The cost of Medicaid expansion. The Governor estimated that Medicaid
expansion would cost PA $4.1 billion over 10 years while the
nonpartisan Kaiser Family Foundation put the cost at $2.8 billion.
Department of Public Welfare spokesperson Anne Bale stated three items that went into the Governor's estimate.
- Staffing and administrative costs to serve 800,000 new Medicaid recipients.
- The woodwork effect: This refers to the possibility that people currently eligible for Medicaid in PA who have not signed up will do so because of the publicity surrounding Medicaid expansion and the individual mandate requiring everyone to have health insurance. If their income is below 46% of the Federal poverty level, the state would have to cover 46% of their Medicaid costs. However, the woodwork effect will occur regardless of whether PA expands Medicaid and should not be counted as a cost of expansion.
- The possibility that people currently eligible for Medicaid but who have either private insurance or are insured through their employer might drop that coverage in favor of Medicaid. However, in order for PA to be responsible for 46% of their costs, they would have to be making less than 46% of the poverty level. How many Pennsylvanians who are that poor have private insurance or are insured through an employer?
The "flexibility" issue. The Governor has stated that he opposes
Medicaid expansion because it does not afford PA the flexibility it needs to design a Medicaid system that is financially sustainable,
and that he would like Medicaid to include incentives for recipients
to seek employment. I previously speculated that he might want PA to
provide less coverage than required by the Affordable Care Act, or to
place some time limit on coverage.
On Wednesday, Florida's Governor Rick
Scott accepted Medicaid expansion after negotiating an agreement with
the Feds to allow Florida to privatize Medicaid by placing recipients
in private, for-profit HMOs and managed care plans. This plan could,
in theory, cut costs by reducing the incentive for unnecessary
medical treatments. Florida has already embarked on a pilot program
of Medicaid privatization. It has not yet been evaluated, but it is
said to be filled with exactly the kinds of problems that already
plague for-profit health insurance:
Critics worry
for-profit providers are scrimping on patient care and denying
medical services to increase profits. Some doctors have dropped out
of the pilot program, complaining of red tape and that the insurers
deny the tests and medicine they prescribe. Patients have complained
they struggled to get doctor's appointments.
Gov.
Scott's agreement with the Feds requires that the program be
evaluated in real time.
Given
Governor Corbett's devotion to privatization, it seems possible that
he is negotiating to bring a similar disaster to PA's working poor. We might at least want to be aware of that possibility.
The Families USA report allows us to give better answers to two financial questions about Medicaid expansion in PA.
How much is Medicaid expansion
actually worth to PA's economy? I previously indicated that PA will
receive $37.8 billion in health insurance from the Federal
government over ten years, and that this money will benefit the
economy. Families USA hired Regional Economic Model, Inc., an
economic think tank, to estimate the direct and indirect
effects of this cash infusion in a target year, 2016. Direct
effects would be new money spent on health care. Indirect effects
would be items like the construction of new hospital facilities or
the money spent by new health care workers on groceries and
entertainment—the so-called multiplier effect.
The estimate was that these federal dollars would support 41,200
new jobs in 2016. They also estimated that the $3.3 billion
in additional health care spending that would occur in 2016 would,
through the multiplier effect, bring $5.1 billion additional
economic activity to PA in that year. Some of this money would come
to the state in the form of additional taxes.
What is the financial cost of not
expanding Medicaid, and who would bear it? As you know, hospitals
must treat people without health insurance (“forced charity”)
and that someone must pay for this uncompensated care. The report
gives the following estimates of how this uncompensated care will be
distributed between 2013 and 2022.
- $878 million will be paid by state and local governments, and ultimately by taxpayers.
- $891 million will be absorbed by hospitals and medical facilities.
- $1017 million will be added to the cost of health insurance paid by Pennsylvanians who have private insurance.
None of these things matter as much as
the 4000 lives per year that would be saved by Medicaid expansion.
However, it's possible that the Governor and his cronies will find
these economic arguments more persuasive.
You may also be interested in reading:
Tom Corbett to PA's Working Poor: "Drop Dead!" (Part 1)
Tom Corbett to PA's Working Poor: "Drop Dead!" (Part 2)
Tom Corbett to PA's Working Poor: "Drop Dead!" (Part 3)
Tom Corbett to PA's Working Poor: "Drop Dead!" (Part 4)
You may also be interested in reading:
Tom Corbett to PA's Working Poor: "Drop Dead!" (Part 1)
Tom Corbett to PA's Working Poor: "Drop Dead!" (Part 2)
Tom Corbett to PA's Working Poor: "Drop Dead!" (Part 3)
Tom Corbett to PA's Working Poor: "Drop Dead!" (Part 4)
