Branstad rejecting Medicaid expansion and other health care news

Roughly 150,000 people, or about 5 percent of Iowa's population, will not receive Medicaid coverage under the 2010 federal health insurance law if Governor Terry Branstad gets his way. The governor repeated yesterday that he does not intend to go along with the Medicaid expansion, because he doesn't believe the federal government should or will provide the promised funding to cover the cost.

Congressional Republicans including Representative Steve King are urging governors to reject other aspects of the Affordable Care Act, such as the state-based health insurance exchanges. Branstad has not yet decided whether to take that route. More details on these stories and other fallout from last Thursday's U.S. Supreme Court ruling are after the jump.  

Of approximately 30 million people expected to receive health insurance coverage under the 2010 Affordable Care Act, more than half (17 million) would be covered through expanding the Medicaid program. The way Congress wrote the law, states stood to lose all of their existing Medicaid funding if they did not increase enrollment by making people eligible up to incomes at 133 percent of the federal poverty level. But the Supreme Court ruled that was too coercive, so states are now free to reject the Medicaid expansion without jeopardizing their other Medicaid funding. If that happens, millions of low-income Americans will be left without coverage.

This Kaiser Commission report estimates the number of new Medicaid enrollees in each state under different scenarios. The Iowa estimates range from just under 115,000 people to more than 163,000 people benefiting from the expanded Medicaid program between 2014 and 2019 (see charts on pages 10 and 11).

Under the Affordable Care Act, the federal government will cover the full cost of the Medicaid expansion for three years, beginning in 2014, and will cover nearly the entire expense after that time. However, Branstad told reporters yesterday that he doesn't believe it.

"Here's the problem, the federal government has done this again and again: 'Buy into our program and we're going to do all these things for you' and then it doesn't happen and then the taxpayers of the state get stuck with it," he said. [...]

His spokesman, Tim Albrecht, said the estimated cost of adding 150,000 to the program is $800 million per year. He reiterated the governor's fears about the federal government's commitments to pay most of that cost. "Federal funding is not guaranteed. They cannot obligate a future Congress to spending," he wrote in an e-mail. "Gov. Branstad believes that eventually, most or all of the $800 million will be obligated by Iowa taxpayers. The state cannot afford this. Additionally, 40 cents of every federal dollar is borrowed money. The governor does not believe we should be adding to that debt through a massive expansion of federal bureaucracy."

Speaking to the Des Moines Register, Senator Tom Harkin described the threat to reject the Medicaid expansion as a "political ploy."

"I just think that any legislator would look at this and say, 'Why would we not do this?' It would be more money for the state, it would tend to get people in and get people health coverage that are lacking it now and show up in our emergency rooms. One way or the other, it's going to save the state money. So I don't understand why you wouldn't want to do that."

"The governors may say that they don't want this, but it seems to me it's going to be up to the legislatures to decide this, not just the governors," Harkin said.

I tend to agree with David Dayen that Democrats are fooling themselves if they think states will hesitate to turn down this deal. It will be easy for governors to win over state legislators by exaggerating the potential cost to the state budget, as Florida Governor Rick Scott is doing to justify his own decision to reject the Medicaid expansion.

If Republicans win a majority in the Iowa Senate and hold their Iowa House majority, legislators will eagerly support Branstad's stand against the Medicaid expansion. But if Democrats hold their Iowa Senate majority, implementing the broader Medicaid eligibility will be a top priority for them. According to Iowa Senate Health and Human Services Committee Chair Jack Hatch, the non-partisan Legislative Services Agency has estimated that state and local governments in Iowa would save $50 million if people on the IowaCare program (which covers some people up to 200 percent of the poverty level) enroll in Medicaid instead.

Branstad isn't going to lose sleep over having the state spend more money by rejecting the Medicaid expansion. Tax collections exceeded projections during the fiscal year that just ended. The state has a healthy surplus and full reserve funds.

Branstad also confirmed yesterday that he isn't interested in the health care policy summit Hatch and other Democratic legislators have proposed.

One question mark is how much powerful interest groups such as the hospital industry will lobby governors to expand Medicaid. Phil Galewitz reported yesterday for Kaiser Health News,

[H]ospitals, doctors and insurers are likely to bring strong pressure on them to accept at least some of the expansion, [University of Texas Professor Charles Begley] said. Providers want the expansion to help pay for their treatment of the uninsured. Insurers want it because states are increasingly shifting Medicaid enrollees into private managed care plans which they operate.

