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Not much was known about the benefits of Medicaid relative to its cost until a kind of enrollment lottery in Oregon created an unusual opportunity for researchers.
In 2008, Oregon officials decided to pare down a Medicaid waiting list but they only had enough money to cover a fraction of the approximately 85,000 people wanting coverage. They decided a lottery was the fairest way to determine who got in and who didn’t.
The unique selection process resulted in two groups of people who shared similar characteristics but unequal access to the health care system. It didn’t take researchers long to realize they had a ready-made study group and a control group.
“It let us study the effects of insurance using a real, randomized control group,” said Kate Baicker, a professor of health economics at the Harvard School of Public Health. “That’s important because people who are on Medicaid look really different from the uninsured population.”
Baicker and her colleagues went to work.
They studied thousands of people — some who were selected in the Medicaid lottery and some who were not — to measure the extent to which Medicaid improved the lives and the health of those who received coverage.
The resulting studies have generated a wealth of information for policymakers about both the benefits of Medicaid and the factors that contribute to its escalating cost.
The study results are now front and center in the Medicaid expansion debate as governors and legislators across the country attempt to decide whether the benefits of covering millions more Americans outweigh the increased costs to taxpayers.
Baicker is scheduled to be in Topeka to speak about Medicaid expansion on Tuesday at a luncheon being organized by the Kansas Health Institute, the parent organization of the KHI News Service. A number of legislators and other health policymakers are expected at the event.
Kansas is one of 23 states that have chosen not to expand their Medicaid programs to include adults whose incomes are below 138 percent of the federal poverty line.
The decision means that approximately 85,000 uninsured Kansans may fall into in what is being called the “Medicaid gap.” They are ineligible for Medicaid but still too poor to qualify for federal subsidies that would all but cover the cost of private coverage purchased in the new marketplace created by the Affordable Care Act.
'Yes' to both questions
So, is Medicaid expansion a good thing that will benefit millions of people or a costly expansion of the safety net that could strain federal and state budgets? It’s both, Baicker said.
“I think we can eliminate both the unduly optimistic view of the program and the unduly pessimistic view of the program,” she said.
→ Continue reading at KHI.org/baicker
→ Tune in for free webstream of Baicker's presentation 12:30 p.m. Jan. 28 at KHI.org/baickerstream
House Speaker Ray Merrick said it will be up to Gov. Sam Brownback to initiate discussions this year in the Legislature about possible Medicaid expansion.
"That’s the governor’s decision and I’ll wait for him to decide what he’s going to do with it," Merrick said in a pre-session press conference this afternoon. "He can request it and we can take it up."
Legislators last year passed a proviso stating that the program could not be expanded without "express approval" of the Legislature, so Merrick's comments indicate the GOP-dominated House is unlikely to give the issue much consideration without a push from the Governor's Office.
Merrick, a Stilwell Republican, said he didn't know yet how much interest fellow House members might have for reconsidering a broadening of the program, which currently is funded about 60 percent by the federal government and provides health coverage to about 380,000 poor Kansans, most of whom are disabled or elderly.
"This is a new year," Merrick said. "I really don't know" how many of the 125 House members might want to wade into the issue.
Between 58,000 and 85,000 Kansans could gain coverage, according to various estimates, if eligibility restrictions were relaxed in accordance with the federal Affordable Care Act, more commonly referred to as Obamacare. The federal law also calls for the feds to pay 100 percent of the cost of covering those newly eligible for Medicaid as a result of expansion. The federal match would drop to 90 percent after 2016.
Senate President Susan Wagle, a Wichita Republican, said earlier this week that she thought any sort of expansion would be difficult to get passed this year in light of the problems that accompanied the launch of the HealthCare.gov online insurance marketplace. But she said she thought the issue was worth debate and consideration.
She said she was interested in studying something like a plan proposed by Pennsylvania Gov. Tom Corbett, which would require program enrollees to be seeking work and also limit the number of doctor visits. The Pennsylvania plan, like some others being implemented or considered in Republican-dominated states, would use federal Medicaid dollars to buy enrollees coverage from private health plans.
