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ACA Fail Fractal
The Medicaid Expansion’s Other Shoe Drops

The Medicaid expansion is about to get very messy. With respect to Medicaid, the Affordable Care Act did two things: it expanded the number of Americans in the program— 9.1 million Americans have joined to date—and it cut the reimbursements doctors would receive from the federal government for serving Medicaid patients. Perhaps because paying people less money to treat more patients seemed odd even to the designers of the ACA, the law also provided a temporary payment rate increase, requiring Medicaid to reimburse at the higher rates paid by Medicare. However as Wonkblog reports, the end of the year will see that temporary increase end, and the Urban Institute predicts that doctors could experience an average reimbursement cut of 42.8 percent. Though that number may be high, cuts are definitely coming to many states:

Some states are trying to plug the gap with their own money. A Kaiser Family Foundation report from late October found that 15 states were planning to extend the Medicaid payments in some form through the 2015 fiscal year (since then, the District also indicated that it also will, according to KFF). Another 23 states said they’ll let the payment rates drop and the other states were still undecided.

The state-level decisions don’t appear to be politically driven — there’s a mix of blue and red states in each category. As Urban finds, nine of 27 states that opted into Obamacare’s Medicaid expansion are extending the increase, while six that rejected the expansion are also extending the payments.

So the big diving factor seems to be money. States that aren’t planning to extend the fee increase are set to see a much larger drop in federal support in states that are extending it — meaning there’s a larger gap to cover with just states funds.

The story sites a study showing that lower reimbursement rates mean doctors are, unsurprisingly, less willing to take on patients. This is yet more reason to believe that the ACA’s vaunted success in getting people insured will turn out in practice to be a promise unmet. Unintentional or not, it is cruelty to tell Americans they have insurance when they cannot use it—and even sites like the Wonkblog are starting to notice.

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  • Andrew Allison

    Medicaid is NOT insurance, it’s welfare.

    • Corlyss

      Spot on! I thought Gruber had an opportunity to do another truth-telling service for the lame-brained Congress by answering one question honestly: “Would we save a lot of money if we just didn’t treat seniors?” or words to that effect. The Congressman was analogizing to a report Gruber authored about how much money we had saved once abortion and contraception services became widely available (read legal – they were always widely available if you knew where to go). Gruber simply couldn’t bring himself to say “Yes! Yes! A thousand times Yes!” even though everyone knows the stats show that 50% of medical expenditures are expended on care in the last 6 months of life. IOW we “spend” 50% of our health care funds on people whose deaths are imminent. That has tremendous implications for eldercare policy only no one wants to go there. It would be one thing if those people were spending their own money. But they aren’t. They’re spending either insurance money or public funds. If they’re spending public funds, we need a more honest debate about spending priorities.

      • FriendlyGoat

        If I didn’t know better, I’d think you are about to advocate “death panels” to fix your last sentence. But, nah, Sarah Palin controls your political brain with a remote control and she has ALREADY declared why you can’t go there. (Doesn’t poll as well for your side. Neither does “Can we just save money by not treating seniors anymore?)

      • Andrew Allison

        It’s worse than you think. Read, which states that “According to one study (Banarto, McClellan, Kagy and Garber, 2004),
        30% of all Medicare expenditures are attributed to the 5% of
        beneficiaries that die each year, with 1/3 of that cost occurring in the
        last month of life.” In other words, 10 years ago 1.67% of all Medicare expenditures were on those who would die in less than a month.
        The amount of money which the medical industry consumes to keep terminal patients alive is unconscionable. TAI talks a lot about the potential for technology to reduce the cost
        of health care, but encouraging DNRs, and perhaps even making
        them mandatory for Medicare patients with terminal diseases would also do a lot.

        • FriendlyGoat

          IF ONLY your side would campaign on mandatory DNRs for old terminally-ill people on Medicare. Then we could have a real discussion with church people about why they think liberals are “elite” and you’re not. Like I told Corlyss, Sarah Palin has already spoken for you.

  • Boritz

    “Unintentional or not, it is cruelty to tell Americans they have insurance when they cannot use it.”

    Good intentions trump all in this corner of the political multiverse.

    • FriendlyGoat

      Good intentions are always the correct driver anywhere and in anything. The alternative is bad intentions, or simply not giving a hoot. There is no evidence that Republicans have ever had “better” intentions for the health care of poor people. Some philanthropists have, and some of those being Republicans. But NOT the whole political right.

  • FriendlyGoat

    Here again, the Republican Congress of 2015 has every opportunity to correct the stinginess of those Democrats with their over-cheap ACA approach by simply funding Medicaid to much higher levels. It’s their opportunity to end the cruelty of insurance which is hard to use.

    • Corlyss

      LOL where’s the money coming from? You ready to pay a 100% increase in your taxes? A 200% increase? Be sure to alert your congressional delegation when you are ready to volunteer for that.

      • FriendlyGoat

        The Congressional delegation from my state is 80% Democrat. I do alert them as you recommend—–by voting for them instead of for the other guys.

