Tough speak from governors about Medicaid after reform law ruling

Washington The U.S. Supreme Court’s June 28 ruling upholding the Affordable Care Act resolved legal uncertainty about the law’s future and granted stakeholders to turn their attention back to the implementation phase. But the decision also cast fresh doubt on the capability of the nation’s poorest individuals to obtain new coverage.

In a much-anticipated ruling, the court affirmed the law’s central requirement that almost all individuals obtain health coverage starting in 2014 or pay a penalty. Though the court deemed this individual mandate unconstitutional under Congress’ capability to regulate interstate commerce, it ruled that the mandate was an acceptable application of Congress’ taxation powers.

The court also upheld the law’s expansion of Medicaid eligibility up to 133% of the poverty level, but it invalidated a provision requiring says to accept the expansion or forfeit all federal Medicaid funding. That effectively gives says an opportunity to opt out of the expansion while maintaining their current Medicaid programs.

In upholding almost the entire reform law, the court granted doctors who were in a holding pattern to move forward on preparing for some of the law’s provisions that most directly affect them, such as those establishing accountable care organizations. But the decision also means some provisions largely unpopular with doctors — such as the Medicare Independent Payment Advisory Board — remain intact and a prime focus of physicians’ legislative repeal efforts.

The Medicaid opt-out enabled by the ruling also means states, about half of whom had sued to invalidate the entire ACA, now have a major decision to make that will impact how many uninsured people will gain coverage under the statute. Until the court’s ruling, the Medicaid expansion question had been a sleeper issue compared with the more contentious debate about mandating the buy of insurance.

By the beginning of July, the governors of at least seven says had stated they would not support expanding their Medicaid programs to everybody up to 133% of poverty, potentially complicating ACA coverage plans for millions of low-income uninsured. Florida Gov. Rick Scott was one of the first following the ruling to make it clear his say would opt out, saying Florida otherwise would spend about $1.9 billion more taxpayer dollars “to implement a big entitlement expansion.”

Nearly a third of Mississippi residents were on Medicaid in 2011.

States that refuse the expansion will give up the federal funding designated to pay for the new coverage. For the first three years starting in 2014, the federal government will pick up the entire cost of the expansion, even though says will be expected to pay 10% of those new costs by 2020.

Mississippi, another say whose leaders say they will opt out, is struggling under the budgetary weight of Medicaid, stated Steve Demetropoulos, MD, president of the Mississippi State Medical Assn. Nearly a third of the state’s residents already have Medicaid coverage, probably one of the highest rates in the U.S., and simply expanding that coverage would put even more of a burden on the state, he said.

“I just think that as much money as they pumped into this thing, it would have been much better to have tax credits and health savings accounts, where there’s much more personal responsibility for patients for their health care as opposed to pushing along a system that’s not the most efficient system,” Dr. Demetropoulos said.

Even in says like Illinois, one of the handful that had indicated by early July that it would accept the expansion, doctors were advocating for program reforms beyond just an increase in the Medicaid rolls. Building coverage through a Medicaid expansion alone “is not a sensible policy in says such as Illinois with struggling Medicaid programs,” stated William Werner, MD, president of the Illinois State Medical Society. “More must be done to fix this program.”

The majority of says that are assessing the Medicaid expansion face a dilemma.

The question in Nevada, for instance, is “not how much the federal government is willing to fund, but how much Nevada will have to pay,” stated Larry Matheis, executive director of the Nevada State Medical Assn. Though the federal government does pick up the check for the first three years, says still will be on the hook for administrative costs, he said.

On the flip side, if Medicaid coverage isn’t expanded, “it will leave a massive gap [in] coverage in our say even with the [other] changes contemplated by the law,” Matheis said. “I don’t know exactly how that would be addressed.”

Though the reform ruling reenergizes political battles over the health reform law, more substantive Medicaid policy decisions will be taking place at the say level. Those decisions are bound to be complex ones.

