MuniLand

The media have focused on the recent Affordable Care Act (ACA) deadline for states to decide whether they will create health insurance exchanges. It’s an important issue, but if a state does not agree to build an exchange, the federal government will step in and create one. So either way, all 50 states will end up having health insurance exchanges.

But the other ACA choice that states have to make is whether to expand Medicaid in their states to include more beneficiaries. According to the ACA law, states will not have pay for the expansion until later years:

States that refuse to cover more poor people will do so despite the fact that Uncle Sam will pick up most of the tab. From 2014 to 2016, the federal government will pay 100 percent of the cost of covering newly eligible people, after which the share will gradually go down to 90 percent in 2022 and later years.

So what is stopping the eight states whose governors have declared that they will not expand Medicaid? Oklahoma’s Governor Mary Fallin makes her case (emphasis mine):

“I have also decided that Oklahoma will not be participating in the Obama Administration’s proposed expansion of Medicaid. Such an expansion would be unaffordable,” Fallin said. Oklahoma and seven other states have declared they won’t expand Medicaid to their poorest residents[.]

The UCLA Center for Health Policy Research has published the results of a study that showed a new program for children resulted in fewer days spent in the hospital, lower medical costs and a higher satisfaction rate by families and care coordinators. The tiny “Partners for Children” California public health program increased home and community-based care for terminally ill children on Medicaid – largely by removing a six-month time limit for how early children with terminal conditions can enter hospice care – and it has shown very promising results. If the program results can be replicated on a larger scale, the program might make an important contribution to lowering health costs and helping terminally ill patients spend more of their time at home. (here)

California Healthline describes the background of the program:

“In 2010, the state opened the program to more than 135 families covered by Medi-Cal (California’s version of Medicaid) in 11 counties.

Individuals up to 21 years old who had been diagnosed with life-threatening illnesses, such as cystic fibrosis, cancer and neuromuscular and cardiac disorders, were eligible to participate in the program.

Millions of uninsured Americans will now have access to healthcare as a result of the Supreme Court’s decision last Thursday to uphold the Affordable Care Act. This is a big step forward for the nation, but it raises questions about funding. The nation is already starved for revenue and is supposed to cut $1.2 trillion from the federal budget over the next eight years through the sequestration process.

Under sequestration, one or more of the three major areas of the budget – defense spending, Medicare or Medicaid – need to be cut. Congress is now trying to have President Obama show where these cuts will be made. But the Daily Caller is reporting that the president doesn’t intend to implement sequestration for the military:

President Barack Obama’s White House has told at least one defense contractor not to worry – sequestration isn’t really going to happen.

The Supreme Court’s decision to uphold the Affordable Care Act just created an unenviable task for governors across the country.

To grant healthcare coverage to all Americans, the ACA involves an expansion of Medicaid, a program jointly funded by the federal and state governments and administered by the states for the poorest Americans. Under the expansion, an estimated 18 million people who previously lacked health insurance will be swept into the Medicaid program. Even though the federal government will bear the full cost of this expansion in the first year and 90 percent of it in subsequent years, states will shoulder some of the program’s administrative costs.

Adding 18 million people to the Medicaid rolls is a challenge in itself, but it also comes amid fears that Congress will decide to cut spending on social programs like Medicaid as a way to decrease the federal deficit. Wary of unfunded mandates like this one, some governors are hinting that they will refuse to expand healthcare coverage under the Medicaid program despite the federal government’s offer to pay for nearly all of it:

The cost of providing health insurance to 47 million elderly and disabled Americans through the Medicare program has been taking up a growing portion of the national budget.

It’s not clear if this is caused by beneficiaries using more services, new high-cost treatments, a higher rate of inflation in health care, the provision of unnecessary procedures or outright fraud. It’s likely to be a combination of all of these factors.

Term after term, Congress pokes at the problem by cutting payments to program providers, which they typically reverse as the deadline for the reduction approaches.

Are we JumboAmerica?  That is to say, has America succumbed to gluttony and sloth?

These questions, though rhetorical, are important since we have impossibly high obesity rates in this country and spend 17% of our GDP on health care. A new national system, Obamacare, will expand access to health care, but it does nothing to address the obesity epidemic among the poor.

Yesterday Phil Izzo of the Wall Street Journal reported on an important study that addressed poverty and obesity (emphasis mine):

Unfunded municipal pension liabilities are getting all the attention now, but it’s the burden of Medicaid and health-care expenses that are really crushing state and county budgets. In California, for example, the state will make a $2.4 billion pension contribution to Calpers and spend approximately $16 billion on Medicaid. The federal government kicks in an additional $25 billion.

I first understood this when I listened to the governors of Vermont and Wisconsin testify to the House Oversight Committee on April 14.  Governor Peter Shumlin of Vermont explained his approach to bringing his state budget into balance:

This crisis is the result of the greatest recession in history. I didn’t start with changes to collective bargaining and pensions. Our first problem is that health care costs have doubled. Our second cost driver is that corrections have doubled in 10 years.