In the past Brownback has said expansion would be up to the Legislature. But administration officials also recently have said that they continue to study the issue and what other states are doing about it.
Sara Belfry, a spokesperson for the governor, said this today when asked for comment on Medicaid expansion:
"Obamacare is fundamentally flawed and the disastrous rollout is just another indicator of the problems we will continue to see," she said. "Gov. Brownback's first priority is to extend KanCare (the state's name for Medicaid) to those who need it most: Kansans with disabilities on waiting lists for services."
The Kansas Hospital Association and a coalition of more than 50 social service and consumer advocacy groups are pushing policymakers to open up the Medicaid program to more people. Under the Affordable Care Act, hospitals stand to lose money they currently receive for treating the uninsured and without state approval of Medicaid expansion will not be able to offset those losses with additional Medicaid income.
Kathleen Christian is a remarkably healthy 63-year-old. She has no chronic conditions and rarely sees the doctor for anything other than preventive care.
Even so, she said she had been looking forward to getting health insurance under the Affordable Care Act, after having been without coverage since she was laid off in 2009.
But last month, Christian learned she would not be able to get coverage after all.
Because Kansas has not expanded Medicaid eligibility under the ACA, she is one of an estimated 85,000 Kansans who experts predict will fall into the so-called "Medicaid coverage gap."
Christian is not eligible for Medicaid (also known as KanCare in Kansas) because she earns too much to qualify for it but she is too poor to qualify for the ACA’s federal tax credits to buy private insurance.
Without the subsidies, there is simply no way she could afford $384 each month for the cheapest plan on HealthCare.gov, Christian said.
"Where am I supposed to get $384 every month? I budget and keep a spreadsheet. I know where every penny goes," Christian said.
Her 2012 adjusted gross income from part-time work was $5,008 and her monthly Social Security checks are about $800, she said.
"The last day of (November), I had $2.96 to my name. By the grace of God, every time I run out, usually the next day I have something to work with," she said. "I'm not alone. I know lots of people like me, lots of people who are struggling. There's just no way they can pay these premiums. It's just not realistic."
Christian said she lays equal blame on President Obama and Gov. Sam Brownback, who has opposed provisions of the ACA from the beginning.
"They're just a bunch of boys having an argument about who's better than who. It's all a political game for them. I don't think they're really seeing what they're doing to people," Christian said. "I guess people who have money just don't understand what being poor is. I'm not materialistically poor — I have a roof over my head, thank God, and we have enough food, although we could use a little bit more. We're not starving to death. But we're cash poor. That's just the way it is."
Christian said when she found out she'd be in the coverage gap, she wrote a letter to Brownback expressing her frustration:
She was laid off from her long-time job at a Lawrence home security company during the recession, she said.
Apart from a minimum wage job capped at 18 hours a week and the occasional temp job, she’s been out of work since.
"I'm in my sixties. It's not real easy to get a job," Christian said.
She has custody of her 13-year-old grandson and gets $115 per month in food stamps.
"It was $135, until they cut it back," she said.
When push came to shove, she filed for early retirement to get the Social Security payments, a move that means she gets lower monthly payments than if she had waited longer to take retirement.
"It was the only way I could support us. I didn't want to do early retirement, but I had no choice," she said.
Her grandson is covered by KanCare, which has less restrictive income requirements for children and pregnant women, but she has no health insurance. She pays for her dental cleanings every six months out of pocket.
"At this point, I'm just biding my time until I can get Medicare," she said.
Christian said she wrote to Brownback hoping a personal story might "get through to him."
“I told him that, as far as I'm concerned, the state of Kansas should be paying the premium credits for those people who do not qualify. I told him that maybe $384 is chump change to him and his people, but it's a lot of money for me,” she said.
Brownback spokesperson Sara Belfry acknowledged receipt of Christian’s letter.
“We did receive a letter from Kathleen (and), like all other correspondence we receive from constituents, we sent a response,” Belfry wrote in an email. “Beyond that, I have no further comment.”
Christian said that, as of this evening, she had yet to receive a response.
