NTF Issue Paper: legwatch162.doc. 6-18.

Angry and frustrated after 6 years of failure to overcome conservative opposition and pass Obama Care Medicaid expansion through the Legislature, leftists organized and began an initiative petition drive. Cynically titled “Insure the Good Life,” leftists and socialists are collecting signatures to place Medicaid expansion on the November, 2018 ballot. They must collect 85,000 valid signatures by July 5. If this petition wins ballot access, voters will have a choice to place 90,000 additional Nebraskans on Medicaid welfare. Expanding Medicaid coverage was a key ingredient of Obama Care, the original law forcing state Medicaid programs to extend coverage to everyone who earned up to 138% of the federal poverty level or lose federal funding, an unfunded mandate later made optional by a June, 2012 U.S. Supreme Court ruling.

A coalition of leftwing groups like Civic Nebraska and NE Appleseed and several liberal senators push this petition drive. The key driver is Sen. Adam Morfeld, who consistently has failed to convince a majority of state senators to expand Medicaid. Most of the funding comes from The Fairness Project in Washington, D.C., a leftist group supported by Big Labor. The group contributed $338,164 in cash and in-kind logistical support, 93% of the total effort as of the end of April. This organization greatly assisted the successful Maine effort to expand Medicaid. The Nebraska Hospital Association whines that hospitals face financial squeezing from $11.3 billion in Medicare cuts, so they yearn for expanded funding from Medicaid, thus shifting costs to us taxpayers.

Although expanded Medicaid would offer health care coverage to more people, most of these citizens could access adequate health care with private market options if allowed by the Legislature. This expansion would cover healthy Nebraskans who could well afford to pay their own insurance premiums. Originators designed Medicaid to assist only the very poor and vulnerable. The petition plan does not cover additional elderly or those with disabilities; it expands eligibility only to able-bodied adults who can work, most of whom have no dependent children and who never have become eligible for other welfare benefits like food stamps and cash assistance. Our most needy and vulnerable citizens already lie at risk in a torn Medicaid safety net, with its fragmented care, access to quality care low, and healthy outcomes questionable. Because physician and hospital providers have greater financial incentives with higher rates to prioritize healthy adults, our most vulnerable will suffer more access barriers. Adding 90,000 more to Medicaid will increase demand for services but not increase the supply of medical providers. Expanded Medicaid will have no incentives for personal responsibility or cost-consciousness among users compared to our traditional Medicaid program, which allows providers to charge patients small copayments when receiving care. Expanded Medicaid will force the state to cover almost all copayments, coinsurance, deductibles, and all out of pocket expenses. The sole copayment charged is a nominal payment for unnecessary emergency room usage. New enrollees will have no responsibility to pay premiums or use incentives to select cheaper plans and probably engage in inappropriate utilization of health care services. Proponents contend that expanded Medicaid would reduce uncompensated charity care, especially at hospitals. Maine found that, though it totaled charity hospital care of about $40 million annually beginning in 2000, by 2011, these costs had risen to $196 million. The cost shift to private insurance increased in Arizona after expanding Medicaid to childless couples. Hospitals there found their uncompensated care costs rising by 9% yearly. Meanwhile, the numbers of uninsured remain static, and more shift from private insurance to expanded Medicaid to save their money. Economists argue that NE Medicaid expansion will mostly shift citizens from private to public insurance instead of reducing those without insurance. Because Medicaid reimburses both physicians and hospitals less than private insurers, hospitals will see revenues decrease for those who previously held private policies. Nebraska Medicaid expansion plans will prove more expensive and create budget instability in the future. The state does not set multi-year contracts with capitalized rates through the competitive bidding process under the expansion plan. Instead, it pays both premiums for enrollees and additional subsidies to insurers to cover deductibles, coinsurance, copayments and other out-of-pocket costs, depending on actual utilization. NE has no negotiating leverage with the plan and no predictability of future premium increases. Thus, the state would trade away all leverage it has and instead tie its annual budget to the ultimate success of new regulations and its insurance exchange pool. Nebraska must provide all regular Medicaid benefits to the expansion group, so it could not reduce costs by providing a more limited benefit package. Actuaries providing information to the Nebraska HHS Dept. predict that the expansion plan will cost $1 billion more than traditional Medicaid expansion and $3.5 billion more than not expanding Medicaid at all through 2020. These actuaries predict that delivering Medicaid benefits through expansion will cost an average of $6,192 per resident, that cost rising to $9,096 by 2020. The Congressional Budget Office previously estimated that expansion will cost about 50% more than traditional Medicaid. After Arizona expanded Medicaid eligibility to childless adults through managed care, it quickly discovered that the expansion cost 4 times initial projections. When granting approval for possible cost-cutting waivers, the federal government generally requires that the waiver does not cost federal taxpayers more than what they would otherwise pay, meaning Nebraska would need to prove that its plan would be no more expensive than a traditional Medicaid expansion. Without such proof, our state would become responsible for costs above what the traditional expansion would otherwise cost. Federal law classifies the expansion population as a new “mandatory population” for states that opt into the expansion. This authorizes the federal government to take away all federal Medicaid funds, if a state tightens eligibility for that group. This means that accepting the federal government enhanced matching rate could tie Nebraska to Medicaid expansion permanently, even if Congress later shifted more costs to the states. It is unlikely state senators later would repeal eligibility for an entitlement, removing thousands of expansion enrollees from Medicaid. States that previously have expanded Medicaid have had little success deleting numbers, even after facing severe budget crises.

