 reimbursements ONLY apply to NEWLY eligible – so the states are “on the hook” for the costs associated with these enrollees.

      And by all accounts the exchanges appear to be finding a lot of these people and adding them automatically [forcing them?] onto their state’s medicaid rolls.

      I also find the whole “collect taxes at the federal levee then send it back to the states” very inefficient – why not just let the states manage whatever health care safety net they would like – with state money.

      The alternative would be to federalize medicaid entirely – that would have the opposite effect Bob seems to want.

      I would prefer EITHER of these two over continuing with a hybrid solution – that seems to have a variety of perverse incentives – and consequences.

      As for how the “train wreck” evolves – we have lots of interesting ways to go …
      – steep losses for insurers lead to very high rates for 2015 and beyond
      – doctor – hospital access creates confusion – and consumer costs that are unforeseen and prove unacceptable.
      – supply side problems are severe – probably regionally
      – they impact of OPC and high deductibles leads to an increase in financial problems – not a reduction as promised.
      – the number of uninsured actually goes UP for two or motor years

    • The state of Florida has over 2.5 million people who live at or below 138% of poverty. (I am not sure how many of them are elderly who own their homes and so need less income.)

      Still and all, that is a tremendous number of poor people.

      Southern states in general have tried to minimize their safety net programs. They do not want poor people to be attracted to their state. They would just as soon see poor people move to the welfare magnets up north. The migration of poor people out from the South from 1920 to about 1970 was in the tens of millions. Historians consider it one of the largest peacetime internal migrations in history.

      That does not solve Medicaid but it does give a little context.

      Meanwhile……

      all the bad results of ACA noted above seem likely to me too. We could add to this list the likely (and deeply foolish) cancellation of millions of policies in the small group market.

      What worries me is that most insurers are part of large financial conglomerates, and once they leave the health insurance market they may never come back in. They will almost embrace the cancellations as the chance to exit an unprofitable business,

      • Bob,

        Hope you are not suggesting the “great migration” had anything to do with welfare policies and/or safety net availability.

        The lack of work/jobs in the South gave little hope or reason to stay put. Jobs were plentiful in steel, auto and other industries in places like Pittsburgh, Detroit, Cleveland and Chicago.

        I think it is more than a little disingenuous to suggest that the South did anything to “drive out” the “poor”.

        Opportunity and good jobs will in my opinion be much stronger “magnets” than the difference in welfare payments and policies.

        When the steel industry collapsed in my home town in western Pa, many of my friends headed for Texas where they found great jobs in the mini-mills. Those unwilling to move had to settle for half or less in income than they had earned before the mill closed. The choice was theirs – and to them rational. Not one of them that I knew based his/her choice on PA offering more robust welfare programs than Texas.

    • I’m a little bit surprised by the general tone of both the blog posts and the comments following it. Nowhere in anything anybody has written here have I read a mention–not even a hint of consideration for–what the states’ citizens want. The general tone here is that public sectors do whatever they want without regard for the will of the people.

      Public sectors–i.e. “the government”–comprise servants who work for the taxpayers. So maybe–just maybe–the states’ public servants aren’t expanding Medicaid because their employers–the voters in the states–don’t want to.

      This isn’t based on “racial hostility” (although that’s a favorite and convenient–however erroneous–explanation . . . and, for the record, I’ve lived either in Florida or the deep South for over 40 years). It’s based on cost.

      The core health-care issue is cost. Finding ways to pay (such as with Medicaid) rather then reduce health-care costs will likely worsen the issue, i.e. increase the cost. The taxpayers are on the hook to pay those costs, and they’ve neither the means nor the inclination to do so, and that is the likely reason why states are reluctant to expand Medicaid, and I hope that’s what those students heard.

      Any discussion about health-care reform cannot be about finding ways to pay exorbitant costs. It has to be about reducing the costs.

    • Excellent comment Andy…

      I do think there are differing “world views” on this.

      I – and I believer you would prefer that the whole issue of health care for the poor be handled at the state – or county level. That is why I would keep the tax dollars “home” – the whole process of collecting taxes FROM residents of one state and sending the dollars to DC and then returning [and in some cases redirecting] those same dollars to the states is inefficient – and absurd.

      Others feel that the process needs to be managed at the Federal level – so that the “bad” states will behave themselves – regardless of the wishes of their citizens and do what they are told.

      And yes – you are right the focus should have been on how to get costs DOWN [not just under control].

      I have posted several times on the fact that Singapore gets much better care for a bout a quarter of what we spend per person. Solving the problem of health care for the poor is a whole lot easier when we are talking about finding $250 a month vs $1000 or more a month per person.

      Invariably I get the response that “Americans would not like XXXXX or YYYYY that is done by Singapore to keep costs down. I am not sure that this argument holds now that we are seeing the full impact of what Obamacare is doing – many of us would chose Singapore’s approach as the lesser of the two evils.

    • “states rights” was a problematic issue for the assembly of representatives who wrote the constitution and it has remained a problematic issue ever since

      “states rights” was used to defend slavery and subsequently the restriction of civil rights to certain people in certain states

      insurance companies have used state sovereignty to hide shelter pricing within “state insurance” markets

      healthcare, education and other things are national problems and need political solutions and “states rights” is used too often as a political tool to protect vested interests

    • Note to Andy:

      I would question one important word in your sentence that “taxpayers have neither the means nor inclination” to cover the costs of Medicaid.

      The word “inclination” is very accurate.

      The word “means” is what I question. Florida is full of retirees with good pensions and investment income who have moved to that state in part because of its lack of a state income tax.

      As Jamzo notes above, the concept of “state’s rights” has a bad name among liberals because of how segregation was defended throughout the 1950’s and 1960’s when I was growing up.

      Now one could argue that opposing Medicaid is not as sleazy and cruel as opposing basic civil rights. I could learn from such a debate.

      But the defenders of ‘state’s rights’ should know why their side is disparaged so often.