Q&A examining Obamacare’s costs in dollars and politics in Pennsylvania

Morning Call (Allentown, PA)

Feb. 27-- Feb. 27--Gov. Tom Wolf expanded Medicaid health coverage under Obamacare four years ago this month.

The financial costs, human outcomes and political ramifications of Democrat Wolf's decision could come into play Wednesday when the state department that runs the program appears before the Republican-controlled Legislature to talk about the 2019-20 state budget.

The Senate Appropriations Committee, chaired by Sen. Pat Browne, R-Lehigh, will hold its Department of Health and Human Services budget hearing at 1:30 p.m Wednesday. The House's Appropriations Committee will have its hearing the next day.

Here's a refresher, in question and answer format, on the history of the law and Pennsylvania's place in it as lawmakers begin to examine related costs for the 2019-20 fiscal year that begins July 1.

Q: What is Medicaid, and how is it different from Medicare?

A: Medicaid and Medicare were signed into law in 1965 as part of the Social Security Act.

At its inception, Medicaid used federal and state tax dollars to provide health coverage to specific segments of low-income residents: elderly in nursing homes, disabled adults, pregnant women, poor children and some parents. By the early 1980s, all states had created their own Medicaid programs tailored to their eligible residents.

Medicare is a federal health insurance program for all residents 65 and older regardless of income.

Q: How does Obamacare fit into Medicaid?

A: President Barack Obama signed the Affordable Care Act into law on March 23, 2010. The ACA offered states the right to expand Medicaid or offer private, discounted insurance to poor, able-bodied residents who had no jobs or low-wage jobs. The law also precluded insurance companies from rejecting people based on pre-existing medical conditions they deemed too costly to cover.

To entice states to sign up, the law required the feds to pay 100 percent of expansion costs through 2016, then gradually drop to 90 percent by 2020. Aside from that financial carrot, the law carried a mandated stick: all residents were required to carry some form of health insurance or pay a penalty.

Q: Sounds political. Was it?

A: Oh yeah. States controlled by Democrats embraced the law. States with Republican attorneys general, including Tom Corbett in Pennsylvania, sued to block it. Private entities accused the Obama administration of a government overreach.

The law also served as a 2010 Election Day referendum on Democrats as Republicans swept into power in Congress and many states.

In Pennsylvania, Corbett became governor, Republicans regained control of the state House and the GOP deepened its control of the Senate.

In June 2012, the GOP-leaning U.S. Supreme Court upheld the ACA in a 5-4 decision, indirectly expanding health care access for the nation's 50 million uninsured adults, including 1.3 million in Pennsylvania.

Q: Did uninsured Pennsylvanians get coverage after the ruling?

A: No. Corbett, fearful of costs, opted not to sign up. He argued future presidents and Congress could not be trusted to live up to the law's 90-10 funding formula.

In 2013, Corbett's administration started devising its own health care plan that included a work requirement for coverage. In late summer 2014, his staff finished the plan, but months later Corbett lost re-election to Wolf, who quickly opted instead for expanding Medicaid. His decision opened health coverage to adults who fell between 100 and 400 percent of the federal poverty level (about $11,490 to $45,960 annually).

Q: Did people sign up?

A: In bunches. In the state's 2014-15 fiscal year, 486,725 residents joined, budget records show. The next year, enrollment went up 49 percent and has not dropped.

Last year, 34,357 residents in Lehigh and Northampton counties were covered by the Medicaid expansion, DHS records show.

DHS estimates 785,993 residents will enroll in Medicaid expansion next fiscal year, budget records show. That would be in addition to the nearly 2.19 million residents who make up Medicaid's traditional ranks.

"Through this coverage expansion ... our uninsured rate is down to 5.5 percent -- the lowest in Pennsylvania's history," DHS Secretary Teresa Miller said in a recent statement.

More people with insurance means the costs of uncompensated care dropped 30 percent to $761 million between 2014 and 2017 at Pennsylvania hospitals, according to the Pennsylvania Health Care Cost Containment Council, an independent agency that tracks health care costs.

Q: Yeah, but how much tax money goes to Medicaid in Pennsylvania?

A: Medicaid programs -- and there are a lot of them -- are estimated to cost $31.3 billion in federal and state dollars next fiscal year, the budget shows.

Those covered by ACA's expansion would account for 16 percent ($4.9 billion) of all program costs, records show. By comparison, the disabled and elderly, who make up part of the traditional group of enrollees, would account for 69 percent of all costs.

Q: How does the reduction in federal support affect state costs in 2019-20?

A: From July 1, when the state's fiscal year starts, through Dec. 31, the federal government will cover 93 percent of the costs. Next year (and thereafter) it drops to 90 percent.

That change, according to the House Democratic Appropriations Commmittee, will cost the state another $132.7 million for Medicaid expansion.

Still, the state experiences a net gain in health care costs for the poor, Ronni Burkhart, DHS's fiscal management director, said in an interview. Prior to 2015, she said, the state spent $600 million in state tax dollars on a "general assistance" health care program that mimicked Medicaid. After Wolf Wolf joined the ACA, that general assistance program -- and its costs -- disappeared.

If you assume the state is picking up the full 10 percent of the expansion costs in 2019-20, the state will spend $490 million, which is still less than the old state program.

Q: What about future politics and its impact on costs?

A: Medicaid now covers 1 in 5 Americans, according to the Kaiser Family Foundation.

That high rate has shifted the political debate, too. A majority of voters now embrace Obamacare, polls show, and Democrats used those sentiments to help take control of the U.S. House in the 2018 election. But President Donald Trump remains opposed to the law. So stay tuned for the 2020 election.

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