Wednesday, March 8, 2017

A Black Hole for the Poor --- Medicaid Under the GOP Bill

The new GOP American Health Care Act (AHCA) should be called "Well, Anyway, It's Not Obamacare." Right from the start all the random shreds of Republican ideas began with: anything but the ACA. Their Bill had to be its negation. An antonym.  A void.  And they have achieved it.  The AHCA is a black hole into which they are kicking any hope for achieving universal care. The Bill is a travesty on many fronts, which we will address going forward.  This article, however, focuses on Medicaid, where the foot of the GOP Bill falls most heavily. 

Medicaid in the Good Old Days (and in Current Non-Expansion States)
So let's drift back to the past, where all the best Republicans want to force us to dwell, and see what pre-ACA Medicaid had to offer.  The original Medicaid is an entitlement program, set up in 1965 under Social Security to cover low-income children and some adults. Medicaid rules varied widely from state to state, but all were required to cover children under 5 at 133% and school age children at 100% of the federal poverty level.  Eligibility for parents and caretakers could fall far below the poverty level. Examples from current non-expansion states are 13% in Alabama, 15% in Texas, 19% in Indiana (Pence's home), and 29% in Florida (Trump's home away from home).

Medicaid also covered pregnant women, elderly and disabled individuals, and some parents, but excluded all other low-income adults.

In 1997, the Children's Health Insurance Program (CHIP) was added to the program to cover kids from uninsured, low-income households that were above the Medicaid poverty line. This was a successful program and by the time ACA was implemented in 2013, eligibility levels were at 235% of poverty level, and only 7% of children were uninsured. (The rates, however, vary from state to state with over 12% of children still uninsured in 7 southern states.

How Did Medicaid Funding Work?
Medicaid does not provide funding directly to individuals but reimburses doctors and medical institutions for expenses qualified under Medicaid.  Such costs are shared by the feds and the states based upon a formula using state income data, so that poorer states receive a larger percentage from the feds than wealthier ones. For example, New York's share before Medicaid expansion was 50%, while Mississippi got $2.79 for every dollar it spent. This system, while not perfect, allows for flexibility in case of changing state needs (e.g., economic downturn, natural disasters, and epidemics).

What Medicaid Expansion Under the ACA Has Accomplished
The year before ACA implementation, 18% of the population was uninsured – mostly non-elderly adults, nearly half of them having been uninsured for 5 years or more.

The current Medicaid program, including the Children's Health Insurance Program (CHIPS), currently reaches 74 million people, including about half of all pregnant women and 20% of all children.  About 11 million people are enrolled in Medicaid expansion states. The new bill will have an effect on all these people, and not in a good way.

As of January 2017, 32 states had adopted Medicaid expansion, under which they provide Medicaid coverage to all adults under 65 with incomes below 138% of the federal poverty level – even those without children. It standardized eligibility rules and provided additional benefits.

At this time, Medicaid and CHIP covers children in families with incomes at least 200% of the federal poverty line, with a number of states with expansion covering those at over 300%.

Research published from 108 studies as of February 2017 on the impact of Medicaid expansion on low-income and vulnerable groups reported the following:
·      Significant coverage gains and reductions in uninsured rates
·      Most research found positive impacts on access to and affordability of care, utilization of services, and financial security
·      Most research reported Improved self-reported health following expansion, but more studies are needed on health outcomes.

The economic impact on the expansion states has also suggested an improved health care system. Under the ACA the federal government paid states with Medicaid expansion 100% of the costs, which decreases over time but will hold steady at 90% in 2020.

Recent evidence has reported positive impacts on multiple economic outcomes, including reductions in uncompensated care costs for hospitals and clinics and positive or neutral effects on employment and the labor market.

What's Going to Happen Under AHCA (aka TrumpCare)
First, the option to cover Medicaid enrollees above the 133% poverty level threshold will be eliminated.  For children, this will go from $138% back to the poverty level. (In New York for a family of four this goes from $33,534 to $24,300). Other unfortunate changes include the repeal of the requirement for essential health benefits. An extra 6% in funds that now goes for attendants who care for Medicaid patients at home or in a community setting will also go away. And, no surprise, Planned Parenthood for Medicaid patients is defunded.

