Friday, October 16, 2015

Obamacare and Red State Rejections: How the Cost of Poor Decisions Continue to Mount

by Nomad

Many Republican governors who refused to accept Medicaid expansion in their states could be having second thoughts. The full consequences of their decision are slowly but surely becoming clear.

The Obamacare battle has taken a few interesting twists.

If you look at many of the conservative sites, you'd think it was a disaster and the worst thing that ever happened to America. The fog of partisanship is hard to peer through but grandually that mist seems to be lifting and that's bad news for red states.

With around 22 states now refusing to expand Medicaid under the national healthcare policy, analysts have been warning that Republican governors may end up paying a political price for their principled rejection. 

That's particularly true in Texas and Florida where the numbers of uninsured are high. According to some estimates, one quarter of the nation's low-income uninsured reside deep in the heart of Texas. 

But it is not just Texas or Florida. If any state could benefit from Obamacare it's Mississippi. The state tops the charts for poor-health indicators: highest in poverty, second-highest in obesity, highest in diabetes and highest in pre-term births. There, 20% Mississippi's nearly 3 million residents are on the Medicaid rolls. Twelve percent are on Medicare, and 20 percent are uninsured, according to the Kaiser Family Foundation. 
And yet, despite the dire need, Republican Governor Phil Bryant decided to turn down an estimated $426 million in federal funds, citing administration costs and rather oddly, the possibility that Obamacare could in the future be repealed.

Due to some special arrangements with the federal government, both Florida and Texas have so far escaped the sting of their non-participation. Bloomberg explains it in depth here. 
Because of special arrangements that predate Obamacare, four states that haven’t expanded Medicaid have been getting billions each year in extra funding to pay for the care of people who are uninsured.
That's an important point. These governors were talking tough about state's rights and the national debt and whatever, while a few of them were happy to rake in federal dollars to cover the costs of their inexplicable decisions.

Paying the Healthcare Piper
However, at the beginning of summer, that special arrangement lapsed and these states will no longer be receiving federal dollars which have been used to cover the costs of rejecting the Medicaid expansion. 
Florida's government was peeved and threatened to sue the Obama administration. (Who hasn't?)
He told reporters: 
“It is appalling that President Obama would cut off federal health-care dollars to Florida in an effort to force our state further into Obamacare.”
If you think about it, that's pretty ironic. 
Governor Rick Scott first opposed Obamacare and then supported and then reversed himself again. Now Scott is appalled because his state isn't getting enough federal dollars. 
In fact, had Scott signed on to the medicare expansion in the first place, the Urban Institute estimated that Florida would have $66 billion of federal funds over the course of a decade.

First the Red State governors were appalled because of the costs of the national health system- it wasn't austere enough and smelled like socialism- and now they are appalled because they are being deprived of federal dollars. 

Back in 2012, Texas governor Rick Perry said his reason for refusing was that the healthcare program represented "brazen intrusions" into the sovereignty of his state. You tend to lose a lot of independence when you decide to take a handout and conservatives should know this better than most people since they have been saying this to the poor and low-income citizens for decades.

More irony is in store for Texas taxpayers who refuse to be forced to pay for other people's medical bills. According to one nonpartisan news service, property owners in Dallas country were forced to pay more than $467 million in taxes last year to Parkland Health and Hospital System, the county’s only public hospital, to provide medical care to the poor and uninsured.
If the state had elected to expand Medicaid, their taxes would likely to have been lower.
If more low-income patients at Parkland had been covered by Medicaid, then federal and state taxpayers would have picked up more of the costs.
But that's not merely a local tax burden. The same is true elsewhere in Texas and most of the other states that turned their backs on the Medicaid expansion. Florida is one of the non-expansion states where localities pay property taxes to support indigent care.

And still worse, according to the article, the residents of these states pay federal income tax which indirectly helps subsidize Medicaid in those states that decided to participate fully in Obamacare. Places where residents can expect to see lower local taxes as more people become insured.

Taxpayers in Texas should be angry but not at the president but at their own state governors' inability to think things through. 

A Heavy Price to Pay for Stubbornness
The full cost of this political battle however is becoming increasingly clear.
One of the best reasons for states to join the program was federal law’s promise of federal funds.
This would cover the whole cost of newly qualified Medicaid patients for three years, until 2016, and at least 90 percent of the costs thereafter. Those 22 states have opted out of receiving those incentives. In doing so, they have left the burden for others to cover. 

On the other hand, as one source tells us, in states that have signed on to the expansion of coverage for the poor, hospital operators such as Ascension Health say their facilities have seen a boost in revenue. A recent study of eight expansion states by the Robert Wood Johnson Foundation concluded each one enjoyed both additional revenue and fewer expenditures.

And now NPR has more bad news for the stubborn governors. (See the link below.) 
A Kaiser Family Foundation survey of Medicaid directors in all 50 states and Washington, D.C., showed that those that didn't broaden coverage saw their Medicaid costs rise 6.9 percent in the fiscal year that ended Sept. 30. The 29 states that took President Obama up on his offer to foot the bill for expanding Medicaid saw their costs rise only 3.4 percent.
It's hard to say whether that is a trend of a passing statistical abnormality. 
If the rising costs do continue, there's going to have to be a serious re-think in many states that were not so long ago so proud about denying so many of their state residents what the rest of the uninsured in other states had access to.