The White House will likely try to leverage that pressure. Chief of Staff Jack Lew said Sunday on This Week With George Stephanopolous that he expects "the vast majority of states" to expand Medicaid.  "For those few that are slow to come in, they're going to have to answer to people why they're turning this down and why they're letting people go without coverage." [...]

The law's supporters argue that states will pay a cost for not expanding Medicaid. They will likely have to pay more to hospitals and other providers to compensate them for caring for patients without coverage, said Jocelyn Guyer, co-executive director of the Center for Children and Families at Georgetown University.

Another factor Guyer believes will drive participation is the reduction of Medicaid funding to hospitals that care for the uninsured starting in 2014. The assumption was they would not need the help because fewer people would be uninsured, she said.

That will also spur providers that care for the uninsured to lobby state lawmakers to expand Medicaid, she said.

Republicans who oppose the health care reform law were disappointed by last week's Supreme Court decision, but some have seized on another avenue for nullifying the Affordable Care Act. Phil Kerpen explains,

On Friday, 73 House and Senate conservatives sent a very important letter to the National Governors Association, urging the states not to adopt state health care exchanges.  These exchanges (which are completely optional for the states) are the centerpiece of Obama's new entitlement that provies vast taxpayer-funded subsidies up to 400 percent of the poverty level.  They are also the mechanism for imposing a $3000 per employee tax on employers who cannot afford to offer health coverage.

As I wrote last year, the text of the law is crystal clear that the subsidies and penalties only apply in states that adopt exchange laws.  However, as I predicted, the IRS has asserted - contrary to law - that the subsidies and penalties apply in states that refuse to set up exchanges.  

Kerpen ignores that fact that the federal government can impose its own health insurance exchange on states that decline to create their own exchanges. (The Des Moines Register editorial board has argued that Iowa might be better off operating under the federal government's exchange.) Hatch tried to get legislators on board with creating a health insurance exchange, but his bill did not advance during the 2012 legislative session.

In any event, Steve King signed a June 29 letter to the National Governors Association urging states to decline to create an exchange. Branstad's communications director Tim Albrecht told me today that the governor's staff are still "studying the ruling, its broad implications, and what it means for Iowa. No decision has been made on an exchange yet."

In related news, commentators for Forbes magazine have been arguing this week about the potential impact of the "medical loss ratio" provisions of the law. Rick Ungar believes this provision "should have a long lasting and powerful impact on the future of health care in our country."

That would be the provision of the law, called the medical loss ratio, that requires health insurance companies to spend 80% of the consumers' premium dollars they collect-85% for large group insurers-on actual medical care rather than overhead, marketing expenses and profit. Failure on the part of insurers to meet this requirement will result in the insurers having to send their customers a rebate check representing the amount in which they underspend on actual medical care.

This is the true 'bomb' contained in Obamacare and the one item that will have more impact on the future of how medical care is paid for in this country than anything we've seen in quite some time.  Indeed, it is this aspect of the law that represents the true 'death panel' found in Obamacare-but not one that is going to lead to the death of American consumers. Rather, the medical loss ratio will, ultimately, lead to the death of large parts of the private, for-profit health insurance industry.

Why? Because there is absolutely no way for-profit health insurers are going to be able to learn how to get by and still make a profit while being forced to spend at least 80 percent of their receipts providing their customers with the coverage for which they paid. If they could, we likely would never have seen the extraordinary efforts made by these companies to avoid paying benefits to their customers at the very moment they need it the most.

But Tim Worstall points out that many health insurers already exceeded this requirement before the Affordable Care Act was passed. The dominant health insurance company in Iowa, Wellmark Blue Cross and Blue Shield, said in a statement last week, "Wellmark is proud to be one of the few Iowa insurance companies to exceed the ACA medical-loss ratio requirement to spend 85 percent of premium dollars on medical claims in the large group market (100+ employees), and 80 percent in the individual and small group markets." So don't expect much to change for Iowa policy-holders.

The Supreme Court ruling itself continues to provoke controversy. Jan Crawford of CBS News published a good piece confirming what some commentators suspected last Thursday: Chief Justice John Roberts initially planned to strike down the health care reform law, but changed his vote. Crawford reports,

Roberts then withstood a month-long, desperate campaign to bring him back to his original position, the sources said. Ironically, Justice Anthony Kennedy - believed by many conservatives to be the justice most likely to defect and vote for the law - led the effort to try to bring Roberts back to the fold.

