For the Monitor
Sunday, January 24, 2016
As New Hampshire’s Legislature kicks off, there is probably no issue of greater significance for the state than the future of its Medicaid expansion. More than 46,000 people are now enrolled in the New Hampshire Health Protection Program, our Medicaid expansion.
It is estimated that by the end of the year, 58,000 New Hampshire residents will have coverage. That is a major chunk of low-income residents who were previously uninsured. It is not an overstatement to say that before the Medicaid expansion, these folks often could not get inside any doctor’s office.
The Legislature now has to decide whether to continue the Medicaid expansion. The program sunsets on Dec. 31. Without reauthorization, it dies and all those who became medically insured would become uninsured again. The state would also lose an enormous amount of federal money: hundreds of millions of dollars per year moving forward.
So far, New Hampshire has taken quite an independent path in crafting a Medicaid expansion that fits our state. The state has used federal funds to offer private sector health coverage to lower income, uninsured residents. This New Hampshire-specific approach is not the conventional way and it required a federal waiver.
Medicaid is a joint federal-state partnership and all states with a Medicaid program must abide by federal guidelines administered by the Center on Medicare and Medicaid Services known as CMS. At the same time, federal rules allow some freedom for states to tinker as long as the federal government ultimately approves the plan.
I think it is fair to say that early reports have found our Medicaid expansion highly successful. Besides the thousands who were previously uninsured and became insured, there has been a noticeable decrease in uncompensated care for health care providers. A study by the New Hampshire Hospital Association has shown a marked reduction in uninsured inpatient, outpatient and emergency room visits.
Less uncompensated care also reduces pressure for health insurance premium increases – not just for families and individuals but for businesses. This is an under-appreciated fringe benefit, and one significant reason that New Hampshire’s business community supports extending Medicaid expansion.
Simply put, the Medicaid expansion is a win-win. Providers get paid and consumers get coverage. Considering the mental health and opioid crisis in our state, this coverage could not be more timely. Medicaid coverage is an essential tool in these fights. It provides access to care so desperately needed for many facing addiction and mental health traumas.
A good deal
Up until now, the Medicaid expansion has been paid for 100 percent by federal dollars. New Hampshire has not had to pony up any financial contribution, which has been a phenomenal deal for the state.
Looking to the future, where things start getting sticky is the funding formula that includes a state contribution in dollars. After the first three years of the expansion, the state is obligated to kick in a small percentage of the cost. In 2017, the federal government will pay 95 percent of the cost; in 2018 94 percent; in 2019 93 percent; and in 2020 and beyond 90 percent. The feds never pay less than 90 percent of the total cost. So next year the state would have to pay 5 percent of the cost and it would gradually go up to 10 percent by 2020.
For perspective, in 2017 and in return for a $25 million state contribution, New Hampshire’s Medicaid expansion is projected to bring $475 million in federal funds back home, to circulate in our economy in beneficial ways.
This is still a wonderful deal for our state. We will be receiving a very great benefit at a small fraction of the cost in state dollars. There is a weird irony in those who profess personal responsibility also wanting the state to get a free ride from the federal government on a program that provides so much benefit to New Hampshire. Doesn’t personal responsibility imply that our state pay some cost? We have skin in the game.
Not surprisingly, Republicans and Democrats have some different ideas about what the future Medicaid expansion should look like. Two bills, HB 1696, a Republican bill, and HB 1690, a Democratic bill, have been introduced and assigned to the House Health and Human Services Committee.
I will touch on some of the bill differences.
The Republicans favor a 4-year, time-limited Medicaid expansion with a new sunset date of Dec. 31, 2020. The Democrats propose to make the Medicaid expansion permanent.
The Republicans are advocating for low-income enrollees to pay premiums. Enrollees with incomes from 100 percent to 138 percent of the federal poverty level (that is $11,000 to $16,000 a year for an individual, and from $24,000 to $33,000 a year for a family of four) would pay $25 per month. Enrollees with incomes from 0 percent to 100 percent of the federal poverty level (up to $11,000 a year for an individual and up to $24,000 a year for a family of four) would pay $10 per month. The suggested premiums are higher than any, to date, that have been allowed by the federal government.
The Republican bill also contains a termination and lockout provision for any enrollee who fails to make premium payments within 60 days of when it is due. Those unable to pay the premium would face a 6-month lockout where they could not re-enroll. As applied to all enrollees, the proposed penalty design is more severe than any that CMS has ever allowed.
The Republican bill also imposes work requirements on Medicaid recipients. While there is legitimate room for policy discussion about the merits of such a proposal for able-bodied persons not caring for children or ailing family members, the reality is that federal law does not allow such a requirement and CMS has never approved a state waiver proposal that includes it.
The Democratic bill contains none of these provisions.
Republican red meat?
It remains unclear if the federal government, through CMS, would grant a waiver with the type of provisions that appear in the Republican bill. They impose conditions that are more stringent than have been previously allowed by CMS.
A question emerges: Would the Republican leadership in the State House and Senate be willing to sacrifice the entire Medicaid expansion if what appears to be a pet ideological laundry list is not okayed by the federal government? It is not clear if the Republican leadership, in an election year, is simply throwing red meat at its right-wing base or if it intends to use the additional preconditions as justification for scuttling the expansion.
It is significant that the Republicans have not pointed out what is wrong with the expansion as it currently functions.
One observation I would make about the Republican bill: It does not recognize the degree of poverty poor people face. The overriding brutal fact of life for people living at or close to the federal poverty level is lack of income, which leads to choices about what bills get paid. Basic necessities like housing, utilities and food can reduce available cash to zero. Other costs like child care or transportation are necessary for employment. If money is short, preventing homelessness or repairing one’s car to get to and from work is likely a higher value than paying medical premiums.
Experience has shown that low-income people are very sensitive to even nominal increases in medical out-of-pocket costs. There is a wealth of research supporting that conclusion. I would cite the Kaiser Commission on Medicaid and the Uninsured. In February 2013, the commission produced an overview of research findings relative to premiums and cost-sharing in Medicaid. The Kaiser Commission concluded that premiums act as a barrier to obtaining and maintaining coverage for low-income populations. It is common for premiums to result in coverage loss and the elimination of access to needed care, leading to adverse health consequences.
State savings from cost-sharing and premiums are due more to eligible people dropping or declining coverage than to increases in state revenue. Significantly, early results from states charging premiums to Medicaid expansion enrollees indicate that the administrative cost of collection exceeds any money actually realized from the premiums.
One would hope the Republican leadership would familiarize itself with the substantive research showing why premiums in Medicaid are generally seen as a failure. Their current bill appears to be more rooted in political posturing than evidence-based public policy.
No doubt party positions will evolve as the legislative session unfolds. Recognizing the paramount importance of maintaining the Medicaid expansion, I, for one, hope the parties can reach a fair compromise. The Medicaid expansion, which helps so many, deserves better than to be reduced to a political game.
(Jonathan P. Baird of Wilmot works at the Social Security Administration. His column reflects his own views and not those of his employer.)