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About PDA Advisory Board AL Medicaid Expansion The Affordable Care Act: "Caught in the Medicaid Gap"
Wednesday, 26 March 2014 00:00

The Affordable Care Act: "Caught in the Medicaid Gap"

Written by  Ryan Vasquez | Alabama Public Radio

All year long, Alabama Public Radio is collaborating with AL.com on the affordable care act. The new health insurance system is causing frustration and concern among Alabama residents. Over the course of the year, you’ll be hearing stories from your neighbors, and we’ll be looking for answers to your questions. One big concern connected to the Affordable Care Act is what’s called the Medicaid gap. Alabama is one of 24 states that chose not to expand Medicaid this year…Governor Robert Bentley made no bones about it during his state of the state address.

“Our great nation is 17.2 trillion dollars in debt and it increases by 2 billion dollars every single day. That is why I cannot expand Medicaid in Alabama.”

Despite calls from prominent officials and studies in support of Medicaid expansion, the governor has said no…

“We think it’s just indefensible,” says Jim Carnes, Policy Director at Alabama Arise. “That a state with as many health challenges and as many low income people as Alabama is leaving those folks in the cold.”

And Carnes says that chilly reception begins with the first part of the Affordable Care Act roll out. It was designed for states to bring their current eligibility level up to around 133 percent over the poverty level. Once states expanded Medicaid, the second big chunk of the ACA was supposed to roll out.

“The health insurance marketplace was designed to start at 100 percent of the federal poverty level and run all the way up to 400 percent four times the federal poverty level,” says Carnes. “And in that span people would qualify for tax credits to lower their insurance premiums.”

The Affordable Care Act and Alabama’s refusal to cover more people under Medicaid means almost two hundred thousand low income residents get nothing. They make too much money to get Medicaid, and they’re considered too poor for help from Washington. Jim Carnes says opponents of Medicaid expansion may not realize who all is being left without options.

“That includes people trying to raise families on minimum wage, people who have been working hard at one or more part time jobs, people who are working in industries that we depend on every single day.”

Currently Medicaid takes up 35 percent of Alabama’s General Fund budget and that number increases yearly. Governor Bentley and the republican majority have been trying to rein in costs.

“So if you look at what we pay and who we pay it for there just aren’t lots of optional groups that you can simply say we’re going to stop paying for,” says Don Williamson.

Williamson is caught in the middle. He’s Alabama’s health officer and he’s also in charge of the Medicaid Transition Task Force.

“Alabama Medicaid covers only the minimum number of people, the minimum types of people required by the federal government,” says Williamson. “And we are probably third or fourth lowest in the country in our per member cost.”

While the federal government would pick up 100 percent of the cost of Medicaid patients under the expansion plan; that offer only lasts three years. It then shifts to a 10 percent responsibility for the states. Given the current state of Medicaid in Alabama even ten percent would be too much of burden to bear.

“We’re going to be almost a $6 billion Medicaid program in 2015,” says Williamson. “The state share of that ought to be almost 2 billion dollars. Again if we get roughly $700 million of state money in 2015 that other $1.2 to $1.3 billion has to be made up some place to get to you state share.”

That extra cost down the road is what makes Governor Bentley uncomfortable. However, two studies by the University of Alabama and the University of Alabama at Birmingham say Medicaid expansion is a good deal. The research points to job creation and twenty billion dollars in extra revenue. But a study by Troy University says not so fast…

“They’re assuming far too high a tax rate. They’re assuming 8.6 percent taxes on all of the money that will be spent,” says Scott Beaulier. Beaulier is Director of the Johnson Center and Chair of Economics and Finance at Troy University. He’s also a co-author on the Troy study.

“There’s problems with that when it’s being spent for un-health services,” says Beaulier. “Health services are largely un-taxed, health service companies are often non-profits so they’re tax-exempt in many cases, they often are exempt from property taxes so that rate is really way too high and that’s what’s driving their very large economic impact.”

Beaulier says if you shuffle the numbers a bit, the outcome goes from a billion dollars in savings to a half billion in losses. He says not at question is whether Medicaid expansion is a good idea.

“A Medicaid expansion that covers 300,000 more people is going to improve health outcomes in Alabama. That’s something that could very well be true,” says Beaulier. “Medicaid expansion of 300,000 Alabamians is something that is going to assure greater security for many poor people that’s something that is probably true, but to say that we are going to get all of these great savings and economic gains from it is where both Phillip and I, my co-author have major problems.”

Whether or not Medicaid expansion is good for Alabama is still debatable. But for 191,000 Alabamians about to hit the affordable care act individual mandate deadline shouldering the full cost of health insurance… it could be a lifesaver.

Link to original article from Alabama Public Radio

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