"He was relentless," one source said of Kennedy's efforts. "He was very engaged in this."

But this time, Roberts held firm. And so the conservatives handed him their own message which, as one justice put it, essentially translated into, "You're on your own."

The conservatives refused to join any aspect of his opinion, including sections with which they agreed, such as his analysis imposing limits on Congress' power under the Commerce Clause, the sources said.

Instead, the four joined forces and crafted a highly unusual, unsigned joint dissent. They deliberately ignored Roberts' decision, the sources said, as if they were no longer even willing to engage with him in debate.

I recommend reading Crawford's whole article.

The latest opinion polls about health care reform show the American public remains divided about the policy and about the court's ruling. The Supreme Court decision may have bumped up Democratic enthusiasm about the election, which would be good news for President Barack Obama. Here's another interesting finding:

Fifty-six percent of Americans believe opponents of the law should "stop trying to block its implementation and instead move on to other national problems," according to the poll by the nonprofit Kaiser Family Foundation.

By contrast, just 38% said those opposed to the Affordable Care Act should "continue trying to block the law from being implemented." [...]

Independents are more inclined to move on, as 51% say it is time to implement the law, and just 35% say they want to see opponents continuing to resist.

Many polls have suggested that a majority of independent voters oppose the Affordable Care Act. I wonder whether other surveys will confirm this finding that independents would rather see the government implement the law than keep fighting about it.

Any relevant comments are welcome in this thread.

UPDATE: Law professor Paul Campos reports for that Chief Justice Roberts wrote most of the dissent in the health care reform case as well as the majority opinion.

My source insists that "most of the material in the first three quarters of the joint dissent was drafted in Chief Justice Roberts' chambers in April and May." Only the last portion of what eventually became the joint dissent was drafted without any participation by the chief justice.

This source insists that the claim that the joint dissent was drafted from scratch in June is flatly untrue. Furthermore, the source characterizes claims by Crawford's sources that "the fact that the joint dissent doesn't mention [sic] Roberts' majority ...  was a signal the conservatives no longer wished to engage in debate with him" as "pure propagandistic spin," meant to explain away the awkward fact that while the first 46 pages of the joint dissent never even mention Roberts' opinion for the court (this is surely the first time in the court's history that a dissent has gone on for 13,000 words before getting around to mentioning that it is, in fact, dissenting), the last 19 pages do so repeatedly.

The Cedar Rapids Gazette's Todd Dorman wrote a great column on Branstad's "Medicaid knee-jerk":

Gov. Terry Branstad said he doesn't like big mandates from on high. (Unless, of course, he's the one imposing them on local governments.) He also doesn't like it when the federal government spends borrowed money. (But if it goes for keeping rural post offices open or sustaining a fighter wing in Des Moines, he just might make an exception.)

He also doesn't trust the feds to come through with the money. But when Iowa mayors make the same argument about his property tax reform plans...meh. What do they know?

Branstad insists that if you want to see what might happen to Iowa, look at awful broke Illinois. Heck, look at Greece!

Iowa tax collections grew at nearly double original estimates last fiscal year, so don't go ordering the gyro of doom just yet.

And actually, if you're looking for a state that expanded Medicaid to cover single adults up to 133 percent of poverty, look no further than Massachusetts. And who helped make that happen? Branstad's candidate for president, that's who.

SECOND UPDATE: The Sunday Des Moines Register called Branstad's position "unreasonable" in an editorial accompanied by this sidebar:

Medicaid is likely helping your relative, neighbor

In fiscal year 2013, nearly 700,000 Iowans will be served in some way and at some point by Medicaid health insurance. That is about one-fourth of Iowa's population.

Next to Wellmark Blue Cross Blue Shield, the state's largest commercial insurer, the government insurance program is the second largest health care payer in Iowa.

So who are the people relying on Medicaid? Poor seniors, the blind and disabled, pregnant women and children.

Although Iowans under the age of 18 make up 46 percent of those served, they account for only 17 percent of total expenditures. Children are relatively cheap to insure because they do not have as many health problems.

The bulk of Medicaid money is used to help disabled and elderly Iowans. Of the $3.5 billion dedicated to the program this year, more than $600 million goes to pay for care in Iowa nursing homes.

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