Iowa Hospital Association backs Medicaid expansion

The Iowa Hospital Association’s board has “unanimously agreed that expanding Medicaid in Iowa is the appropriate public health policy for Iowa.” After the jump I’ve posted the full text of the association’s policy brief explaining why Medicaid expansion would be good for Iowa individuals, businesses, and the state as a whole.

Governor Terry Branstad opposes the Medicaid expansion, which is now optional for states following the U.S. Supreme Court’s June decision on the 2010 health insurance reform law. Branstad does not trust the federal government to allocate the promised funds supporting broader Medicaid eligibility. His staff indicated last month that it will cost approximately $800 million annually to add 150,000 Iowans to Medicaid.

However, hospitals face guaranteed losses if the program is not expanded to cover more uninsured Iowans, as the Iowa Hospital Association’s policy brief explains below.

During the 2012 legislative session, the Iowa Hospital Association lobbied against state Medicaid cuts and even ran a low-budget television commercial about the issue. If Republicans win control of the Iowa Senate and hold the Iowa House this November, I doubt any amount of lobbying will convince state lawmakers to expand Medicaid.

However, Iowa Senate Health and Human Services Committee Chair Jack Hatch, a Democrat, told the Des Moines Register’s Tony Leys,

Most legislators have at least one hospital in their districts, he said.

Hatch predicted that other groups would add their voices to the lobbying effort. “It will be deafening by the time we get back in session in January,” he said.

August 2012 policy brief from the Iowa Hospital Association (emphasis in original):

Hospitals across the nation supported passage of the federal Affordable Care Act (ACA) in 2010 as a means of providing health insurance to millions of Americans with little or no ability to afford coverage. In June 2012, the United States Supreme Court upheld almost all of the provisions of the ACA, including the legality of mandating all citizens to purchase health insurance coverage. In its ruling, the Supreme Court rejected only one provision of the law: the federal government’s ability to withhold existing Medicaid support to states that do not expand Medicaid coverage to adults ages 19-64 who are at or below 133 percent of the federal poverty level (FPL). In Iowa, this population is estimated to be around 150,000 people.

Importantly, the Supreme Court’s decision did not prohibit the federal government from exerting pressure on states to expand Medicaid coverage by other means. In fact, Medicaid expansion addresses the largest segment of providing coverage to uninsured citizens. So while the federal government is still examining how it will respond in the long term, the Supreme Court ruling did have the singular effect of leaving states with the opportunity to expand Medicaid, much like the program’s original adoption in 1965. This means that the Iowa General Assembly will face this key decision regarding Medicaid expansion when it reconvenes in January 2013.

The Iowa Hospital Association (IHA) represents all of Iowa’s 118 hospitals. In August 2012, the IHA Board unanimously agreed that expanding Medicaid in Iowa is the appropriate public health policy for Iowa. Medicaid expansion would have a positive impact for the health status of all Iowans, including specific benefits in the following areas:

* Expansion is Good For the State of Iowa

Iowa currently provides a limited set of health insurance benefits to more than 60,000 Iowans through the IowaCare program. IowaCare is a Medicaid waiver program that insures a very similar population that would be covered through Medicaid expansion, with a current annual program cost of $165 million (both state and federal funds). Besides being complicated to administer and having mixed performance results because of its coverage limitations, the IowaCare waiver ends on December 31, 2013. Failure to expand Medicaid potentially leaves these 60,000-plus people completely uninsured.

While there has been some discussion regarding the state financial impact regarding Medicaid expansion, under ACA provisions the federal government will fund 100 percent of the costs for this population for the first three years of expansion. Long term, that financial commitment evolves to no less than a 90/10 federal-state matching rate, still well above the approximate 60/40 federal-state match for the traditional Medicaid program.

County governments currently are required to provide mental health care services to residents without financial resources or health insurance coverage. Medicaid expansion allows for the coverage of mental health and substance abuse benefits, and could relieve counties across the state of millions of dollars of mental health care obligations, freeing up resources for other purposes.

A little-used 1997 directive from the United States Department of Health and Human Services allows Medicaid coverage for prison inmates who receive inpatient care in local hospitals. It currently has limited benefit because while inmates qualify financially for Medicaid, they are generally able-bodied adults who do not meet the categorical test. However some states- including Mississippi, Nebraska, North Carolina, Oklahoma and Washington-have already taken advantage of this provision within their prison populations. Generally speaking, these programs have largely covered childbirth and limited cancer diagnoses; but under the ACA, Medicaid expansion could potentially address the inpatient health care needs of virtually the entire Iowa prison population, saving the state millions of dollars each year (Mississippi’s limited program already saves that state $10 million annually; North Carolina expects to save $12 million annually on its limited program).

* Expansion is Good For Community Hospitals

Approximately $158 billion of the ACA’s cost is funded through Medicare payment reductions to hospitals. Those reductions are real, whether or not a state chooses to expand its Medicaid program. Hospitals agreed to those payment reductions with the expectation that more people would have access to health care coverage, thereby lowering the cost of uncompensated care. Those Medicare payment reductions to Iowa hospitals will total more than $2.3 billion over the next 10 years. Expanding Medicaid to uninsured Iowans is essential to help offset those Medicare cuts as intended by Congress during the creation of the ACA.

A portion of those Medicare savings will come from deep reductions in Medicaid Disproportionate Share Hospital (DSH) payments, which traditionally have gone to hospitals that see a larger number of these beneficiaries. Failure to expand Medicaid to a broader population would certainly have a negative impact for hospitals that already treat a high number of Medicaid and uninsured patients, including the state-owned University of Iowa Hospitals and Clinics.