Proponents promise hundreds of millions in federal Medicaid aid, however, these millions not guaranteed, and the Trump Administration is cutting grants to states. The federal government already faces more than $17 trillion in debt, with Medicaid and other entitlement costs expected to drive skyrocketing federal spending in coming years. Congress has the power to arbitrarily change its enhanced funding rates at any time. A trustee President Obama appointed to oversee Medicaid declared it is a “near certainty” that federal support for Medicaid will decrease in future years. Because the feds already recalculated the NE Medicaid match rate, now an additional $75 million that the state must pay to maintain our existing Medicaid program. Therefore, millions in additional costs would bust the state budget and steal funding from education, infrastructure, and other basic state services. History frequently has shown that the federal government makes promises of funding and then scales back its commitment. A most recent example is the fed decision to end its financial commitment to Co-Opportunity Health, a consumer operated and oriented plan which provided private health insurance coverage to thousands of Nebraskans. Co-Opportunity started as part of an Obama Care initiative partially funded with federal dollars. At the end of 2014, the feds abandoned its commitment to Co-Opportunity, leaving it insolvent and policyholders scrambling to find new coverage. As Washington failed with Co-Opportunity, it is foolish to depend on long-term funding for expanding our Medicaid program in Nebraska.

Medicaid means to offer affordable health care for the truly vulnerable. State Senators should focus on long-term free market solutions to meet these objectives instead of accepting Obama Care socialist health care expansion. See the NTF issue paper on free market alternatives.

Based on experiences in other states, Medicaid expansion enrollees do not attain better health, suffering worse outcomes compared to similar patients not on Medicaid. Medicaid patients running to the emergency room did not decrease, causing a surge in expensive ER use in these states. Medicaid expansion causes adults to replace their private insurance with Medicaid, thereby contracting the private marketplace pool. A recent analysis predicted that up to 45,000 Nebraskans who currently pay for private health insurance would trade their coverage for Medicaid under the proposed expansion.  Most states that expanded Medicaid see much larger enrollments and expenditures than expected. It already consumes over 25% of all state spending.(National Association of State Budget Officers: http://www.nasbo.org/sites/default/files/State%20Expenditure%20Report%20%28Fiscal%202012-2014%29S.pdf) This petition would add a $158 million burden to our state budget and make property tax relief impossible. NE Medicaid already eats $1.8 billion of the total budget to serve about 238,000 each year. One comprehensive study found that expanding Medicaid to healthy adults reduced employment and earnings among them.(The Foundation of Government Accountability. http://www.thefga.org/research/work-requirements-work-well-for-welfare-reform/)

