Virginia Should Take Obamacare’s Money

flying cadeuciiIn September 2012, I said that Republican governors should be expanding their Medicaid programs under Obamacare.

I argued that Republicans have long called for state block grants and the flexibility to run their own Medicaid programs in what are the state “laboratories of democracy.”

I made the point that, given the then recent Supreme Court decision enabling states to opt out of the expansion, the Obama administration would be hard pressed to deny any reasonable proposal from Republican governors.

If Republicans really believed in state responsibility and flexibility for how they run their Medicaid programs, this was the opportunity to prove it. (See here.)

Since then, a few Republican governors have taken that tack and the Obama administration has been very cooperative and flexible.

This is a good place to recognize outgoing HHS Secretary Sebelius for her leadership by being willing to work with state Republicans in order to get millions of people covered who wouldn’t be getting coverage otherwise.

Good faith Republican Medicaid proposals have led to good faith responses from Sebelius’ Department of Health and Human Services (HHS) and a few done deals and other deals still in the works.

Many Republicans have said that Medicaid is not sustainable and that the feds could well cut the new Obamacare funding in future years. Sebelius responded by giving these governors an out if funding were to be cut.

Of course Medicaid is unsustainable, that’s why the states should be given the autonomy to run their own plans and deal with these challenges in any number of different ways the country can learn from.

Arkansas, a conservative state led by a Democratic governor and a very conservative Republican legislature, was one of the first states to secure a Medicaid waiver from the Obama administration. The Republican legislature just renewed that program.

But in a recent Forbes article, that expansion came under sharp criticism:

Any Governor or legislator still considering a “Private Option” style ObamaCare Medicaid expansion in their state should take an extra-long look, as the Razorback state’s version is turning out to be hugely expensive. While the “Private Option” plans are required to look almost exactly the same as Old Medicaid from an enrollee’s perspective, the plan does have one big difference from a straight “traditional” ObamaCare expansion: state taxpayers are on the hook for all cost overruns. The trend of enrollment in the first few months project a cost overrun of tens of millions of dollars for 2014 alone, with potential overruns growing larger in the future.

Sounds like a Medicaid block grant success story to me!

Seriously. Yes, Arkansas apparently has some serious problems that need to be fixed. But isn’t that what Medicaid block grants are all about––decentralized experimentation, trial, error, and adjustment?

So, what do we know about Medicaid in Arkansas:

  1. Arkansas has its own experiment trying to figure out how to deliver better low-income care at a better cost.
  2. Because of it, 100,000 people are being covered that wouldn’t have been covered without the state and the feds doing a deal.
  3. Arkansas got more flexibility and the governor and legislature, not bureaucrats in Washington, DC, are responsible for making it work.
  4. Looks like Arkansas is not off to a sterling start.
  5. So, Arkansas needs to adjust.
  6. And, Arkansas will adjust because they have to.

Nobody said giving the states autonomy would lead to easy successes.

And, let me be clear, I don’t know if the private option scheme Arkansas is following is the right course. But, that is what experimentation is about. Other states can and probably should try other things.

I can’t figure out what’s the matter with all of these reluctant conservatives on the subject of Medicaid expansion. As many as 5 million people don’t have health insurance coverage because of their refusal to expand Medicaid––on their own terms.

Republicans want Medicaid block grants but when the Obama administration effectively goes along with the concept by approving a number of special deals the other Republican governors don’t make the Obama administration a good faith offer of their own.

And, when a state like Arkansas arguably stumbles out of the gate, they declare state Medicaid autonomy a failure.

Right now, the new Democratic governor of Virginia is in the middle of a big battle with his conservative Republican legislature. He’s basically telling his legislature he wants to go to Washington and get a deal to expand Medicaid on Virginia’s terms.

But the Republicans are saying, “No.”

I know that being anti-Obamacare is a potent election-year issue for Republicans. But every time they get a block grant concession from the Obama administration Republicans could argue they know how to fix America’s broken health care system with practical “common sense” and state-based Republican ideas. Why shouldn’t this be a winning political strategy for them?

What are they afraid of; the blue states will end up covering more people for less money than red states doing it their way?

So much for 50 state laboratories.

This from the same party that thinks selling insurance across state lines, association health plans, and high risk pools are good common sense ideas.

