Like everything else in an election year, it depends whom you ask
No matter who wins the presidential election in November, state decisions about Medicaid expansion under the Affordable Care Act (ACA) will remain firmly in state hands. But which hands? There are governors and there are state legislatures. Sometimes, they agree on their decision - pro or con - but often they do not.
While there appears to be a distinctly political, anti-Obamacare sentiment among many opponents, some opposition is also quite practical in nature. Some states are so different, so limited, or so far behind others in the ways that they manage Medicaid benefits and limits today that they can see thatexpandingMedicaidpertheACA - even with the federal government footing nearly all of the bill - will be a major undertaking.
And, while opponents continue to make short-term political hay with like-minded voters, state behavioral health directors know that there's no way for governors, legislators, or voters to avoid the consequences of a state's decision about expansion for long. States that support expansion will take on a new set of responsibilities and resources, with the goal of creating a nearly even level of Medicaid support across like-minded states.
States who oppose the expansion will face more of the status quo: Poor citizens with untreated medical, mental health, and substance use disorders will get some care, but much of it in the least appropriate and most expensive settings. They will continue to find care as they do (or do not) today: in crowded hospital emergency departments, repeated short-term psychiatric hospital admissions, or through costly cycles of homelessness, arrest, trial, and incarceration.
This much is clear: the states which already have extremely low Medicaid coverage are the ones in which the governors are rejecting expansion outright: Mississippi, Florida, South Carolina, Louisiana, and Texas. Many other states have governors and legislatures that are not sure, waiting to see what will happen, and who will emerge victorious as national and state leaders after November's elections.
Why are states hesitating to decide?
The Supreme Court ruling upheld the individual mandate of the ACA. That is requirement that all citizens who make more than 1 33 percent of the federal poverty level (FPL) must purchase health insurance coverage. But, it also gave states the option to refuse the other key portion of the ACA bargain: the Medicaid expansion.
Essentially, the expansion would ask all states to expand the scope of their Medicaid programs from their current income/qualification levels to encompass all citizens who earn up to 133 percent of the FPL. For the first time, this would create a roughly equal level of benefits across participating states and include even those without dependent children - a population that is often uninsured and excluded from traditional state Medicaid programs. (Figure 1)
Why would states turn down a 100 percent contribution from the federal government to expand healthcare through 2016 - and 90 percent thereafter?
Reason 1: Fear. The most generous interpretation is that some governors are concerned about their states being trapped by cost increases, enrollment increases, or the inability of the federal government to live up to its end of the bargain. Kathleen Sebelius, Secretary of the Department of Health and Human Services, addressed those fears early in August when she assured states that they could delay their entry into or drop out of Medicaid expansion whenever they wish.
In the text of a communiqué from the H HS press office to Behavioral Healthcare, Sebelius said: "The expansion of Medicaid eligibility to low-income adults as provided in the Affordable Care Act is voluntary for states. A state may choose whether and when to expand, and, if a state covers the expansion group, it may decide later to drop the coverage. The federal financial support for this coverage established under the Affordable Care Act is 100 percent in 2014, 2015 and 2016, and no less than 90 percent thereafter."
Reason 2: Concern for enrollment growth. Another consideration may be the impact on the state, based on the sheer number of new i ndividua Is to be served and their related fianncial impact. To explore these considerations, Behavioral Healthcare sought out numbers on the "absolute" impact of both enrollment growth (Figure 2) and state spending growth (Figure 3) associated with the Medicaid expansion in the period 2014-19.
The percentages make clear that enrollment increases in many states will have a significant impact, both systemically and on providers. Providers will, presumably, be seeing more people and, for the first time, there will be incentives for "seeing" them in preventive/primary care settings instead of high-cost emergency room, hospital, or criminal-justice settings.
States that face the largest Medicaid expansion efforts will also see hefty increases in state costs, despite the 90 percent long-term federal match. However, these increases in state costs will not top five percent of baseline Medicaid spending in 2011 (Figure 3) for even the top 10 states by enrollment growth. But, it will occur in what is, for nearly all states, the largest and fastest growing element in their budgets.
Reason 3: Politics. A less generous interpretation of state opposition to the Medicaid Expansion is more ugly: politics. Some Republican governors need to show that they oppose health care reform for partisan reasons. Democratic governors in conservative states are feeling the same pressure.
More numbers behind the expansion
Under the ACA, 30 million uninsured people will gain health insurance. Joel Miller, senior director for policy of the National Association of State Mental Health Program Directors (NASMHPD), said onethird of these - 1 1-12 million people - will have a behavioral health condition. For these, some 60 percent of new behavioral health care costs resulting from the ACA will be covered through the expansion of Medicaid, and about 40 percent will be covered by insurance purchased through the exchanges.
"We know that some of the states are concerned that if they do participate in the expansion that other residents will come out of the woodwork," said Miller. "They think their healthcare systems don't have the capacity to treat these people."
