Supreme Court Medicaid Ruling Worst for Very Poor People

Analysts and pundits have dug into the Supreme Court’s ruling on the Affordable Care Act, including the part that addresses Medicaid.

What we’re learning is very bad news for very poor people because millions — especially the poorest — are likely to remain uninsured.

Here’s why.

As I earlier wrote, the ruling essentially lets states retain their current Medicaid eligibility restrictions.

They’d forfeit the extra federal funding they’d get if they expanded their programs to include all residents (except some immigrants) with incomes at or below 133% of the federal poverty line.

But they wouldn’t lose the funding they get under the regular formula — 50% up to 73.4% of costs in the upcoming fiscal year.

We’ve had a lot of speculation about what state governors will do, especially those heading up the 26 states that challenged the law.

Some say it will be hard for them to turn down so much extra money, especially when their constituents see how other states are benefiting — and from their federal tax dollars too.

Governors will also be under pressure from their in-state hospitals — a powerful lobbying force, as the final shape of the ACA shows.

Others point out that some right-wing governors have already rejected extra federal money, e.g., some of the stimulus grants created by the Recovery Act.

And some of their states would incur quite large additional Medicaid costs — not initially, but as 2020 approaches and thereafter. A big reason is that, at this point, their programs exclude so many people an expansion would cover.

In Texas, for example, non-working parents qualify for Medicaid only if their incomes are below 12% of the federal poverty line. The cut-off for working parents is 26% of the FPL — just over $4,960 a year for a family of three.

Not surprisingly then, the combined caseloads for Medicaid and the Children’s Health Insurance Program* would initially increase by an estimated 1.2 million if the state adopts the ACA expansion criteria.

This alone, says the state’s Health and Human Services Commission, would cost the state $2 million, increasing to $1.4 billion by 2020.

What it would get from the federal government would be exponentially larger, however — total of $52.5 billion through 2019.

Florida Governor Rick Scott claims that it would cost his state about $1.9 billion to “implement a massive entitlement expansion of the Medicaid program.”

In this case too, though he doesn’t say it, the cost in part reflects the state’s very low income eligibility cut-off — 58% of the FPL for parents.

Think Progress reports that Scott and nine other governors have said they’ll definitely not accept the expansion funding. Twenty-two are still on the fence, including 15 whose states signed on to the lawsuit.

So it seems we’ll indeed see a goodly number of states with no Medicaid expansion — at least initially. We’ll thus still have millions of people with no health insurance. And they’ll be among the poorest.

The problem, as the Center on Budget and Policy Priorities explains, is the way the ACA structures tax credits to subsidize health insurance purchased on the exchanges states will establish — or the federal government establish for them.

The most generous subsidies are for people at 100% to 133% of the federal poverty line. I infer that Congress included this income bracket to extend assistance with health care coverage to documented immigrants who aren’t eligible for Medicaid.

Other people in this income bracket could purchase health insurance if their state decides not to expand its Medicaid program.

The coverage would cost them more than Medicaid would have, but the premiums would be fairly modest — at most 2% of annual income.

No subsidies, however, for people below the federal poverty line — people who can’t possible afford to buy insurance at market rates. They’re about 80% of all uninsured people who’d have become eligible for Medicaid before the Supreme Court ruled.

Congress could, of course, fix the ACA to make health insurance for these people affordable if their states won’t open Medicaid to them.

Lot of luck. Republican Congressional leaders insist that the law must, as the House Majority Leader John Boehner put it, “be ripped out by its roots” and replaced with …. Well, they’re still not saying.

This much we know. Senate Minority Leader Mitch McConnell thinks that coverage for the well over 30 million people uninsured now “is not the issue.”

As the New York Times explains, Republicans may have difficulty dismantling the ACA in its entirety. But this is cold comfort to the poor people whose only hope for health care is Medicaid.

* CHIP is part of the calculation because Texas had planned to shift some children out of the program and into Medicaid in 2014.

UPDATE: PolitiFact has just awarded a False rating to Governor Scott’s claim that expanding Florida’s Medicaid program would cost $1.9 billion. Estimates from the state’s health care agency, it says, indicate that costs for new patients added under the expansion would be about $500 million, but not until 2020.  At least, one advocacy organization has called the estimates “hyper-inflated.”

Health Care Reform Survives, But With Low-Income People at Risk

I don’t know about you, but I breathed a huge sign of relief when the first tweets announced that the Supreme Court had upheld the individual mandate in the Affordable Care Act.

I’d been thoroughly convinced by arguments that the whole ACA framework would ultimately collapse if people could go without health insurance until they needed costly care and then were entitled to it — and at the same price the company charged people who needed only routine preventive care.

What’s problematic, however, is another part of the Supreme Court decision, which may limit low-income people’s access to affordable health care. Here’s why.

Under the ACA, all individuals with incomes at or below 133% of the federal poverty line were supposed to become eligible for Medicaid in 2014, when the health insurance purchasing exchanges and subsidies for not-so-low-income people also kick in.

All, that is, except undocumented immigrants and others who’ve been in the country for less than five years.