    • TheRadicalModerate

      Allow me an earnest response to your sarcasm (and some numbers to back up Corlyss’s response to you).

      “…the Republican Congress of 2015 has every opportunity to correct the stinginess of those Democrats…”

      First, let’s remember where the spending went in 2014 (cf. Tables 3.1 and 3.2):

      Entitlement spending (Medicare, Medicaid, Social Security, Income Security, and VA): 68.0%
      Defense: 17.0%
      Interest on Debt: 6.1%
      Everything Else (you know, silly stuff like public health, infrastructure, R&D, law enforcement, international aid, education, environmental management, running the bureaucracy): 8.9%

      Note that these numbers are a percentage of total outlays, so we’re not even worrying about the deficit here. BTW, “entitlement spending” is abstracted from the “human resources” superfunction in the budget. That portion of the budget has consumed 1.75% more of total outlays per year since 2009.

      There’s no money. Raising taxes doesn’t work–no matter what the marginal rate structure is (and we’ve tried a whole bunch of them in the last 70 years), revenues come in at about 18% of GDP, because that’s what people are willing to pay. Entitlements are eating us alive, and if anybody were to correct the “stinginess”, we’d pretty much collapse.

      “It’s their opportunity to end the cruelty of insurance which is hard to use.”

      You know what would be less cruel? First, if we didn’t dump about 37% of the cost of the ACA qualified health plans onto the 5% of taxpayers that have the misfortune of having to buy their insurance on the individual market. (Note that the vast majority of those taxpayers are middle class. That 37% comes right out of increased premiums for the people who don’t qualify for subsidies, before we even touch monies from the general fund.)

      I suspect it would also be less cruel if doctors didn’t view every Medicaid patient walking through their door as a giant money suck. You could go a long way toward that by converting Medicaid (and Medicare, for that matter) into premium support programs, where “clients” (I love that word) would buy their insurance on the open market and the government would subsidize a fixed portion of it. And you could go even further by de-professionalizing routine care so that you’d have affordable clinics for vaccinations, routine physicals, ear infections, etc.

      It’s not that there aren’t solutions for all of this stuff. It’s just that there aren’t solutions where a giant centralized bureaucracy decides who gets covered for what and for how much.

      • FriendlyGoat

        1) It’s not “my” sarcasm. Other sources are calling the Democrats’ rates cruel, when Republicans only plan to cut them.
        2) There is no way doctors get paid more from Medicaid by putting a layer of profiteers in between.
        3) Republicans are AT LIBERTY to “de-professionalize” and set up clinics. Ya think they will?
        4) Please see my reply to Corlyss for a summary of where the GOP plans to reduce their revenues, aka spend money.
        Capital gains winners. Estates. Corporations. Even you do not need a crystal ball to predict the tendencies of the next Congress coming in.

        • lhfry

          Organizations like Walmart and some large drug chains are indeed setting up clinics for vaccinations and other routine medical care – staffed largely by nurses and nurse practitioners. And you can get vaccinated by your local pharmacist as well. This is a good thing. Once the ACA tanks, as it will, then such providers can be the opening for a truly consumer driven medical care system backed up by true insurance instead of pre-paid medical care.
          Those of us on Medicare are also facing a doctor shortage. Many doctors won’t take it. Angie’s List did an article about the problem of Medicare recipients who move to a new location and then find that few or no doctors in their new location will take a new Medicare patient. My husband and I found this outside the Washington DC area and have relied on urgent care facilities as a result. We’re now looking at a concierge service because as you age, even if you are healthy, you need continuity of care – even just a doctor with whom you can file your dnr or advanced directives and who can be expected to be in the same place for a few years. Urgent care doctors move on.

          • FriendlyGoat

            Walmart and pharmacy chains do some good work within their goals to bring in customers and make money from those customers on other things while they’re there. I am certainly not against those corporate initiatives.
            The question is whether Republican-led legislatures and Congress will do anything to help, now that they have a lot of power. Will they?

  • Corlyss

    Next up, the Physician Shortfall Act that requires all doctors as a condition of licensing to serve the government health care programs on a salaried basis for 10 years after they graduate.

    • FriendlyGoat

      T’would be perfectly reasonable as a mechanism for forgiving the borrowed cost of a physician’s education.

  • teapartydoc

    If you want affordable health care offered in a price-competitive environment, you will have to abolish government medical licensing.

    • FriendlyGoat

      Just for the heck of it, would you please tell us whether you’re recommending this out of the personal experience of being a now-licensed “doc”?

  • Thom Burnett

    TAI is dreaming. That temporary increase in doctor’s pay will be in place a generation after I die.
    The alternative of angering doctors, patients, and the general public won’t allow
    Congress and/or the President will kick the can down the road a year or two at a time – just like they’ve done with so many other provisions of the Affordable Care Act.

    Fiscal observers were pointing how fictional this cost savings is likely to be before the act was passed.

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