Next month, all eyes will be on the U.S. Supreme Court when it takes up the issue of whether the Affordable Care Act (ACA), commonly referred to as Obamacare, allows people in states without their own insurance market exchanges to receive federal tax credits that help them afford the health insurance they purchase through the federal exchange. While many in the national press will focus on whether this will or won’t be the law’s undoing, there is a more interesting story playing out this spring in state capitals across the country.
Chuck Graham; Feb. 24, 2015
The last time the court rendered a decision on the ACA, it decoupled a provision in the law that required states who accept any Medicaid funds also to participate fully in the implementation of the law – specifically it’s expansion of states’ Medicaid programs to serving those with incomes below 133 percent of poverty, or about $15,654 per year for a single person. The court left it up to states to decide if they would take the billions of dollars in additional tax revenue and expand Medicaid to millions of their own citizens. For the first three years of expansion, the federal government pays 100 percent of the expansion, and thereafter continues paying 90 percent, meaning that the State only has to come up with 10 percent of the costs to pull down billions of dollars in federal support.
For states, that’s a heck of a deal. If you look at federal highway dollars, states generally put up 20 percent match to pull down 80 percent from the feds. For Vocational Rehabilitation, the state-to-federal match is 21.3/78.7 percent. In the current Medicaid program, the federal government puts up at least 50 percent for all states, ranging in a multiplier of up to 74 percent for some like Mississippi. There is a myriad of other state-federal matching programs, and as a former state legislator and budget committee member, we always strived to fully fund our federal match programs to pull down the most federal money we could.
Each of these programs pales in comparison to the bargain for state governments to pull down 100 percent match for three years and 90 percent from here to eternity to provide health care to our poor and working poor, to keep open rural hospitals and clinics, and to bolster our overburdened safety net hospitals. After all, our own citizens have paid that money in federal taxes to the IRS and you would think that the majority of legislators would want to bring their own taxpayers’ money back to their states.
A majority of governors and state legislatures did exactly that. Twenty-eight states and the District of Columbia have taken advantage of this unprecedented federal revenue stream to date, expanding their Medicaid programs to insure as many of their citizens as they could. What do the others have in common? With the exceptions of Missouri and Virginia, all have Republican governors. However the Missouri and Virginia legislatures are controlled by the GOP.
Five years after the passage of the ACA, the partisan disdain is still so strong for the law that many Republicans can’t bring themselves to accept the tremendous financial benefits for the people they serve. Their fervent hope is that the law will be pulled out “root and branch,” as Senate Majority Leader Mitch McConnell, is fond of saying, in spite of the indisputable fact that the president will veto any such effort.
In the meantime, the states are taking a myriad of approaches to the issue. You might hear “reform”, “redesign” and other state-specific branding like “Healthy Indiana 2.0” and even the Wyoming Health Department’s creatively named “Strategy for Health, Access, Responsibility and Employment.” For many Republican governors, the lure of being able to patch their budget holes and create health care jobs is proving too much – so long as you don’t call it Obamacare.
Even as the dominos have predictably begun to fall in many conservative states eyeing billions of dollars of untouched revenue, pockets of resistance remain, and my home state of Missouri is one of those. The vast majority of Republican legislators believe that by just saying “no” they will somehow shrink the size of the federal budget deficit.
One of the vastly underreported aspects of the ACA is the elimination of what are called DSH payments. DSH, or Disproportionate Share Hospital, payments are huge federal payments to hospitals to reimburse them for the costs of uncompensated care they accrue by providing inpatient hospital and outpatient hospital services to the uninsured and underinsured. As the ACA was negotiated, the hospitals forfeited more than $100 billion in DSH payments in return for having everyone insured through Medicaid and private insurance (through the exchanges).
So what happens to them when a state says “no” to Medicaid expansion?
In Osceola, MO, a town of just 900 people, Sac Osage Hospital, employing 100 people, closed. Last year, two of Missouri’s 74 rural hospitals – including psychiatric, rehabilitation and Veterans hospitals – shut down. Statewide, approximately 1,800 hospital employees lost their jobs, according to the Missouri Hospital Association.
Of course, the local legislators are riding to the rescue to save those jobs, right? Wrong.
“Now the hospitals have brought some of this on themselves,” says State Sen. Ed Emery (R-Lamar). “A lot of it was what we call in the rural areas ‘betting on the come’: If you’ll do this, then we’ll promise you this, and those promises were not fulfillable. Now they want my constituents and taxpayers to bail them out, and I just don’t think that’s the right thing to do.”
Emery is among the majority of Missouri state senators who have held fast against Medicaid expansion because they say it will cost the state too much money and create too much reliance on government.
Enter former governor and U.S. Senator Kit Bond. Bond, a fixture in statewide politics going back to his election as state Auditor in 1970, is a well-respected conservative. As a reference point, Bond was one of only six U.S. senators to vote against the Americans with Disabilities Act in 1990.
Last year, the Missouri Chamber of Commerce, no bastion of liberalism, hired Bond to lobby the Missouri General Assembly to expand Medicaid. Why in the world would Kit Bond and the Missouri Chamber of Commerce want to help expand government-supported healthcare?
It’s the one word both parties talk about endlessly: jobs.
According to a study by the Missouri Economic Research and Information Center (MERIC), “Expansion of Medicaid eligibility for adults earning up to 138 percent of the federal poverty level is expected to inject $17.4 billion in new federal spending into Missouri’s economy from 2015 to 2022. Expanding Medicaid coverage would create a total of 23,868 jobs over the eight-year period, $9.9 billion in new wages, $14.6 billion in new gross state product , and $402 million in new state general revenue by the year 2022. The expansion would support the same number of jobs currently employed in Missouri’s real estate sector.”
Bond also asked them to consider the cost of inaction, including “how much money would come to Missouri that does not come here, how many health providers lose their jobs, how many needy people wind up in the emergency room to get primary care, which will drive up the cost of insurance that pays for the hospitals’ cost.”
As many other Republicans are doing, he even tried to put a state specific spin on it. “It’s a workable plan,” Bond said. “It protects the state budget and it provides the hardworking Missourians who are in the (coverage) gap with health care coverage and it allows us the chance to bring some sound principles” to managing Medicaid.
“It’s a Missouri solution,” he said. “This is the one opportunity to get some real reform in Medicaid. My good conservative friends and I have been talking about getting reform, because the system right now is not under control.”
But set aside the massive cost savings for a second. What about the jobs? What politician worth their salt wouldn’t do everything they could to attract 24,000 jobs to their state?
Near the end of last year’s session, as hopes were dashed in the Medicaid expansion effort, Bond reflected on his efforts: “At one point they were calling us Don Quixote, tilting at windmills, but the Don Quixote folks are making some strong points.”
“All we want is careful consideration by the members of the Senate on what happens to Missouri if this doesn’t pass, and what happens if it does.”
As the ACA is implemented and more states find new and creative ways to participate, perhaps his won’t be thought of as the one who was tilting at windmills.
Chuck Graham is a former Missouri state senator who served 12 years in the Missouri General Assembly and is a member of the National Advisory Board (NAB). Learn more about the NAB at www.myDFI.org.