Medicaid expansion decision may affect businesses and consumers in a big way [Columbia Daily Tribune (MO)]

Sarah Miller didn't have steady work when she moved to Mid- Missouri in 2009, but a year and a half ago she decided to change that.

She started attending Metro Business College to get her medical assistant certification, and in February she landed a part-time job at Capitol Region Medical Center in Jefferson City, making about $200 a week.

PHOTO: Sarah Miller'sMedicaid coverage is set to laps... more [+] PHOTO: Linda Luebbering, state budget director, explai... more [+] PHOTO: Missouri Chamber of Commerce and Industry Presi... more [+]

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Now, Miller will be booted off Medicaid at the end of September.

The federal/state health insurance program helped her while she was pregnant with her daughter, Madilynn, now 2 years old. Miller is still young enough to be on her mother's health insurance, but when she needed emergency gall bladder surgery, Medicaid subsidized the high deductible that she couldn't afford. Although Capitol Region, part of University of Missouri Health Care, offers health insurance, she said the premiums would eat up too much of her paycheck to afford.

"I'm pretty worried because ... I'm looking for a place to rent right now, and if they drop me completely and my daughter, yeah, it's a pretty high priority," Miller said.

Miller's daughter probably won't be dropped from the program; Missouri covers children whose parents make up to three times the poverty level. But Miller, with her current pay, would still make above Missouri'sMedicaid eligibility threshold: 18 percent of the poverty line. For a family of two, that's $2,791 a year.

Missouri legislators, if they wanted to, could expand the safety net and keep Miller on Medicaid. In doing so, they would allow about 218,000 more Missourians to enroll in the program. It's a choice they didn't have until last summer, when the U.S. Supreme Court upheld the Affordable Care Act but allowed states to choose whether they would expand Medicaid.

The Republican legislature is balking, while state Democrats and the health care industry are fiercely lobbying for expansion. Even traditionally conservative groups such as the Missouri Chamber of Commerce are supporting expansion, saying it would be impractical to turn down federal support for expansion and the money it would pump into the state's economy.

The fight pits future costs to the state against present economic benefits, not to mention assisting a vulnerable population. Without expansion, some employers might have to pay more as health care mandates take effect next year, and hospitals stand to lose money as federal payments for charity care go down. Medicaid expansion would blunt that blow, especially for poor hospitals in rural parts of the state. The big systems, with hundreds of millions of dollars sitting in their fund balances, would be better able to absorb the hit.

Even if Medicaid is expanded, the question remains on whether it will expand access. Doctors already are hesitant to add Medicaid patients because of the program's low payment rates. Many low- income people already receive uncompensated care from hospitals, and if Medicaid doesn't expand access to primary care and other services, it could end up being just another pot of money paying for emergency room visits.

"That is definitely still a question, whether" Medicaid "reimbursement will be sufficient for those providers to continue seeing patients," said Akeiisa Coleman, a health policy associate at the Missouri Foundation for Health.

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The law envisioned all states would cover people up to 138 percent of poverty, or $21,403 for a family of two. Gov. Jay Nixon, joined by health care providers and their lobbyists, has called for Missouri to take the expansion. Proponents argue it's essentially free money for the state because the federal government will pay the entire cost of expansion for the next three years. In 2014, it's estimated to bring in more than $1.1 billion, and through 2020, the federal government would put more than $8.2 billion for Missouri'sMedicaid expansion into the economy, according to a study prepared by the University of Missouri School of Medicine for the Missouri Hospital Association and the Missouri Foundation for Health.

But Republicans who control the legislature have been unwilling to advance the expansion proposal, citing the future cost to the state. In 2017, Missouri will begin paying a portion of the costs, and by 2020, Missouri would be responsible for paying 10 percent of the cost of expansion, estimated at $119 million that year.

Proponents say the influx of money will boost the health care economy and ultimately pay those future bills through increased tax revenue. With a large portion of Mid-Missouri's economy reliant on health care, the Columbia Chamber of Commerce came out in support of Medicaid expansion.

"From a practical standpoint, Mid-Missouri, and particularly Columbia, is going to disproportionately benefit from those medical dollars coming into this community," said Steve Spellman, the co- chair of the Columbia chamber's government affairs committee. "Everything else being equal, it's more money for the state; it's more money for the health care industry."

Republicans counter that it's risky to trust the federal government to hold up its end of the bargain and keep the state's share of future payments at what it says it will be.

"What we're doing right now is balancing that against the bigger- picture issues of how much money is this going to take from public education to pay for this in the long term," said Sen. Kurt Schaefer, R-Columbia, who voted against expansion in committee. "It's not free money. It's money that the federal government is borrowing."

Traditional Republican allies, particularly the Missouri Chamber of Commerce, have urged the party to support expansion. "Missouri tax dollars are being shipped to D.C. to pay for this thing, so we might as well get as many of them back as possible," said Brendan Cossette, the Missouri chamber's director of legislative affairs.

Schaefer, though, said the influence of the hospital lobby and health care industry has influenced those groups' support. "The reason for that is all of those chambers have hospitals on their boards," he said.