Taking money from taxpayers and giving it to another group of individuals through an expensive entitlement program does not result in real or sustainable economic development, especially when free market alternatives appear readily available. Expanding Medicaid will not result in the tax relief and good-paying jobs we need to advance Nebraska for the next generation. Urge everyone you know to NOT sign the Medicaid expansion petition. If the petition unfortunately wins ballot access, help NTF campaign against it before November and urge your state senator to propose additional private sector insurance options for uninsured Nebraskans.

Research, documentation, and analysis for this issue paper done by Nebraska Taxpayers for Freedom. This material copyrighted by Nebraska Taxpayers for Freedom, with express prior permission granted for its use by other groups in the NE Conservative Coalition Network. 6-18. C

From Sean Davis, The Federalist, 2018.
Medicaid expansion could increase the cost of private health care.

Many hospitals and health care providers shift their costs of treating Medicaid patients to those with private health insurance. This is because health providers are paid less per Medicaid patient treated than they are generally paid per privately insured patient (many hospitals lose money treating Medicaid patients). To make ends meet, hospitals will often charge higher rates from private insurance plans in order to make up the difference. As a result, expanding Medicaid could actually make quality private health care less affordable.

Expanding Medicaid could force states to reduce funding for education, increase state tuition, or cut transportation funding.

Today, Medicaid consumes about one in four dollars of an average state’s budget. Even with the president’s non-binding promise of Uncle Sam paying for much of the expansion under the president’s health care law, non-partisan experts agree that Medicaid expansion will increase costs to states. Experts warn these increased costs will threaten other important state budget priorities like spending on education, roads and bridges, and state prisons. As the Medicare actuary warned, “Should these trends continue as projected…Medicaid’s share of both Federal and State budgets would continue to expand absent other changes to the program, budget expenditures, or budget revenues.”

Expanding Medicaid could force states to increase taxes.

As Medicaid costs balloon, states could avoid those massive programmatic cuts to non-Medicaid programs, but the solution wouldn’t be any better: States could always raise taxes. If state and local politicians decided that cuts to other programs were too much to bear, they could turn instead to the geese that keep on laying golden eggs: hard-working taxpayers. Or they could do both, and cut programs and raise taxes to pay for the Medicaid expansion.

Obamacare repeal becomes harder and harder as more people pile into Medicaid.

This is likely one of the few areas of agreement between Obamacare’s boosters and its opponents. It’s one reason why the president has pushed governors and state legislatures to adopt Medicaid expansion. As the Medicare rolls increase, so, too, do the number of people who could lose coverage under a vanilla Obamacare repeal. “Why do you want to steal health insurance away from these low-income families?” the Left will ask, full of faux outrage.

Obamacare’s Medicaid expansion is financed with $1 trillion in tax hikes and $700 billion in cuts to Medicare.

Contrary to politicians like Ohio Gov. John Kasich, who claimed that money would be “left on the table” if Ohio refused to expand Medicaid, there is no pot of money sitting around just waiting to be used. Obamacare’s Medicaid expansion is paid for through a combination of tax increases and cuts to Medicare. The program doesn’t work like a typical discretionary program, where a fixed amount is appropriated regardless of program utilization. Medicaid’s cost increases are tied directly to enrollment. When more people join the program, it costs more. The only money “left on the table” is money that belongs to the already over-taxed families who are busy trying to cope with the massive health insurance premium increases Obamacare has foisted upon the country.

Medicaid promises people health coverage, but often denies them access to quality doctors.

Too often the current Medicaid program denies patients access to care, since about 40 percent of primary care doctors do not even accept Medicaid patients because the reimbursements are so low. As a result, studies show that patients on Medicaid often have worse outcomes after major surgeries, have higher child mortality rates, and use emergency rooms even more than people without insurance. Medicaid proves the truism that access to a government program is not necessarily access to quality health care.

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