• Oops, no Medicaid for you! But how about some cash?

    Go read Sarah Kliff’s piece about a Montana legislator who accidentally killed Medicaid expansion in the state by a mistaken vote. Oops! Embedded in it is this:

    Still, Bangerter didn’t want her state to miss out on the chance to expand health insurance to some of Montana’s 176,000 uninsured residents. So she introduced House Bill 623, which would allow the state to give many low-income residents “income-enhancement” grants, which would get their income above the poverty line — and that would mean they qualify for tax subsidies on the health insurance exchange.

    This is not, ultimately, what was the subject of the oops-vote last week. The legislation had evolved to a more Arkansas-like private option. But I want to talk about this income enhancement idea anyway. Would it fly?

    I ask because this was my idea! No, I can’t prove it. I don’t believe I wrote it down publicly, though I might have emailed it to someone or other. (Yes, I now see that I did.) So, some questions:

    • How many other states are considering income supplementation to bring people into eligibility for exchange subsidies?
    • Would HHS have a problem with this?
    • Does it even require federal approval?
    • Is it cost effective? (Whether it is will depend on the income distribution of state residents below 100% of the federal poverty level, as well as the cost of the next considered option, e.g., expansion of Medicaid in some fashion. So, maybe a better question is, in what cases is it cost effective?)


    • “Beginning in 1974, Pierre Trudeau’s Liberals and Manitoba’s first elected New Democratic Party government gave money to every person and family in Dauphin who fell below the poverty line. Under the program—called “Mincome”—about 1,000 families received monthly cheques.

      Only two segments of Dauphin’s labour force worked less as a result of Mincome—new mothers and teenagers. Mothers with newborns stopped working because they wanted to stay at home longer with their babies. And teenagers worked less because they weren’t under as much pressure to support their families.

      The end result was that they spent more time at school and more teenagers graduated. Those who continued to work were given more opportunities to choose what type of work they did.

      In the period that Mincome was administered, hospital visits dropped 8.5 per cent. Fewer people went to the hospital with work-related injuries and there were fewer emergency room visits from car accidents and domestic abuse. There were also far fewer mental health visits.

      “When you walk around a hospital, it’s pretty clear that a lot of the time what we’re treating are the consequences of poverty,” she says.”

    • It might be good if ACA pushed states to give cash in place of in kind benefits.

    • On a related note, to the extent that people overstate their income on tax returns in order to qualify for the subsidies, this actually incentivizes states to refuse the medicaid expansion, since over-reporting means more income tax revenue and fewer state welfare benefits. In effect, refusal to implement the federally-funded medicaid expansion would to some extent redistribute tax receipts from the federal to state governments without anyone knowing.

      Of course, its hard to imagine that that many people would actually over report their income, so probably not a huge deal.

      • If I or a family member had significant medical needs and I was within striking range of the 100% FPL mark and my state didn’t expand Medicaid, rendering us ineligible, I would be strongly tempted to overstate my income, pay the small additional tax, and get a big subsidy for insurance that could tremendously improve our lives and finances. I’m not saying this will happen much, but if it does, could anyone catch it? Prove to me I did not earn another $2,000, say, doing landscaping for cash around the region? Sure, a deep audit that required documentation and confirmation from secondary sources might catch me. But is the IRS going to audit very poor Americans for overstating income? Seems unlikely. The perfect crime, perhaps.

    • So let me get this straight. Let’s say a state decided to scrap state-run welfare programs and instead just offer in-kind cash payments to their poorest citizens. Just mail out checks. These transfers are now considered income. If the state pledges to bring everyone to 100% of FPL, everyone qualifies for exchanges.

      Are the numbers even close to working out? If a state pools its welfare, TANF, disability, and Medicaid money (and I don’t know how much the states are chipping in for these programs anyway) could it send out checks big enough to do this?

      Also, it seems like this would only work in a state with a heavy libertarian streak without the “poor people will spend money on drugs” moralizing you’d get in some conservative areas.

      So as long as you’re willing to run a massive social engineering/poverty reduction experiment, you can force the Feds to pay for/play along with a complete redesign of the safety net?

      This is really interesting, in a I-kinda-want-to-see-how-it-would-work but Im-scare-to-kill-the-safety-net sorta way.