Charity care and bad debt levels at Iowa hospitals are at historic highs and growing by more than 10 percent each year. Iowa hospitals currently provide more than $600 million in charity care each year and have an additional $350 million of bad debt, largely coming from uninsured and under-insured Iowans. Such increases in uncompensated care limit a hospital’s ability to maintain a complete line of health care services as well as its ability to attract and retain the working professionals that are essential to care delivery. Expanding Medicaid would provide relief to this growing financial burden and help limit health care cost increases for everyone.

Expanding Medicaid also would take pressure off hospital emergency rooms, the most expensive entry point into the health care system and the safety-net access point for care of the uninsured. People who do not have health insurance often delay treatment until their condition is poor enough to warrant a trip to the emergency room. Expanding Medicaid provides more primary care opportunities for Iowans to address their health needs before they reach a critical state.

Iowa hospitals employ more than 70,000 people and are significant contributors to the Iowa economy, in many cases being the largest employer in their communities and counties. Iowa’s health care sector has been one of the most resilient segments our state’s economy throughout the national recession and hospitals provide well-paying, high-tech jobs in all parts of the state. However, Iowa is already disadvantaged by lower Medicare payments than most other states, making it increasingly difficult for Iowa hospitals to attract and retain the kind of staff necessary to continue providing the highest quality care in the nation. Well over half of Iowa hospital expenses now are dedicated to salaries and benefits; failing to expand Medicaid (and therefore payment) to hospitals further puts Iowa hospitals at a competitive disadvantage with other states, particularly those states that do expand their Medicaid programs.

Hospitals are also currently trying to address broad payment reforms that will put their organizations at greater accountability for overall population health. The evolution of “health homes” and Accountable Care Organizations, which seek to better coordinate care and lower costs, is compromised if Iowans are not insured so that they can be included in these innovations. Assuring that Iowans have insurance coverage by expanding Medicaid is a necessary step if Iowa is going to make any significant care delivery changes in this regard.

* Expansion is Good For Individuals

Numerous studies clearly indicate that people are healthier if they have access to health insurance. Failure to provide reasonable access to health insurance coverage is detrimental to population health and would indicate that Iowa in not really serious about its stated goal to become the healthiest state in the nation.

For example, the Centers for Disease Control and Prevention recently reported that 29 percent of Iowans are now obese, the major precursor to a variety of chronic disease conditions that require the most expensive care to address. Expanding Medicaid not only helps identify and treat chronic conditions at the early stages, but also provides a vehicle for moving people into health homes or other types of programs where their care can be managed more effectively.

Generally speaking, Medicaid expansion would apply to people making at or below 133 percent of the federal poverty level (although states may have flexibility in lowering that threshold). For a single adult, that income limit would only be $14,856. Clearly people in this income group do not have the resources to purchase private health insurance, which in many cases could have annual premiums as high as their annual salary! Perhaps more importantly, for a single parent of one child that income limit would rise to only $20,123. In such cases today Medicaid is already providing coverage for the child, but not for the parent. Medicaid expansion is simply the easiest and most cost effective manner to provide health insurance coverage to Iowa’s working poor.

As already mentioned, having health insurance coverage via Medicaid would allow people to access primary health care services rather than to delay care. Nowhere would this be more demonstrable than in the IowaCare program, where beneficiaries now travel extensive distances to get to a participating provider for limited services. Expanding Medicaid would allow these individuals to receive care in their local communities and to access pharmaceuticals and other services that can be more effective in managing their illnesses or disabilities.

* Expansion is Good For Business

Expanding Medicaid would also have positive effects for Iowa’s business community. The reality is that when some people receive “free” care, those costs don’t disappear-they are absorbed by other payers in the health care marketplace. Because most people receive health insurance coverage through their employer, Iowa businesses are indirectly bearing some of the cost of uncompensated care through higher insurance premiums. As Iowa seeks to enhance its business climate, failure to expand Medicaid ultimately doesn’t alleviate any pressure on the employer community regarding health care costs, making Iowa less competitive with other states that choose to take advantage of this opportunity.

Additionally, businesses are more productive when they have a healthy workforce. Keeping people on the job by adequately addressing health care needs before they become so severe that productivity time is lost is also a hidden component of health care costs.

Today many small businesses are challenged by the financial cost of providing health care coverage. An important element of the ACA is the creation of state health benefit exchanges, which can help provide individuals and businesses access to health insurance. Fundamental to the success of a health benefit exchange is the need to expand Medicaid. The ACA envisions Medicaid as part of the full continuum of health insurance products that would be available through a health benefit exchange. Failure to expand Medicaid could leave some people unable to qualify for the subsidies that will be available through the exchange and raises questions about the overall viability of this model.

In conclusion, Iowa hospitals and the Iowa Hospital Association strongly support expanding Medicaid as a way to address many of the challenges in Iowa’s health care system. Failure to seize this historic opportunity to significantly address the plight of uninsured Iowans has negative consequences for population health, Iowa’s health care infrastructure, and Iowa’s national competitiveness both economically and regarding overall quality of life. IHA supports state government action to expand Medicaid in Iowa in 2013.

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  • TEB is clearly bluffing

    after the Nov election, he’ll accept the expansion as long as Medicaid funding comes as a block grant. The details depend on which party wins.

    Block grants = bad idea but is a large component of R&R’s “cutting the deficit.”