By expanding Medicaid, the state-federal partnership that offers health insurance to low-income Americans, the Affordable Care Act set out to cover some 17 million uninsured– or roughly half of the 34 million who are expected to gain coverage under reform.
But when the Supreme Court ruled on the Affordable Care Act in June, it struck down a key provision which threatened that if a state refused to co-operate in extending Medicaid to more of its citizens, it could lose the federal funding it now receives for its current Medicaid enrollees. In a 7-to-2 decision, the justices ruled that this punishment was too coercive: “withholding of ‘existing Medicaid funds’ is ‘a gun to the head’ ” — that would force states to acquiesce.
As a result, states can, if they choose, opt out of the Medicaid expansion, and some governors are threatening to do just that–even though Washington has promised to pay 100% of the cost from 2014 to 2017. After that, the federal share would gradually decline to 90% in 2020– and remain there. This is a generous offer; today the federal government now picks up just 57 percent of the tab.
Nevertheless, some states claim that the 10% that they would have to ante up after 2020 is more than they can afford. A few go further and admit that this isn’t just about money: by rejecting the federal funds, they are voicing their objection to “Obamacare.”
What these governors ignore is the impact that the loss of those Medicaid dollars will have on insurance rates in their states, says Joe Paduda, editor of Managed Care Matters. Hospitals have been counting on the influx of new Medicaid dollars to reduce the cost of uncompensated care.
Assuming that Medicaid will expand, the Affordable Care Act has already trimmed subsidies to hospitals that care for a disproportionate share of impoverished patients. But now, if states turn down the Medicaid funding, the hospitals in these states “are going to have to make up the revenue loss from somewhere,” says Paduda, “and that ‘somewhere’ is going to be from privately-insured patients. That will lead to health insurance costs increasing much faster in ‘non-expansion’ states than in the rest of the country.”
We have been told that in some red states conservatives “hate poor people.” But my guess is that they’ll hate higher premiums more. If premiums go up, governors who turned down federal Medicaid dollars will have to answer to voters.
Note to Readers: I published this post on HealthInsurance.org yesterday. You’ll find the rest of it here. You can comment there, or come back here. I’ll check comments on both blogs.