Advocates pushing Kansas officials to expand Medicaid acknowledge it is unlikely they will achieve their goal this year.
But they said they remain hopeful they can convince Gov. Sam Brownback and legislators next year to make more Kansans eligible for the program.
“If it’s not going to happen the first year, we’ll continue to build grassroots support. We’re not giving up,” said Anna Lambertson, director of the Kansas Health Consumer Coalition, one of the groups pushing for expansion.
Medicaid, known in Kansas as KanCare, currently provides medical and long-term living assistance services for about 380,000 poor, disabled and elderly Kansans. Expansion could increase enrollment in the program by as many as 240,000, according to various projections.
The federal Affordable Care Act initially required states to expand Medicaid eligibility. However, the U.S. Supreme Court decision that upheld the law made expansion optional for states.
Expansion would have a bigger impact in Kansas than in many other states. That’s because the state’s current eligibility criteria exclude all but the poorest adults. Only those with children and incomes less than 32 percent of the federal poverty level — about $6,000 a year for a family of four — can qualify. Implementing expansion would mean that adults in that same family of four could make more than $31,000 a year and qualify.
The Brownback administration has estimated that expanding eligibility for the $3.2 billion program would cost the state an additional $600 million over 10 years.
Door still open
Whenever asked about expansion, Brownback says things that suggest he’s more likely to say “no” than “yes” to it. But advocates said they remain encouraged by the fact he hasn’t rejected the idea.
“If he’s really looking at the options with an open mind — as he himself has said he’s doing — then I see him taking his time (to decide) as beneficial,” Lambertson said. “I’d rather that he take his time than just say ‘no’.”
Last week, Brownback again expressed doubts that the federal government could afford to keep its promise to cover all the costs of expansion for the first three years and no less than 90 percent thereafter. Despite his misgivings, he said, he continues to have “active conversations” with expansion advocates and legislators on the topic.
“It’s in the legislative process,” Brownback said. “Expansion would have to be addressed by the Legislature. They would have to budget it.”
Brownback’s requirement that legislators budget for it before he would sign off on it has advocates convinced a decision won’t be made this year.
Members of the House-Senate conference committee negotiating a final version of the fiscal 2014-15 budgets are scheduled to return to the bargaining table early next month when the Legislature returns to Topeka for what leaders hope will be a brief wrap-up session.
A study released today by the Kansas Hospital Association says that expanding Medicaid eligibility to levels called for in the federal health reform law would pump more than $3 billion into the state’s economy and create 4,000 new jobs by 2020.
The study, done for the association by the Center for Health Policy Research at George Washington University and Regional Economic Models, Inc., also shows that expansion would save the state more than it would cost.
Tom Bell, the association’s chief executive, said the projected economic benefits were too significant to be ignored by Gov. Sam Brownback and legislative leaders as they consider whether or not to expand eligibility for the healthcare program that serves poor, elderly and disabled Kansans.
Brownback has been a vocal opponent of the Affordable Care Act but has not made a decision on Medicaid expansion, which was made optional for states as the result of last year’s U.S. Supreme Court decision upholding the law.
“I think from our perspective, it’s not unlike the state landing a huge federal contract,” Bell said.
The impact of the expansion on the Kansas economy could rival that of the National Bio and Agro-Defense Facility in Manhattan, Bell said.
“That’s the way we look at it, as an opportunity for our state,” he said.
Bigger impact in Kansas
Since Jan. 1 in Kansas, the Medicaid program has operated under the name of KanCare. Three health insurance companies are under contract with the state administer it.
The health reform law requires that the federal government cover state costs of expanding Medicaid for three years. After that, the federal share would recede gradually until it reaches 90 percent, where it would remain.
Currently, Kansas’ Medicaid eligibility criteria for adults are among the most restrictive in the nation. Only those with children are eligible and only then if they earn less than 32 percent of the Federal Poverty Level (FPF) — currently $5,900 a year for a family of four.
Because those numbers are so low, expanding Medicaid would have a bigger impact in Kansas than in many other states by making all Kansans who earn up to 133 percent of FPL — $30,660 for a family of four — eligible for the program.
