On Tuesday, PA Governor Tom Corbett stated that at this time he cannot recommend accepting $38 billion in
federal funding to expand Medicaid, thereby denying medical
assistance to more than 700,000 Pennsylvanians. This series of posts
will consider the implications of that decision. My first post
presented evidence that Medicaid improves health and saves lives.
The second examined the costs and benefits of Medicaid expansion
under the Affordable Care Act (ACA). This time, I'll look at how
these costs and benefits apply to Pennsylvania.
I attended a webinar on Corbett's
budget sponsored by the Pennsylvania Budget and Policy Center on
February 6. Some of the figures in this post come from that
discussion. If it becomes available on the web, I will add a
reference to it.
First of all, let's look at the 719,000
Pennsylvanians who will be denied coverage. Pennsylvania is one of
the least generous states in the country when it comes to providing
Medicaid coverage for adults. To qualify for coverage you must make
46% of the federal poverty level or less. For a family of three,
that's less than $8781 per year. (You'll recall that children under
six are covered up to 133% of the poverty line, and older children up
to 100%.) If the governor had agreed to Medicaid expansion, all
adults (and children) would have been eligible for Medicaid if they
made up to 133% of the poverty level—$25,390 for a family of three.
This is where it gets complicated.
Under the ACA, people who make between 100% of the poverty level
($19,090 for a family of three) and 138% are eligible for subsidized
health insurance purchased through the federal exchange.
(Pennsylvanians will be using the federal exchange because Corbett
has refused to implement a state exchange.) This subsidy should, in
theory, reduce the cost of private insurance to approximately what
they would pay in Medicaid premiums and co-payments. However, this
leaves a huge coverage gap for Pennsylvanians making between 46% and
100% of the federal poverty level. They will not be eligible for
either Medicaid or subsidized private insurance.
These are the 719,000 adult
Pennsylvanians who will be denied health care coverage as a result of
Corbett's decision. In effect, Corbett has created a new “doughnut
hole” for Pennsylvanians making between 46% and 100% of the poverty
level. Most of them fall into the category of the working poor.
These are the people who work at Walmart or McDonald's. The graph
below illustrates this problem. You can click on it to expand it.
The Kaiser Family Foundation has estimated that Medicaid expansion is worth $37.8 billion in health care coverage for Pennsylvanians to be paid by the federal government between 2014 and 2022. The governor gave as his main reason for refusing the coverage that it will cost Pennsylvania $4.1 billion to implement the program between now and 2022. Most of this is backloaded, when the state is required to cover 5% (in 2017) or 10% (in 2020) of Medicaid costs. This $4.1 billion figure is contested. Kaiser puts it at $2.8 billion. The governor has not realeased any data to show how he arrived at his figure. However, even if it turns out to be accurate, the governor is turning down $38 billion in order to save $4 billion.
Furthermore, this neglects other costs
to Pennsylvania if it rejects Medicaid expansion. For example, it is
estimated that, if Medicaid is not expanded, Pennsylvania hospitals
will be faced with $1 billion per year in uncompensated costs for the
care of uninsured people. Some of these costs are shifted to people
with insurance through higher premiums, or are paid for by state and
local taxes.
In Governor Corbett's letter to Health
and Human Services Secretary Kathleen Sibelius, he gives two other
reasons for rejecting Medicaid expansion in addition to the alleged
$4.1 billion cost.
He refers to the current Medicare as a
“broken system” plagued by waste and fraud, and states that it
makes no sense to expand such a system. He claims that in 2009, $43
billion “could not be traced directly back to Medicaid
beneficiaries.” He does not cite a source and I'm unable to
evaluate this claim.
He also calls for granting states greater flexibility “to successfully reform and build a system that
works for them.” He calls for aligning benefits “to meet
individual needs and closer (sic) resemble coverage provided
by employers.” He calls for a Medicaid program that “promotes
personal responsibility” and provides “appropriate incentives for
participants to seek and retain employment.” This is vague, but
bear in mind that Pennsylvania is already one of the country's
stingiest Medicaid states. It appears that Corbett wants the
flexibility to reduce coverage below the amounts specified in the
ACA, or to place some time limit on Medicaid enrollment.
Next time, I'll speculate a bit about
the politics of Medicaid expansion in Pennsylvania, and what health
care activists can (and cannot) do to persuade the governor to change
his mind.
You may also be interested in reading:
Tom Corbett to PA's Working Poor: "Drop Dead!" (Part 1)
You may also be interested in reading:
Tom Corbett to PA's Working Poor: "Drop Dead!" (Part 1)
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