The ground doesn't seem to be shifting in favor of expansion, said Rep. Chris Kelly, D-Columbia, and it's "inexplicable" that in communities like Columbia, legislators are opposed to expansion. "I haven't seen the support from where it should be," Kelly said. "We take a huge lick in our local economy."

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The reason that hospitals have been so vocal is that, no matter what decision is made on the issue, they are required to treat people who walk through their doors. The federal government reimburses them a portion of their costs through disproportionate share hospital, or DSH, payments. The health care law, envisioning that Medicaid would be expanded in all states, begins reducing those payments next year.

"DSH payments are being phased out, but the amount of people who are coming in to get care are not," Cossette said. "If we don't expand Medicaid to cover these folks, then hospitals and providers are going to be saddled with these costs, and they're going to have to pass them on somewhere."

That has been the line from the hospital lobby: Without Medicaid expansion, premiums for private insurance will go up to cover the increased cost of uncompensated care.

Jonathan Gruber, a Massachusetts Institute of Technology economics professor who helped craft the Affordable Care Act, said premiums for commercial insurance are expected to rise 5 percent to 15 percent in states that don't expand Medicaid. People between 100 percent and 138 percent of the poverty level might be able to buy insurance on the under-construction health exchanges because they will be eligible for a federal subsidy.

"The bigger issue is those below the poverty line," Gruber said at a health care journalism conference last week.

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Although consumers' wallets are affected, hospitals' bottom lines will be, too. The Missouri Hospital Association says its members will lose $6.3 billion over the next nine years in DSH payments and reductions in Medicare reimbursements that will take effect. Dave Dillon, a spokesman for the hospital lobby, said the 2013 budget for DSH payments was about $780 million for hospitals in the state.

Although hospitals say Medicaid doesn't even cover the cost of care, they say it's better than nothing. Without it, hospitals are in danger of closing, said Mitch Wasden, CEO of MU Health Care.

"It's really probably hard for the public to appreciate those kinds of cuts until they see the effects of them, until they see hospitals close and things," he said.

That might be true for smaller, rural hospitals. Audrain Medical Center, for instance, had run a deficit for several years. But it was acquired recently by SSM, a much larger health system, as part of a trend that is occurring with small hospitals across the state.

The large hospital systems are in a better position to absorb the cuts. For instance, BJC Healthcare, which operates Boone Hospital Center, made $339.9 million more in revenue than it spent in 2011. The year before that it made $269.4 million in profit. In 2011, it spent $154.3 million on charity care, $65.7 million of which was reimbursed, according to its most recent 990 form filed with the Internal Revenue Service. It was sitting on $3.3 billion in net assets, including $2.2 billion in publicly traded securities.

Jacob Luecke, spokesman for Boone Hospital, did not make an administrator available for an interview. Luecke said there were no estimates for DSH payment cuts at Boone Hospital. Messages left with interim President Randy Morrow's office were not returned.

At MU Health Care, Wasden said the hospital is expecting a reduction of $5 million to $6 million in DSH payments next year. Another $2 million in reduced Medicare payments are expected.

MU Health Care, too, is sitting on a pile of cash. Its fiscal 2013 budget assumes $682 million in revenue and $624 million in expenditures. However, after debt service of $24 million and voluntary capital investments in its facilities of $40 million, it actually ends up spending more than it would make. Still, the system would end fiscal 2013 with a $330.7 million fund balance.

Plus, hospitals haven't been talking about the increased revenue they would receive from an expanded pool of commercial insurance once insurance companies can no longer bar people with pre-existing conditions from obtaining coverage, and the exchanges open up.

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Whether Medicaid expansion would improve health for poor people or just soften the blow to hospitals' pockets is up in the air. Many doctors don't even take Medicaid, and even though its reimbursements have been increased to Medicare rates for two years, no one knows if they will stay that way. If people can't get care before they go to a hospital, not much will change.

"A lot of physicians have no choice, as a matter of practice, to limit how many Medicaid patients they see," said Tom Holloway, executive vice president of the Missouri State Medical Association.

His group, which represents doctors, is supporting expansion in the hope that payments can be "reformed," he said. Reform, in this context, means increased reimbursement rates.

"I have to presume that if the rates got acceptable, there would be more private providers interested in serving that population," said Gloria Crull, CEO of the Family Health Center of Boone County.

Her organization is one of the few that does, but it receives federal grants to help cover the cost. Medicaid helps it expand its resources for care, and like hospitals, she expects federal assistance to provide charity care to decrease as many states adopt Medicaid expansion. If that happens and Medicaid isn't expanded, it's more people getting sick and going to hospitals, which taxpayers and people with insurance end up paying for anyway.

"It's kind of a fluid environment right now," Wasden said. "The problem is the authors of the ACA didn't anticipate a scenario in which states did not expand Medicaid. That was not an option."

This article was published in the edition of the Columbia Daily Tribune with the headline "LOOMING QUESTIONS: Medicaid expansion decision may affect businesses and consumers in a big way."

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