Various estimates suggest that expansion could add between 226,000 and 240,000 Kansans to the 380,000 now enrolled in Medicaid.
Net benefit to the state
A Kansas Department of Health and Environment report released last week estimated Medicaid costs would climb by $513 million over 10 years regardless of whether the state expanded eligibility for the program. That’s because heightened attention surrounding the expansion issue is expected to prompt many people who already are eligible but not enrolled to sign up.
Covering only those who are made eligible by the expansion would cost another $600 million over 10 years, the KDHE report said. Even so, the hospital association report said that expanding Medicaid would produce a net savings to the state of $82 million from 2014 to 2020.
“That’s front loaded into those first three years, but it’s still a substantial net benefit,” Bell said.
Brownback has not ruled out expansion but neither has his administration shown much, if any, enthusiasm for the idea. Reacting to the KDHE cost estimate, Sherriene Jones-Sontag, the governor’s chief spokesperson, said expanding Medicaid would affect the state’s ability to fund other “core responsibilities.” The impact would be even greater “if the federal government fails to keep its promise to pay for its part of the expansion,” she said.
Bell said administrators at the association’s 126 member hospitals understand Brownback’s concerns, which are shared by many legislators. But he said they believe the Medicaid expansion dollars are needed to offset the anticipated loss of other federal funds that hospitals have used to cover the cost of caring for the uninsured.
“From an economic perspective for our members — especially those that treat a higher number of uninsured — they think it makes great sense to take a serious look this and see if we can make it work,” Bell said.
Many Kansas hospital officials say they are worried that if state policymakers choose not to expand eligibility for the state’s Medicaid program, the hospitals will see a significant drop in the money they receive to help care for patients who can’t or won’t pay their medical bills.
Currently, 64 of the state’s 127 hospitals divide about $51.3 million a year in what are called Medicaid disproportionate share payments.
They use the money, a mix of federal and state dollars, to offset some of the costs of caring for the uninsured.
“It’s a significant amount of funding for us,” said Bruce Witt, director of governmental relations at Via Christi Health in Wichita.
In the current fiscal year, Via Christi Health is expected to receive almost $13 million from the disproportionate share payments, the most of any health care provider in the state.
Under the Affordable Care Act, also known as Obamacare, those payments are to be significantly reduced, starting in October.
“We’re being told that ‘disproportionate share’ won’t be completely phased out, but that roughly 50 percent will be going away,” said Tom Bell, chief executive of the Kansas Hospital Association. “It may end up being somewhere between 50 and 75 percent. We don’t know at this point.”
Though Via Christi could expect to lose the most dollars, the smaller, rural hospitals likely would be the hardest hit proportionately based on an analysis done for the KHI News Service by its parent organization, the Kansas Health Institute. The analysis calculated the likely revenue hit on each Kansas hospital based on recent payment histories, bed counts and inpatient stays.
State option on Medicaid
The law’s design, Bell said, preceded the U.S. Supreme Court’s June 28, 2012 ruling that gives states the option of choosing to not expand their Medicaid coverage to include non-disabled, childless adults whose incomes fall below 133 percent of the federal poverty level.
Since the ruling, governors in at least 10 states – Alabama, Georgia, Idaho, Louisiana, Maine, Mississippi, South Carolina, South Dakota, Oklahoma, and Texas - have said they will not expand Medicaid eligibility.
“Our lieutenant governor is saying he’s not sure that DSH (disproportionate share) is going away because the (U.S.) Supreme Court has said the federal government can’t penalize states for not going along with the Medicaid expansion,” said Shawn Rossi, a vice president with the Mississippi Hospital Association.
“We don’t know if that’s a correct assumption,” Rossi said, “but we are for sure telling our legislators that if DSH goes away, we’re definitely going to need something to take its place. We see a very large number of people who are uninsured.”
Brownback looking it over
Kansas’ Gov. Sam Brownback has been an outspoken opponent of the Affordable Care Act, has not yet decided whether to implement the Medicaid expansion.