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What If Your State Doesn’t Expand Medicaid?

Monday, January 21st, 2013

The last post was about state governors who are refusing to expand Medicaid. The Medicaid expansion is part of the Affordable Care Act, or “Obamacare,” although states cannot be compelled to take part in it.

If you live in one of those states — Alabama, Georgia, Idaho, Louisiana, Mississippi, Oklahoma, South Carolina, South Dakota, and Texas, with possibly more to come — you may think this decision won’t affect you if you aren’t on Medicaid. But it will.

For example, hospitals and nursing homes in the “no expansion” states are going to be heavily penalized. As part of the 2010 negotiations over “Obamacare,” hospitals and other providers agreed to lower Medicare reimbursement payments. In return, it was promised that most people will have insurance, either private or provided my Medicare, Medicaid, or other program.

Uninsured people who can’t pay their hospital bills are a big driver of hospital costs, because hospitals jack up everyone else’s bills to pay for the uncollected ones. This is a particularly acute problem in Texas, where a full 25 percent of the population is uninsured. If the uninsured rate in Texas remains high after reimbursement rates go down, hospitals will be in big trouble.

So even if you are not a Medicaid patient, a state’s turning down the Medicaid expansion program could compromise the work of hospitals, nursing homes, and other facilities in ways that could result in poorer care for all patients — smaller staffs, fewer new technology whiz-bangs, etc. Whether you are currently healthy or have a severe medical condition such as mesothelioma, somewhere down the line this could impact you or those you love.

Jonathan Cohn wrote in The New Republic, “If states decline the new Medicaid money, as Perry is threatening, providers will get absolutely hammered, with consequences not just for them but for their patients and for the people whose taxes and premiums finance them.”

Taxes? Premiums? Yes, the more uninsured, the higher the premiums for those with insurance, and the more hospitals and other health care facilities have to rely on taxes to keep going. Rick Ungar wrote in Forbes that Texas governor Rick Perry’s refusal to comply with the Medicaid expansion will result in increased health insurance premiums for all Texans and increased property taxes for home owners.

If you are opposed to big “entitlement” programs on principle, refusing to expand Medicaid may seem like a good idea. You may think this will save you from paying more taxes. But if you are a taxpayer with health insurance, you’ve been paying for the care of indigent patients for many years, in a grossly inefficient way. And if hospitals will be getting less Medicare money without a reduction in the number of uninsured patients, you could end up paying more.

And, so far, we haven’t talked at all about the poor, who will pay the biggest burden. The “working poor” will be especially hard hit. These are people in low-wage jobs with no insurance benefits; they can’t afford private insurance but aren’t poor enough to qualify for Medicaid. The Medicaid expansion, which raises the income level at which one may qualify, is meant to help this group in particular.

What makes this situation especially frustrating is that the Medicaid expansion actually is a sweet deal for states. Awhile back Ezra Klein wrote for the Washington Post website that the federal government was making an offer states could not refuse. The “feds will cover 100┬ápercent of the difference between wherever the state is now and where the law wants them to go for the first three years, and 90┬ápercent after 2020.”

In other words, the states are turning down a program that will cost them nothing for at least three years, and in doing so they will cause their citizens to pay higher taxes and insurance premiums. Way to go.