THCB

The Supreme Court May Have Saved Lives … by Keeping People Off Medicaid

Here’s the most underreported story of the summer. When the Supreme Court ruled on the Affordable Care Act (ObamaCare) it inadvertently liberated millions of people who were going to be forced into Medicaid. Now they will have the opportunity to have private health insurance instead. What difference does that make? It could be the difference between life and death.

A Congressional Budget Office (CBO) report this week says there are 3 million such people. The actual number could be several times that size. But first things first.

Imagine that you are the head of a family of three, struggling to get by on an income, say, of $25,000 a year. You’ve signed up for your employer’s health plan because you want your family to get good health care when they need it. But that takes a big bite out of your paycheck — $250 a month.

When you first heard about the president’s health plan, you heard him say that if you like the plan you’re in you can keep it. That was good news. You also believed the whole point of the reform was to help families like yours get health insurance if for some reason you had to seek insurance on your own.

Now get ready for some surprises. The first will be an announcement that in another year or so your employer’s health plan will no longer be available to you. The reason: plain economics. People at your income level will qualify for as good or better health insurance in a new health insurance exchange. And almost all the premium will be paid for by the federal government. Most people like you would rather have higher wages than a health plan that duplicates what you can get almost for free, your employer will reason. So in order to compete for labor, your company will have to give prospective employees the compensation package they most want. And your employer will be right.

Then there will be a second surprise. Under the new rules, if you are eligible for Medicaid, you can’t get private insurance in the exchange. Further the health reform law is designed to force the states to raise the income level for Medicaid. If your state complies, someone with your income will be eligible for Medicaid and you won’t be allowed in the exchange!

Now if you were a resident alien, the rules are different. Since they don’t generally qualify for Medicaid, immigrant families at your income level can get subsidized private insurance in the exchange. But alas, you’re a citizen. So this option isn’t open to you.

Now let’s say you are under the impression that Medicaid is second rate insurance and you remember that your employer promised to pay more in wages once your health benefit is gone. What about using the higher wages from your employer to buy private insurance outside the exchange?

Now get ready for the third surprise. There isn’t going to be any market for private insurance outside the exchange — at least not for you. The insurance companies are going away. The brokers are going away. The market is going away.

Now for the final surprise. The only option open to you under the Affordable Care Act is Medicaid! Why should you care? Because your initial impression is correct. Medicaid is second rate insurance.

In most places Medicaid patients have a terrible time finding doctors who will see them and facilities that will admit them. That’s why so many of them turn to community health centers and the emergency rooms of safety net hospitals for basic medical care. Medicaid enrollees turn to emergency rooms for their care twice as often as the privately insured and even the uninsured. In fact, if you’re trying to get a primary care appointment, it appears your chances are better if you say you are uninsured.

In the future, things are likely to get worse. Here’s the latest from Kaiser Health News:

Sixteen states impose a monthly limit on the number of drugs Medicaid recipients can receive and seven states have either enacted such caps or tightened them in the past two years, according to the Kaiser Family Foundation…  Mississippi has a limit of two brand-name drugs. In Arkansas adults are limited to up six drugs a month.

Study after study has found that patients on Medicaid have worse outcomes than patients with private insurance. With respect to cancer care, outcomes are much better if you have private insurance, but there does not seem to be much difference between Medicaid and being uninsured. Health blogger Avik Roy summarizes other studies that find that Medicaid patients do no better and sometimes worse than the uninsured. Additional evidence is supplied by Scott Gottlieb.

But now a rescuer has appeared on the scene. The US Supreme Court has ruled that the federal government can’t force the states to expand their Medicaid programs. If your state doesn’t, then you can enter the exchange and get private health insurance after all. Right? Maybe.

Here is where is gets little bit tricky, owing to the bizarre structure of ObamaCare. The new health law is trying to get the states to expand Medicaid eligibility to 138% of the federal poverty level ($15,415 for an individual or $26,344 for a family of three). But let’s suppose that, thanks to the Supreme Court, a state doesn’t do anything. It turns out that only people who are between 100% and 138% of poverty can then go into the exchange and get private insurance.

So if your employer does raise your pay and pushes you over that threshold, you qualify. However, while your salary is still only $25,000 you may not be eligible for Medicaid. Here’s the double whammy:  You will not be allowed into the exchange either. You will be in a sort of “no-man’s-land” donut hole. And the only way out will be for you to somehow earn more income. Or, lie about it. This may be one of the very few instances where people will find it their self-interest to tell the IRS their income is higher than it really is!

According to the CBO about two-thirds of the states will not expand eligibility above 100% of the federal poverty level. That’s why 3 million citizens will be liberated and will get private insurance instead. Moreover, the subsidies in the exchange are incredibly generous. The most the family has to pay is 2% of their income.

Further, the private plans in the exchange will pay providers about 50% higher fees that the rock bottom payments they would have gotten from Medicaid. This will be a huge relief for safety net facilities that are scraping by on inadequate resources as it is. And it’s a reason why the CBO may have underestimated how many states will find this option very attractive.

ObamaCare is still a Rube Goldberg contraption that desperately needs repealing and replacing. But in the interim, the Supreme Court has done a lot of families a big favor.

John C. Goodman, PhD, is president and CEO of the National Center for Policy Analysis. He is also the Kellye Wright Fellow in health care. His Health Policy Blog is considered among the top conservative health care blogs where health care problems are discussed by top health policy experts from all sides of the political spectrum.

