I just want to expand on one of the pieces I linked to from yesterday, because I think the underlying issue is crucial: the state if Texas may not drop out of Medicaid, but the debate they're having is a good indication about the real crisis that healthcare reformers are about to face.
This was my main point furing the painful, seemingly endless process that created the Affordable Care Act, and it seems to be coming true much the way I predicted. Within days of a painful midterm election, it's become clear that the costs associated with expanding Medicaid will be a big issue for states and for the Federal Government.
And the problem for Democrats is that so much of what was wrong with the original bill is summed up so neatly in trying to address the problems with Medicaid.
Many progressives, though, are missing the shape of the coming debate, focusing too hard on the Texas example and the extreme edges. The reality is that Texas will not get out of Medicaid, for a variety of reasons; and really, all the Texas legislature did was direct the state's Department of Public Health to study the possible effects of exiting Medicaid. It's entirely likely that when the study cmes back, the reasons for not giving up Medicaid dollars will become breathtakingly clear.
None of that means the issues will go away.
As I said yesterday, Suzy Khimm's post lays out a lot of the dilemmas that are driving states like Texas to complain about issues around paying for healthcare for the poor. Many people - even many progressives who care about the healthcare reform issue - do not understand that Medicaid has always been underfunded and does not, in most states, cover care for most people in poverty.
Indeed, as I've laid out several times, the first problem is that Medicsid is handled by the government as a block grant of money to each state. This has led to 50 different programs, and wide variety between states. The size of those block grants is generally not enough to cover all the people in need. And the economic downturn has, as many predicted, led to an enormous increase in people looking to access Medicaid coverage.
Texas, which is not an especially generous state in terms of Medicaid coverage, pays for about 40% of its Medicaid program; the rest comes from the federal grant. The reason for the stidy is that some Texas lawmakers believe, erroneously, that refusing federal money, and being free from federal "mandates", they could run a cheaper state program.
There's plenty of examples of why this is not the case... but the one which makes the point most painfully is probably nursing homes. Many younger people don't realize that Medicare has no long term coverage in its plan, and that extended nursing home care is either paid for out of a senior citizen's own pocket, or, after their own resources have been exhausted, by Medicaid.
As life expectancies have lengthened, the problem of paying for longer and longer stays in nursing homes has increased, to the point that Medicaid is now paying an enormous share of the coverage for seniors in long term care. This reality has occasionally led to articles and TV news reports documenting the shock and disay of families when theybrealize that an older relative can no longer stay in a preferred, expensive, senior living arangement. The dilemma has also led to a process known as "asset stripping" in which an elderly person's assets are transferred to relatives, usually children, so that the senior can qualify for Medicaid - a process the government has tried to police, to little avail.
Just on the nursing home issue alone, it's unlikely Texas could take over the costs of this care, by itself, and save any money. And you can pretty much write the "they're trying to kill Grandma" stories if the funding were to be cut without blinking.
By jumping into this issue so broadly and to such an extreme end, Texas lawmakers probably did themselves no favors - Rick Perry, just reelected, has probably managaed to scotch any chance of running for other offices, just for starters. But the issues that the Texas debate brings up are serious, and bound to continue to come up. When Medicaid eligibility is extended in 2014, under the new law, the costs for the program will jump enormously. And Texas lawmakers are probably right that there are few realistic options for the state to pay for the huge increases they face.
Much has been made of the fact that the Affordable Care Act, towards the end of the process of creating it, added a provision to pay for the coming increased costs, at least for the first five years of the expansion. Few reporters covering this have looked deeply at the claim, which has several problems.
First is that, as a number of Governors have pointedout, the Federal grants are already too small. The formula for the expansion of the grants is unlikely to provide enough funds to cover all of the newly eligible, especially now, since the provision was written before the effects of the economic downturn on increased demand for Medicaid were clear.
Second, the "five year extension" simply puts off the hard issues temporarily - this was the main driver of the "Cornhusker kickback" that Ben Nelson negotiated for Nebraska, which would have covered that state's increased costs indefinitely (and, as I noted at the time, probably proved that Nelson was smarter than much of the room). And why five years? Because any onger than that would wreck the Democrats claims that the whole law does not increase the deficit.
Third, the whole process of "expanding Medicaid" was done extremely cynically and unrealistically: there's no real reform of Medicaid's flaws, no attemot to address the issues we already knwo about trying to provide care to the poor on the cheap. As Khimm, noted in her post, Medicaid pays 66% of Medicare's reimbursement rates. This low level - the lowest of any government or private insurance plan - means in practical terms that many doctors and hospitals refuse to treat Medicaid patients. And those who do are often, sadly, crooks or shysters providing substandard care. And all of that is before the government begins to address a stated plan - as part of the pretend world where the "reofrm" act doesn't coast as much as it really does - to cut Medicare's reimbusement rates.
The so-called "doc fix" plan, which has been in place for years, calls for autmoatic cuts in Medicare reimbursements as a way to reduce that program;s costs; in reality, Congress has avoided every annual cut in rates since the law took effect in the mid nineties. The whole issue was avoided when the Affordable Care Act passed, but Nancy Pelosi - yes, her, again - promised that the "doc fix" would be addressed in the fll. Amd here we are, and the Democrats just lost the House over this very issue. Any chance Medicare rates will be cut? Anyone?
It's nice that the proposed "Teaxs Massacre" of Medicaid coverage has, in a general way, reignited the sense many progressives have for being the party that protects poor people... but demonizing Texas officials and dismissing their extremem ideas is really just a further dodge of one of the worst failures of the healthcare reform bill, failure to start reform in the place that Democrats should own: making sure a solid safety net exists that helps those most in need. The Medicaid mess isn't really about Texas: it's about California, New York and Massachusetts, states that actually go a considerable length on their own to provide coverage that actually does some good for the people who need it. Their programs are extremely expensive - a big reason Californis is in such dire straits, and why Mass and NY are struggling with state governments that can't seem to get their fiscal houses in order - and five year expansions are no answer for the problems they face.None of this gets better, and the midterm election results do not point to a better approach on either side fon this, the thorniest of problems we face as a nation. I'd try to end this on an upbeat note... but really, there isn't one.
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