"The rhetoric is that they can't handle the costs," he added. "But a lot of people with no coverage end up in the emergency room, or get readmitted, so hospitals see their uncompensated care costs go up."
Unfortunately, said Miller, many people with a serious mental illness, even though they are eligible for Medicaid, are not enrolled, and end up "going through the criminal justice system, getting uncoordinated care, or homeless."
"It would be penny-wise and poundfoolish not to opt in for Medicaid expansion," said Miller. It's a good bet that NASMHPD members agree, but few of these state behavioral health directors would speak to Behavioral Healthcare on the issue, presumably because the issue has placed so many of their bosses - state governors - on the hotseat.
One state's plan for the expansion
One, however, did step forward: Brian M. Hepburn, M.D., executive director of the Mental Hygiene Administration of the Maryland Department of Health and Mental Hygiene.
He said that Maryland is already well on its way to expanding Medicaid, and is way ahead of the naysaying states in covering people for behavioral health problems. He suggested that Maryland could well be a model for states to follow.
"Most persons with serious mental illness are already covered for their mental health treatment through programs for the uninsured if they do not qualify for Medicaid or have other insurance," Hepburn said. However, he added, they don't have coverage for physical problems so Medicaid expansion will be very beneficial for them.
"This will enable individuals to get the needed services for their substance use and for their physical problems," said Hepburn. "We are anticipating that the expansion population will have less severe mental health issues but more severe substance use problems."
Currently, the state's mental health benefit is through a carve-out, with mental health services paid through Value Options on a fee-for-service basis. This is a full-service benefits package which includes inpatient and outpatient treatment, and rehabilitation. Of the individuals getting services, 45 percent are under age 21. Substance abuse treatment is not carved out, but delivered by HealthChoice managed care organizations. The benefits package only covers inpatient treatment for detoxification.
Under the Medicaid expansion, the benefits package will be similar but with more flexibility in the use of technology, such as telemedicine. That may be necessary in order to accommodate the increase in demand, Hepburn said. There will be increased efforts to make people aware of their eligibility and to get them enrolled.
"We are expecting a decrease in costs for those persons currently getting services paid for with only state dollars but who are eligible for Medicaid under the expansion," said Hepburn. "We are being cautious because there are services that are needed for recovery that are not covered by Medicaid, such as housing and supported employment."
Gov. Martin O'Malley and Joshua M. Sharfstein, M.D., Secretary of the Department of Health and Mental Hygiene, have no political problems with Medicaid expansion. "They want Maryland to be one of the first states to comply with the ACA," Hepburn said. "We've moved ahead with the health insurance exchange."
Too good to pass up?
Like all behavioral healthcare advocates, Hepburn finds Medicaid expansion under the ACA to be an obviously good deal - too good to pass up, even if only on fiscal grounds. "The fact that the federal government is paying almost 100 percent of the costs, especially considering the problems states have had since 2008 with the recession, makes it pretty hard to object to Medicaid expansion, unless the objection is politically motivated," said Hepburn.
Indeed, it can be argued that the states with the worst current Medicaid programs stand to gain the most through the Medicaid expansion, while states with more comprehensive Medicaid programs stand to gain relatively less. Hepburn notes that Maryland will have gone so far toward expanding Medicaid by 2014 that its federal share for expansion will be relatively small. Through its adult care waiver, the state has, essentially, been moving ahead with its own Medicaid expansion for many years. And, it has done so with its usual federal Medicaid match - just 50 percent.
"I can't believe that states will leave 100 percent federal funding on the table," said Hepburn. "Many of those states are having big time trouble financially right now. To say that they're afraid of what's going to happen down the road - well, right now what's happening is that people who are uninsured are using high-cost services - emergency rooms and inpatient services." The uninsured have been a significant cost driver, he said.
"The federal government is offering a deal," said Hepburn. "I understand politics. But I cannot imagine, once the election is over with, and the politics are over with, that the states are going to leave those dollars on the table."
And Hepburn noted that expanding Medicaid has the potential for people to have improvement in the quality of their lives. "It's very sad that this has become political."
The costs of opting out
The Congressional Budget Office (CBO), after the SupremeCourt decision, estimated that 6 million fewer individuals will be covered by Medicaid expansion because of the states' ability to opt out.4 However, because 3 million will be able to receive coverage through an insurance exchange, the total reduction in Medicaid coverage will be a net of 3 million people, according to the CBO.
The CBO also looked at the impact of repealing the ACA at the request of House Speaker John Boehner (R-Ohio), and found that repeal would increase the deficit by $109 billion through 2022, The New York Times reported July 24.