Robert Laszewski has been a fixture in Washington health policy circles for the better part of three decades. He currently serves as the president of Health Policy and Strategy Associates of Alexandria, Virginia. You can read more of his thoughtful analysis of healthcare industry trends at The Health Policy and Marketplace Blog, where this post first appeared.

37 replies »

  1. After the initial appointment I felt so much better as my dentist was lovely. My next appointment both my teeth came out and it was all over within 15 minutes. All them years I had my broken teeth and it was over like that.

  2. @Peter

    So if they’re able-bodied, working age adults, it’s incredibly silly to complain about someone describing them as able-bodied, working-age adults. End of story.

    If you want to argue that this group of able-bodied, working age adults (the vast majority of whom have no dependent children and don’t qualify for other types of welfare, like cash assistance or long-term food stamps) should receive taxpayer-funded Medicaid benefits, that’s a fine discussion to have. But pretending that it’s somehow inappropriate to accurately explain who is actually in this population is absurd.

  3. @ Jonathan,

    So what if they are working age, able bodied, the fact is they don’t earn enough to afford coverage. They could be actually employed.

  4. “As many as 5 million people don’t have health insurance coverage because of their refusal to expand Medicaid––on their own terms.”

    Medicaid is not insurance, it is welfare. Spin it as coverage (lousy coverage), but no one should tolerate welfare being described as insured particularly as opposed to uninsured.

  5. I should not have used that word “earned.” Earned carries the implication that if it is not “earned” it is undeserved. And that is wrong. Good health care is as important to civilized society as any other resource.

    That’s the pitfall of that word “entitlement.” Good health care is no more earned than well-engineered roads or buildings constructed in compliance with good building codes. Citizens don’t “earn” the right to be protected by military defense. The same should be true of reliable, affordable health cafe. That is part of our birthright as Americans.

    Maggie Mahar put up a post about cancer treatment in France which included this wonderful postscript:

    …I couldn’t help but remember a conversation I had with a close friend who married a Frenchman and lived in the Dordogne region of Southwest France, for a number of years. During that time, she was hospitalized and received medical care. When she returned, she explained that in France health care is so different because “The French believe that nothing is too good for another Frenchman.” (This includes poor countrymen as well as illegal aliens who have filed for residency).

    If only we felt that way about each other.

    – See more at: http://www.healthbeatblog.com/2014/02/the-french-way-of-cancer-treatment-part-1/#sthash.4BGKVYh2.dpuf

    Old or young, able-bodied or handicapped, stupid or smart, sane or crazy — even criminals behind bars… all deserve decent health care. I don’t know what it takes to get that idea across, but I keep trying. There are no civilized arguments against it.

  6. @Peter1

    Also, I was not aware that you “earned” Medicaid benefits by paying income taxes through a payroll tax that, as John said, operates “unlike the income tax.”

    Workers do earn Medicare benefits by paying payroll taxes, though.

  7. @Peter1:

    My point is that it’s pretty strange to complain about the description of the Medicaid expansion population as “working age, able-bodied adults” when they are, in fact, working age (between the ages of 19 and 64) and able-bodied (non-disabled) adults.

    Saying “I do not like this accurate description” is silly. Shouldn’t the public be informed who exactly this Medicaid expansion intends to cover?

  8. Are people between the ages of 19 and 64 not “working age” adults? Are people who are non-disabled not “able bodied” adults?

    Also, it appears you are confusing Medicare and Medicaid. While workers are responsible for Medicare payroll taxes, there are no payroll taxes that support the Medicaid program.

  9. ” When I hear Republicans and Libertarians argue that “social service support” are disincentives to work it makes my skin crawl.”

    Seems Republicans don’t view government handouts to business as disincentives to invest. Business now wants a subsidy every time they build another building, with property tax forgiveness, free infrastructure, and cash. All this takes money from schools and other community services.

  10. Please excuse me for being prickly about calling Medicaid an “entitlement.” I’m not implying laziness. I’m pointing out — and objecting to — that word, which carries the implication of laziness, especially when coupled with able-bodied and working age adults. When I hear Republicans and Libertarians argue that “social service support” are disincentives to work it makes my skin crawl.

    I’m having trouble with the syntax of “the CBO has shown the labor market impacts of expansion. Income cliffs are real, and people rightfully respond to them.” Not sure what that means.