So, here's the GOP carrot
States with expanded Medicaid will still get the extra federal dollars for people who enroll before the end of 2019, However, the feds will provide 80% of costs not 90%, which is what it was expected to be in 2020 under the ACA.
Those states that didn't opt in for expansion will get $10 billion over 5 years for safety-net funding.

And Here's the Giant Catch for Expanded States
So, the following is important.  This is how the GOP is going to kick ACA Medicaid into the void:

People can stay enrolled in expanded Medicaid programs as long as they don’t experience a gap in coverage for more than a month.
Medicaid enrollees continuously move in and out of coverage because of changes in their lives that bring them in and out of poverty. Under the new bill, once a state loses its enhanced funding, people whose incomes nudge even temporarily above the eligibility threshold  (about $16,400) would lose their Medicaid. So, for example, a seasonal worker's income might rise above the threshold, and will remain too high for more than a month. Under AHCA not only will that worker be unable to re-enroll but he or she will lose access to Medicaid permanently.

The large majority of people on Medicaid in any case fall off after two years, and the numbers decline steadily after that. This means that even in the states that keep expanded Medicaid, eventually there will be no enrollees in the program.

And once the expansion enrollments have dissipated, the feds will use the old matching rates, on average paying 57% of costs while states pay 43%.  According to the Center on Budget and Policy Priorities states that had expanded Medicaid and want to continue benefits would have to pay 2.8 to 5 times more, which would mean they would have to increase their share of the costs by at least $253 billion over ten years. 

And Then There Are the Caps
Under the AHCA, as of January 2020 every state, even the expansion states, will be paid on a per-beneficiary basis for all Medicaid enrollees. The cap is calculated based on spending in 2016, and would rise annually to match the growth in the medical care component of the consumer price index.  It's expected, however, that the actual costs will rise by about 0.2% points faster than the capped amounts, so over a decade the amount would climb to $116 billion. (This is over and above the $253 billion expansion states would need to cover benefits). In reality it would be even higher because states are expected to cover all costs over the per capita cap. These could occur due to unexpected events, such an epidemic, recession, or natural disaster or simply because of an unexpected increase in residents.

There's no provision for states to negotiate these caps, and they would also be vulnerable to further cuts, since, unlike in the past, Congress could theoretically delink the funding from the actual costs of providing health care, for example lowering the annual cap growth to pay for other programs.

States would once again determine their own eligibility thresholds and benefits, and states who had opted for expansion but cannot afford to carry their costs along, will most likely revert to the bad old standards, typical of the non-expansion states. There, Medicaid is limited to parents with incomes up to 44% of the poverty line. Childless adults over 21 who are not disabled, pregnant, or elderly are generally ineligible for Medicaid, no matter how poor they are.  In these non-expansion states, 2.6 million adults have incomes above Medicaid eligibility but are not at the poverty level.  This makes them ineligible for exchanges subsidies, meaning they fall through the cracks.

As an additional sad observation, the average lifespan of people who live in states with expansion Medicaid is 80.1 years; in those who don't it is 78,7  (about the same as people in the Maldives and the Czech Republic).  African Americans who live in 13 of those 19 states do even worse, with life spans under 76 years, on a par with Azerbaijan and Libya. 

It is puzzling why the GOP would create such a punishing bill, particularly since it would put the greatest burden on the poorest states with the worst health care, mostly Republican states. Furthermore many of these states, weirdly, refused the benefits of the expanded Medicaid, which would have improved the lives of some many of their own citizens. It continues to be the most important question for Americans: Why do we legislate so often against our own best interest?


  1. Carol, fantastic article! Really clear and gets to the point of this really complicated program. We really have to work on keep this program in place and enhancing it.

  2. Just superb, Carol. Thank you so much.