The Medicaid Expansion Push

Jan 15, 2014

One of the biggest issues for this legislative session is whether to expand Medicaid.  The Affordable Care Act assumed states would do that and offered to pay the full cost for the first three years – then scaling back to 90% over the next seven years.  

About half the states – including Virginia – refused, and that means about 190,000 people in the Commonwealth will still be without medical coverage.  Governor McAuliffe is pushing for expansion of Medicaid, but Republicans are pushing back with some surprising proposals.

Virginians who don’t get health coverage through their jobs, and can’t afford to buy a policy on the federal exchange can apply for Medicaid, but in this state only pregnant women, children, very poor working parents, people with disabilities and poor nursing home patients qualify.   That leaves about 190,000 adults without coverage – among them, 49-year-old Jewel Royal. 

When I spoke to her after a news conference last year, she was working six hours a day, earning less than nine dollars an hour, to look after disabled people. “I feed them, dress them, bathe them, comb their hair,” she explains. “I make sure their medicines were taken on time, make sure their doctors appointments are made.  Make sure their doctors appointments are kept.”

But when she’s sick, Royal can’t afford to go to the doctor.  Instead, she relies on home remedies and worries that her high blood pressure might lead to a stroke. “I don’t want to be incapacitated.  I don’t want to be a burden to my family, and if we could prevent having to be in a hospital bed, laid up somewhere for the rest of my life, why not have health insurance?”

Delegate Steve Landes, co-chair of Virginia’s Medicaid Innovation and Reform Commission, says care is available for Royal and other working poor in Virginia.  “We are very good about providing funding for free clinics.  We obviously cover the costs related to indigent care for hospitals and we’re looking at ways to continue and even improve that, so that people don’t have access to healthcare – that’s just not true.”

Royal says waits are long for an appointment at Richmond’s free clinic, and if she misses work, she won’t get paid. 

Carolyn Engelhard gets that.  She’s director of the Health Policy Program at the University of Virginia.  Not every community has a free clinic, she says, and those clinics – which are staffed mostly by volunteers -- can’t provide the kind of comprehensive and continuous care that people need. “Some of them can be cared for at the free clinic, and I serve on the board of the free clinic and have for the last decade, but the free clinic is not the solution. We are a band aid.”

Nor does she think hospital emergency rooms should be doing this job.

“The poor hospitals have really kind of been thrown under the bus, because when the ACA was passed, they offered to give up 188 billion dollars over ten years in reduced reimbursements in exchange for these additional enrollees through Medicaid and private insurance.”

In a survey of his constituents, Delegate Landes warns that expanding Medicaid could cost Virginia over a billion dollars a year, forcing the Commonwealth to cut key services like education, mental health and public safety.  When he was reminded that the feds would pay the full cost of expansion for the first three years and no less than 90% thereafter, his numbers changed. “Even with expansion at 90%, the state’s share still would be about $285 million.”

Maybe, says Michael Cassidy, president of the Commonwealth Institute for fiscal analysis – a non-partisan think tank.  More likely, he says, the state will end up saving money. “We make payments to hospitals in our state for uncompensated care that they provide for folks who are uninsured. To the two teaching hospitals for example, UVA and VCU, we’ve provided over a billion dollars in uncompensated care payments over the last ten years.”

And, Cassidy says, there are other state payments that would no longer be necessary. “There’s a lot of community based mental health and substance abuse services that we pay for  with state general fund dollars through our local community service boards for example.  About a third of the folks who are served are uninsured, and a good chunk of them would get coverage through Medicaid.  We have breast and cervical cancer screening and things like that that we wouldn’t be paying for with our own state dollars, because these folks would be getting coverage through an expanded Medicaid program.”

He also contends Virginia would save money on health insurance for more than 100,000 state employees.  That’s because hospitals would no longer charge insured patients more to help cover the cost of uninsured patients, allowing   insurance companies to lower premiums. “Like all employers, the state of Virginia has had to deal with increases in their own health insurance premiums for their workforce.  There’s sort of a hidden tax on everybody’s health premiums because of the cost shifting that occurs.”

Finally, Cassidy predicts Medicaid expansion would mean more jobs and more tax revenue as an already growing sector of the economy – healthcare – expands to meet the need.  For all of those reasons, he sees Medicaid expansion as a bargain for Virginia.

But some Republicans oppose expansion of government programs – believing the private sector is more efficient.  That’s why Delegate Steve Landes wants to take federal Medicaid money and use it to buy private insurance for the poor on newly established exchanges.  “One thing that the private insurance generally does is you have a co-pay. We all know that if you have to pay a little bit, you tend to watch where your money’s going, and you tend to watch how you access the service.”

Professor of Public Health Carolyn Engelhard says buying private insurance is more expensive than expanding Medicaid, and co-pays may discourage sick people from getting care when they might get worse and end up requiring even more expensive medical services.

One more point is sparking debate. Critics of Medicaid expansion cite a recent study in Oregon, where newly enrolled recipients continued to use expensive emergency rooms for care.  Engelhard took a close look at that claim and pointed out that half the visits involved injuries – possibly real emergencies, it takes time for habits to change, and emergency rooms are often the only choice for parents who lose pay if they miss work.

“We are one of the few countries that do not offer evening appointments or weekend appointments.”
In Massachusetts, it took six years, but patterns did change. Medicaid recipients began going to a doctor’s office instead of the ER, as medical practices offered evening and weekend hours. 

No one knows whether Virginia’s legislature will finally agree to expand Medicaid, but Engelhard is betting on compromise – predicting some people will become eligible for the federal program while others get subsidies to buy private insurance on the exchange.  Two other states – Michigan and Arkansas – have opted for that hybrid solution to expanding medical coverage for the poor.