    What I do know is that despite whatever other numbers are there is a large and growing population of unemployed and underemployed people, and as long as wages continue to be pushed down in a sinking feedback loop (increasing competition for any kind of work — part-time, low wage jobs and little upward mobility) those people need all the help they can get.

    Medicare is a critical part of the safety net. And whatever “social service support” benefits are forthcoming are not entitlements but earned benefits. Payroll taxes feed the federal revenue stream almost as much as income taxes, but unlike the income tax, there is no deduction before those dollars get harvested. They are collected from every dollar earned. And many people who might benefit from EITC never see it because they take the standard deduction (or more likely pay a fee as well, which they can ill afford, to “do their taxes”).

  11. John,
    Not sure it matters if we call it an entitlement, a social service support, or whatever your preferred term, they all have similar impacts.

    And the expansion population is largely able-bodied, working age adults, so no they don’t all become lazy as you imply, but the CBO has shown the labor market impacts of expansion. Income cliffs are real, and people rightfully respond to them. Do you disagree?

  12. From Forbes:

    “We recently talked to Arkansas State Senator Bryan King, chairman of the Legislative Joint Auditing Committee, who has been monitoring Private Option implementation. Here’s what he had to say about that promised flexibility:

    Arkansas’ negotiations with the Obama Administration made one thing clear: the bureaucrats in Washington hold all the cards and their main concern is implementing ObamaCare, not providing states with any real flexibility. They may relent on tweaks that amount to nothing more than window dressing, but their intent is for states to expand Medicaid and enroll more Americans into government-run health care. Arkansas made a grave mistake in trusting the Obama Administration’s false promise of flexibility and our state’s sense of buyer’s remorse grows worse by the month. I only hope that leaders in other states are not fooled by these empty promises.”

    My feeling about this is the Feds don’t trust Southern States to enact any meaningful Medicaid expansion. It would be the same if the Federal imposition of abolishing segregation had been given, state “flexibility”. It just would not have happened.

  13. I don’t want to get in the way of a pissing contest, Mr. Archambault, but when I went to the link you lost me with this:

    The Private Option Medicaid expansion creates a new entitlement for able-bodied, working-age adults.

    When you refer to access to healthcare, by whatever means, an “entitlement” it really pushes my button. And by adding “able-bodied, working age adults” to the description the implication becomes “lazy moochers trying to get something for nothing.”

    Sorry sir. Everything else is blowing smoke. I’ll try to be quiet now.

  14. Thanks Peter1 for your comment on Social Security disability being rampant in some red states. A conservative named Kevin Williamson wrote a long sad article on this called The White Ghetto in the National Review 1-25-2014.

    Here is an irony for you. If disability benefits had to be paid for with state tax dollars, these states would probably have rejected the program. The national origin and funding of social security dissolves a lot of right wing resistance.

    I think it was Theda Skopcol who wrote about the contrast between ‘good welfare’ and ‘bad welfare.’ Social security gets into the good tent and Medicaid gets into the bad tent.

  15. The poor need an AARP then they’d get all the Medicaid they would need. Poor people don’t vote or participate – usually. If they did the rich would have to design a different “democracy”.

    I can remember when Obamacare was being designed and debated. West Virginia was having an election and the NRA was there telling poor West Virginians that guns were more important than health care access.

    Seems they bought it. However West Virginians (as other states) don’t mind running one of the biggest fraud schemes around to get federal dollars – Social Security Disability. We love it when the feds send us money but don’t want anything else from them – like clean water and air and safer cars.

    I’ve thought about Bob’s “federal gubmint” comment (and the response from JC) and I have used this phrase myself. I don’t think it equates to just the poor or uneducated, but it does paint a valid picture of the ignorant who walk to their mailbox to get that government check while being opinionated against everything the government wants to do – outside of sending them a check.

    Rich(er) people don’t need as much government, but they get good at telling the poor they don’t need it either. In the south that seems to be a winning tactic.

  16. Jeff has been pointing out the “woodwork people” coming onto Medicaid for some time, good for him.

    According to Harold Pollack, the average new entrant to Medicaid who is not disabled or seriously ill costs the program $594 a year. A poor state like LA would only pay a third of that on woodwork people.

    Most of the anti-Medicaid states have very low state income taxes, or no income taxes. They gang up on the poor with property taxes already.