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bob hertzEast St. Paul DentisthsteveGregg MastersBobbyG Recent comment authors
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bob hertz
Guest

The secret history of federal health policy is similar to the secret history of federal edcuation policy and federal labor policy — namely, what can we do to mitigate the cruelty of southern states? Southern congressmen rejected Medicare at first because it called for integrated hospital wards. LBJ turned on his fellow southerners to pass Medicare. The South accepted Medicaid because it allowed states to set the income limits, plus the feds paid a higher percentage of the costs due to low Southern incomes (which derived from Southern anti-labor-union practices) Even today, over 10 million persons are eligible for Medicaid… Read more »

John Ballard
Guest

Embarrassingly true, bob hertz. I was born in a “border” state but reared in the South. As Molly Ivins pointed out more than once, when you grow up and discover you’ve been lied to all you life it makes question everything for yourself. That happened to a lot of us in the Sixties but apparently not nearly enough. It’s no accident that military installations are concentrated in the South, the result of regional solidarity locking in federal dollars without any expiration of the arrangement. Or that the Solid South was solid Democrats until the Voting Rights Act of 1965 was… Read more »

bob hertz
Guest

Dr. Goodman and Avik Roy do sometimes have valid insights, but they are peddling a very ugly and misleading canard when they say that Medicaid patients have worse outcomes than privately insured patients. What they leave out is the REASON why Medicaid patients have worse outcomes……….and the reason is that in most states, Medicaid patients are virtually all poor and unemployed. Their lives on average have far more violence, both in the family and in the streets, much worse nutrition, and more dangerous jobs than people with private insurance. (or no jobs at all, which results in more self-destructive behavior.)… Read more »

John Ballard
Guest

Thank you for this. Over several years of reading THCB I have seen Dr. Goodman’s picture connected with ideas I can’t swallow so often that I sometimes skipped anything he posted without reading it. On the other hand, one of my most informative exchanges (with other readers, however) was prompted with an excellent column posted with his photo (A Healthcare Contract With America) which advanced several very constructive, if obscure, ideas. Following a popular narrative often carries discussions so far afield that it’s impossible to drag common sense back into the conversation. And popular narratives about health care and health… Read more »

East St. Paul Dentisth
Guest

Medicaid should be dismantled in its entirety because States obviously are ill equipped to deal with their poorest citizens. all smiles dental centre

steve
Guest
steve

The preponderance of literature shows that Medicaid improves outcomes. The Oregon study is making this clear, as have many other studies. I have gone over the cited studies with Avik on his old blog. They suffer from selection issues and/or poor controls.

On availability, it should be noted that it is actually just about as easy for Medicaid patients to find a doctor as it is for privately insured patients.

Steve

Gregg Masters
Guest

This from a guy who famously claims ‘there are no uninsured’ in America as we all have ‘access’ via the emergency department. More perspective from the privileged perch of executive compensation.

Mr Goodman never had to stand in the line of humiliation in an effort to qualify for Texas’ Medicaid ‘high bar’ of FPL income qualification. Funny how Texas continues to ‘lead’ in setting lower thresholds in healthcare indicators from number or uninsured, % covered by employer sponsored health plans, to the proliferation of junk insurance.

Margalit Gur-Arie
Guest

Ah, the complexity of it all is exquisitely blinding.
Mr. Goodman is right. Medicaid was conceived as, and is, second rate insurance and nobody should be in Medicaid. Medicaid should be dismantled in its entirety because States obviously are ill equipped to deal with their poorest citizens. Medicaid should be folded into Medicare as a first step towards providing (equitable) health care for all.
A good place to start would be the cancellation of the ill-conceived dual eligible “experiments” of dumping Medicare members into Medicaid style services just because they happen to be poor.

BobbyG
Guest

There you have it. Copy that.

John Ballard
Guest

Clicks **Like**

John Ballard
Guest

I don’t believe those working for $25,000 a year have access to or can even afford a decent group insurance policy. I managed the working poor for my entire career and I can tell you that the overwhelming majority are uninsured because they cannot afford the premium, even with employer contributions.

Will
Guest

Kind of ironic that you chose today to celebrate the exclusion of 6 million people from medicaid. Ironic because less than 7 days ago an NEJM report showed: Medicaid expansions were associated with a significant reduction in adjusted all-cause mortality (by 19.6 deaths per 100,000 adults, for a relative reduction of 6.1%; P=0.001). Mortality reductions were greatest among older adults, nonwhites, and residents of poorer counties. Link: http://www.nejm.org/doi/full/10.1056/NEJMsa1202099#t=abstract P.S. That Lancet paper you referenced doesn’t control for the difference in average health of someone in the medicaid population compared to the average health of someone who is privately insured. The… Read more »

Craig "Quack" Vickstrom, M.D.
Guest
Craig "Quack" Vickstrom, M.D.

Shorter Mr. Goodman: we must let the poor die in order to save them.

spike
Guest
spike

John Goodman should look up “Concern Trolling” on Urban Dictionary.

Really, concerned for people who work but make so little they qualify for Medicaid? As if those people are currently getting insurance from Wal-Mart, I mean… their employers. To put it mildly, Mr. Goodman’s other posts on TCHB have not demonstrated similar concerns for the poor.

Daniel Carnese
Guest

Nice try, Mr. Goodman. Your analysis ignores the fact that the employer’s payment for health insurance is tax-deductible, while the increase in gross wages you hypothesize is not. Furthermore, since the whole analysis is predicated on the hypothesis that “s good or better health insurance” will be available to employees. But since you are trying to argue that this may not be the case, that defeats the essential premise of your case. The bottom line is that your analysis adds to the expectation that employer-provided coverage will not significantly decrease, consistent with what has actually been happening in Massachusettts, the… Read more »