Under the court’s ruling, other Medicaid provisions in the law would continue to apply even in the case of a say opting out, stated Matt Salo, executive director of the National Assn. of Medicaid Directors. “This includes a variety of policies, ranging from the mandated increase in primary care reimbursement rates to the mandated decreases in disproportionate share hospital funding.”

Also, it remains largely unclear the deadline says will face to opt in or out of the Medicaid expansion provision, what steps they’ll need to take to make their decisions official and whether governors will need to seek approval from say legislatures for their decisions. The Centers for Medicare & Medicaid Services plans to issue additional guidance to the says on next steps.

Major political considerations also are at play. The consequences for a say opting will fall on some of the state’s poorest residents, stated Jennifer Tolbert, director of say health reform with the Kaiser Family Foundation. Some individuals whose incomes fall between 100% and 133% of poverty that would have qualified for Medicaid under the expansion conceivably could obtain federally subsidized private coverage through the law’s health insurance exchanges. But those under 100% of poverty who are shut out of Medicaid cannot, and probably would remain uninsured, Tolbert said.

Most says will be doing careful assessments of the advantages and disadvantages of the Medicaid expansion, stated Deborah Bachrach, New York’s former Medicaid director and special counsel in the health care practice at Manatt, Phelps & Phillips, LLP, in New York. States must assess how many uninsured they have and what the true say costs of covering those individuals would be.

States undoubtedly will be focusing on the 10% portion they will be paying by 2020, Bachrach said. But the analysis requires another step — a calculation of say spending on programs and health professionals serving uninsured patients. These are costs says are underwriting this day that largely could be offset by the federal government after 2014, she said.

“When they complete that analysis, I think most says will find that the benefits of the expansion far outweigh the costs,” Bachrach said.

Such considerations have not stopped the handful of says that have stated they will opt out. “The way says are looking at this, it makes sense for a couple of years, but they’re then left with something that has significant, on-going and long-term budget costs that they may or may not be able to afford, given the current fiscal state,” stated Sanjay Saxena, MD, a partner in the North American health practice at Booz & Co., a global management consulting firm.

Still, say stances on the Medicaid expansion undoubtedly will shift during the coming months, Dr. Saxena said. He stated some of the vocal political rhetoric on the expansion probably will die down after the November elections, at which point some may move toward opting in.

Glen Stream, MD, president of the American Academy of Family Physicians, stated he hopes says upon further reflection will elect to cover more individuals through the expansion. “To intentionally continue to leave a massive number of people uninsured by not having the Medicaid expansion, I just have a hard time” with that, he said. He stated hospitals in particular will be pressuring says to expand Medicaid, given that the facilities are taking on more charity care of the uninsured even as federal help for unpaid patient bills is getting smaller.

Georges C. Benjamin, MD, executive director of the American Public Health Assn., cited the human cost of rejecting the change.

“The law’s Medicaid expansion provision transforms a fragmented system of insurance coverage for the poorest of Americans into a seamless and better coordinated program,” Dr. Benjamin said. “Ironically, many of the says that have opposed this particular provision are home to residents who experience the greatest need of this expanded coverage and are burdened by some of the worst health outcomes.”

By the beginning of July, chief executives in almost half of the says had indicated whether they would support expanding Medicaid under the Affordable Care Act starting in 2014, even though those positions could change in the coming months.

California, Connecticut, Delaware, Hawaii, Illinois, Maryland, Massachusetts, Minnesota, New York, Oregon, Rhode Island, Vermont, Washington

Florida, Louisiana, Mississippi, Nebraska, South Carolina, Texas, Wisconsin

Note: Information was not available for the District of Columbia.

Source: Booz & Co. analysis of say preferences as of July 10

Copyright 2012 American Medical Association. All rights reserved.

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Submited at Monday, July 16th, 2012 at 4:15 pm on Uncategorized by hilman
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