    I would like to see an estimate of just how much extra taxes a middle class LA family would have to pay if Medicaid expanded. I bet the number is under $500 a year.

    As Bill Maher once said, and I know JC will bristle at this, “The historic role of the Democratic party is to bring the hillbilly half of America into the 21st century.”

  17. “And of course it is a contested notion that Medicaid actually improves the health condition of the poor.”

    Does any health care coverage for any income group improve their health condition? If you argue the poor won’t be better off because of this then why cover anyone?

  18. Changing voter hours/locations and mail-in ballots isn’t designed to reduce voter turnout especially select target ethnic and age groups?

    Utter nonsense and political scientists (who are all quants now) have known this for a long time now.

  19. Louisiana answer: LOTS of poor people! How they got there and how Louisiana’s political system has failed to raised people’s incomes, or create a viable modern economy- beyond my scope of knowledge.
    See also: Mississippi, Arkansas, New Mexico, West Virginia, Rio Grande Valley, Texas, etc.

    Participation rates in Medicaid pre-ACA in most of the sunbelt was less than half of those eligible. And ACA eliminated categories and raised the income threshold, in some cases, by triple or quadruple what it was. What ACA was, and failed to do: a partial federalization of the program. And for what it’s worth, it was a 7-2 Supreme Court vote, not 5-4, to keep things the way they are.

  20. “In states like Louisiana, HALF your citizens are eligible for Medicaid.”

    Just why is that so Jeff? Louisiana is one of the worst offenders in the tax concession game giving wealthy corporations undeserved tax breaks that remove money from local programs and schools. Why does LA have one of the worst school systems in the country – that’ll be your answer to “HALF your citizens are eligible for Medicaid”.

  21. : “Although the findings of Rhodes et al and those of physician surveys suggest that a smaller proportion of physicians care for Medicaid beneficiaries than for patients with private insurance coverage, the medical needs of the Medicaid population could still be adequately met if participating practices were conveniently located near where Medicaid beneficiaries live and if they served enough Medicaid patients. However, study findings suggest not only that physician participation in Medicaid is low but also that those who do participate care on average for a small number of Medicaid beneficiaries.”
    The study authors and the editorialists agreed that timely monitoring of the number of physicians accepting Medicaid and the number of Medicaid patients per practice will be important to guide policy on incentives and reforms.

    The above is from a study by the RWJ Foundation.

  22. Ohio, where I live is an odd duck. It’s a swing state that carried Obama, but has a Republican governor and Repub legislature. The governor actually did a run-around (apparently allowed by the Ohio constitution) and despite the objections of the legislature, convened a council to approve Medicaid expansion in this state.
    Now, the other problem to consider is where all of these new Medicaid recipients will get care. Medicaid has never been a great payer and in fact, Obama promised parity with Medicare last year. Consequently, many physicians are limiting new Medicaid patients. Even my dentist who has taken Medicaid for years, says he can’t afford to take on more. While having some sort of insurance could be considered a step, you still have to ensure access to care. There seems to be conflicting evidence whether or not having Medicaid will in fact do this.

  23. I’m with Robert L on this one. Virginia needs to expand its program.
    I live here and Virginia’s current program is SUPER stingy. The Repubs have NOTHING to suggest as an alternative, despite 900 thousand uninsured. It’s just “no”! Not OK.

  24. Oops. “the feds INCREASED the match, so they WOULDN”T have to raise taxes or shaft the care system…

  25. THere are a ton of reasons to worry about expanding Medicaid if you’re a Governor. But the ability of the feds to cut the match rate isn’t really one of them. There is fifty years of history here, and, to my knowledge, you can count the number of times the feds cut the match on zero hands. In fact, when states were in REAL trouble, just five years ago, the feds INCREASED the match, so they would have to raise taxes or shaft the care system in the middle of a devastating recession.

    If I were a Governor, I’d be thinking about all those people who were eligible for Medicaid BEFORE ACA, who now have a fast lane (e.g. the Exchanges)
    to enrollment and for whom the match is 30-50% for the state, not zero going to ten. Think of Medicaid as a cargo full of cannonballs in your hold (no containers).