One of the most negative impacts of opting out would be to the hospitals, who have to absorb the costs of uncompensated care. In the July report, the CBO wrote: "Pressure to expand Medicaid coverage is also likely to come from health care providers that stand to gain when more people have coverage. In particular, hospitals that will receive smaller disproportionate share payments from Medicaid under the (Affordable Care Act) may exert pressure on states to make up for those losses by expanding Medicaid eligibility."
"Disproportionate share payments" - payments made to states because of so much unreimbursed care delivered in hospitals - would be cut under the ACA. According to the CBO, this would be a savings of more than $22 billion between 2014 and 2022. These cuts would be distributed among states based on various factors.
Unlike the state insurance exchanges, which have a deadline for being set up - the federal government will step in and set them up if states don't - there is no deadline for deciding whether to opt in to Medicaid expansion. The CBO's estimate said states would spend overall about 2.8 percent more on Medicaid from 2014 to 2022 with expansion. The law also requires states to raise Medicaid fees to providers.
The majority of Americans - 67 percent according to a poll last month by the Kaiser Family Foundation - support Medicaid expansion.
FL In Florida, where Governor Rick cott has been an outspoken critic of Medicaid Expansion, The Associated Press reported that if the state decides against expansion, it would save just $3.9 million in the next budget year but forego $2.1 billion in federal expansion funds along with coverage for 801 ,000 more people. Should the state reverse its decision, it would pay just $487 million for Medicaid expansion up to FY 2020-21, while the federal government would pay $4.2 billion of the tab.
UT In Utah, there is more indecision. Gov. Gary Herbert, an "unabashed supporter of Governor Romney," told the Deserei News that he wants to wait until after the election before deciding whether to expand Medicaid. Calling it the "budget buster of all budget busters," he said Medicaid has grown from 9 percent of the state budget to 21 .8 percent in the past 10 years.
"If Utah's budget is stretched short, don't blame Medicaid," Allison Rowland, the Voices for Utah Children director of research and budget told the Deserei News. "Only 8 percent of state resources go to Medicaid, and Utah receives two additional dollars on average for each one it spends." She says that Medicaid did its job, spending 1 8 percent less per enrollee than in 2007, before the recession, while covering 1 08,000 more residents.
TX Gov. Rick Perry of Texas is one of a handful of Republican governors who has rejected Medicaid expansion outright. According to the Center for Public Policy Priorities, implementing the Medicaid expansion in the state would increase the rolls by 1 .5 to 2 million people3- a substantial number in a state whose current Medicaid population already represents 7 percent of recipients nationwide. The legislature will make the final decision when it convenes in January.
OH In Ohio, 1 million people could be added to the state's Medicaid rolls if GOP Gov. John Kasich and Lt. Gov. Mary Taylor opt in, but they too are awaiting November's election results. Democratic majorities in the state's more urban counties strongly support the expansionand Obama's reelection. However, GOP majorities in suburban and rural counties make Ohio's election results too close to call. If Obama wins, Kasich- a pragmatist- will likely lead the effort to opt in.
MO In Missouri, Medicaid expansion would add coverage for more than 300,000 residents, but the legislature in this conservative state could well prevent the initiative. The federal government would pay $8.4 billion for a Medicaid expansion in Missouri through 2019, leaving the state to pay $431 million for the same period through 2019.
NV In a Las Vegas Sun News column, J. Patrick Coolican called Medicaid expansion in Nevada a "no-brainer." Medicaid covers just 12 percent of Nevada adults, the lowest in the country, according to the Kaiser Family Foundation. Expansion would add 72,000 Nevadans to the current 309,000 enrólleos by 2022. "Expanding Medicaid is the humane and prudent policy choice, so I'm sure we won't do it," Coolican concluded cynically.
OK Oklahoma, Medicaid expansion could save $47.8 million a year - almost all in mental health. Carter Kimble, spokesman for the Oklahoma Health Care Authority, told the Tulsa World that Medicaid expansion would save $34 million for the Department of Mental Health and Substance Abuse Services, $1 1 .2 million for the Corrections Department, and $2.4 miiiion for the state Health Department. Oklahoma has more than 503,000 uninsured adults; 200,000 of them would be newly eligible for Medicaid under the expansion. Gov. Mary Fallin said that the state would decide after the November election.
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1,2 Data sourced from: Holohan J, and Headen I. "Medicaid Coverage and Spending in Health Reform." May 2010. Viewed 8/27/12 at www.statehealthfacts.org/comparereport. jsp?rep=68&cat=17.
3 Angeles J. "How Health Reform's Medicaid Expansion will Impact State Budgets." Revised July 25, 2012. Viewed at http://www.cbpp.org/ cms/index.cfm ?fa= vicw& id=380 1
4 "Estimates forthc Insurance Coverage Provisions of the Affordable Care Act Updated forthe Recent Supreme Court Decision." The Congressional Budget Office. July 24, 2012. Viewed 8/10/2012atwww.cbo.gov/publication/43472.