    When your state’s revenues shrink, Medicaid costs explode, and you have to screw somebody because you are constitutionally required to balance your budget (you don’t have Ben Bernanke there printing “Louisiana bucks” and throwing them out of helicopters)

    It’s the worst category of counter cyclical spending (exactly why it’s there in the first place!). Medicaid is the balancing item in your budget, and tips you over when you’re in serious trouble. In states like Louisiana, HALF your citizens are eligible for Medicaid. And if it’s the half who didn’t vote for you in the first place, well, you do the math. . .

  26. “Many Republicans have said that Medicaid is not sustainable…”

    But the poverty that makes it necessary is?

    Southern States’ economies have always been built on the exploitation of cheap labor.

  27. Note to JC:

    When the Civil Rights and Voting Rights Acts were being debated in the 1960;s, black people made up about 50 per cent of the population in the Deep South and were casting about 5 per cent of the votes. I read this last week in Randall Woods’ biography of LBJ.

    I do not contend that all opponents of Medicaid are racists. And I do admit that Medicaid has many design flaws. I would actually support any state that refused Medicaid but put more money into community clinics and public hospitals. However, the anti-tax fervor seems to oppose all forms of civic aid.

  28. Another reason for skepticism of taking the Medicaid deal now (in addition to my previous points) is that the federal government retains the sovereignty of altering it at any point. And then what happens? The state government has the be the agent to actually scale back the Medicaid program, or make up the difference.

    This is a salient concern, given the (a) unsustainability of the federal entitlement state and (b) the proven inability of federal politicians to take any political fire to ameliorate these problems. It seems to me as though pushing the health entitlement burden on to the states is just the sort of thing you might want to think about doing ~ 2024 when Medicare + Medicaid + CHIP + ACA Exchange Subsidies = 6% of GDP.

  29. “Voter suppression laws just exaggerate this trend but did not cause it.”

    There is no empirical evidence to back this up.

    Personally, I support the idea of bidding with the feds as a vehicle to reform the Medicaid program in the states in exchange for expansion, but there is something to be said for waiting to see how others go about doing it (e.g. Arkansas). Since the offer is open ended, you might get a better offer from a later administration, too. The Obama Admin. might get more flexible as the months drift on.

    In other words, there are rational reasons to wait.

    “Helping poor people” is not an insuperable maximand. Program design matters ENORMOUSLY. Badly designed programs can crowd out other, equally valuable goals (e.g. a low tax rate to attract businesses so the poor can get jobs). Bad program designs can also hurt the stated or implied policy goals. Look at Medicare. It was supposed to be the loss leader for national health insurance, but it was so terribly designed that it took almost 50 years to get anything approaching a universal insurance program. And think of all the billions it wasted. And of course it is a contested notion that Medicaid actually improves the health condition of the poor.

    But then again, “conservatives hate the gubmint and don’t care about the poor” is such a juicier talking point!!!!

    PS: I especially like the “gubmint” line, implying that opposition is concentrated among poorly literate Southerners. I am a Northerner through and through, can speak English as well as anybody, and I say: wait to see if the government offers you a better deal.

  30. Do a search for “Charlene Dill” and see what comes up. She’s the poster child for what can happen when states opt not to expand Medicaid.

    Charlene Dill, a 32-year-old mother of three, collapsed and died on a stranger’s floor at the end of March. She was at an appointment to try to sell a vacuum cleaner, one of the three part-time jobs that she worked to try to make ends meet for her family. Her death was a result of a documented heart condition — and it could have been prevented.

    Dill was uninsured, and she went years without the care she needed to address her chronic conditions because she couldn’t afford it.

    Under the health reform law, which seeks to expand coverage to millions of low-income Americans, Dill wasn’t supposed to lack insurance. She was supposed to have access to a public health plan through the law’s expansion of the Medicaid program. But Dill, a Florida resident, is one of the millions of Americans living in a state that has refused to accept Obamacare’s Medicaid expansion after the Supreme Court ruled this provision to be optional. Those low-income people have been left in a coverage gap, making too much income to qualify for a public Medicaid plan but too little income to qualify for the federal subsidies to buy a plan on Obamacare’s private exchanges.


  31. The logical conclusion is that in most conservative states, there are more votes to be gained by “standing up to the federal gubmint” than by helping poor people.

    In sheer population numbers, there are far more poor adults than there are anti-federalist conservatives.

    But the pool of likely voters is apparently a lot different than the general population. Voter suppression laws just exaggerate this trend but did not cause it.