The federal government will initially pay the full costs states incur for Medicaid caseload increases due to the higher eligibility ceiling and the expansion of coverage to adults who don’t qualify now, e.g., those without disabilities or dependent children.

The extra federal support will phase down after the first three years. Beginning in 2020, states will get only 90% of coverage costs for their newly-eligible Medicaid participants.

Still a high percent, but likely to leave them with a total of about $73 billion more to pay by 2022.

Or maybe less. As the Center on Budget and Policy Priorities notes, this estimate doesn’t factor in what state and local governments will save in health services for the uninsured, e.g., emergency room care.

Twenty-six states nevertheless filed a lawsuit claiming coercion because, under the law, they’d lose all federal funding for their Medicaid programs unless they expanded them as described.

This is really no different from the way a vast number of federal programs operate. If states want federal funding, they have to meet certain standards.

For safety net programs like Medicaid, this generally means that they have to provide certain types of benefits to people the federal law has targeted.

The Supreme Court majority, however, ruled that states can opt out of the Medicaid expansion without losing their regular share of Medicaid funding.

It seems reasonable to suppose that many, if not all of the 26 states will do just that.

Other states might follow, since they’ve been struggling with rising Medicaid costs — and paring back optional benefits — since the recession set in.

What’s going to happen to the millions of uninsured people who aren’t poor enough to qualify for Medicaid under their states’ existing laws, but plenty poor enough to make market-rate health insurance policies unaffordable?

To the able-bodied, childless adults, some of whom are poor as the proverbial church mouse — homeless even?

Well, maybe this is an idle worry. As economist-blogger Jared Bernstein observes, anti-poverty advocates won’t be the only ones fighting against state opt-outs. Health care providers have interests in Medicaid expansion too.

Mother Jones blogger Kevin Drum thinks that some state agencies will also press for expansion since they’re “already on the hook for indigent healthcare.” Better to get those indigents into Medicaid and the federal government picking up the costs.

On the other hand, Wonkblogger Ezra Klein reminds us that the Supreme Court decision is hardly the end of the story.

Both Congressional Republicans and Presidential candidate Mitt Romney have vowed to repeal the ACA.

Say they’ll replace it, but can’t (or won’t) tell us how. Clearly, however, not with anything like an individual mandate or a mandatory expansion of Medicaid.

An across-the-board sweep in November, including a 60-vote Republican majority in the Senate, could thus put us right back where we were before the ACA.

As many as 33 million people who would have had health care coverage — including as many as 17 million through Medicaid — would still be at risk of untreated illnesses and injuries or bankrupting medical costs.

One reason that 2012 is, as an op-ed in the New England Medical Journal says, “a watershed election for health care.”

House Ways and Means Shifts Costs, Wipes Out Services Grants

I wouldn’t want to leave the impression that the House Agriculture Committee’s attack on the food stamp program was the only threat to low-income people spawned by the Republican majority’s effort to protect defense spending.

The Ways and Means Committee also had to find more savings — $53 billion over the next 10 years. And it too met its target by shifting costs to low-income people. But they’re not the only ones who’ll be harmed by what it’s come up with — far from it.

Here’s what the committee passed — and what the full Republican majority in the House almost surely will pass before week’s end.

Child Tax Credit Restriction

Ways and Means dusted off a proposal that earlier surfaced a way to offset some of the costs of extending the employee payroll tax cut and what remains of long-term unemployment insurance benefits.

Under the proposal, only parents with Social Security numbers could claim the Child Tax Credit. Immigrants who pay their income taxes using a number issued by the Internal Revenue Services would have to pay more because they’d lose the credit.

And those toward the bottom of the income scale would lose the partial reimbursement the tax credit provides.

First Focus reports that 5.5 million children would no longer benefit from the extra money their families have to spend on basic needs.

Elimination of Social Services Block Grant

Ways and Means would wipe out the Social Services Block Grant altogether. This also is a rerun, already revived in the current House budget plan.

SSBG is a relatively small program that provides states and the District of Columbia with funds they can use to meet a wide range of needs.

It’s commonly used for subsidized day care, services to protect both children and vulnerable adults from abuse and neglect, foster care and services that help seniors and people with disabilities live independently, e.g., Meals on Wheels, transportation.

Many states and the District also use SSBG funds for casework services that link people to programs that can help them.

The House Budget Committee calls the services “duplicative” because other pots of federal money fund them too.

This is misleading for two reasons. First, some states use the block grant for services that aren’t covered under other programs, e.g. protective services for elderly victims of abuse and neglect.

Second and more importantly, services aren’t duplicative just because states can draw on more than one program to fund them. Low-income parents who get child care subsidies funded by SSBG, for example, don’t also get subsidies funded by the Temporary Assistance for Needy Families program.

In other words, SSBG enables states to extend services they consider essential to more people who need them — over 22.6 million, according to the latest official figures.

Unlimited Health Care Subsidy Repayments

This is a bit technical, but it’s a big deal. So bear with me here.

Under the Affordable Care Act, people who aren’t poor enough to qualify for Medicaid can get subsidies to purchase health insurance through the exchanges, i.e., the upcoming state-level insurance markets, if they meet two conditions.

Their incomes must be at or below 400% of the federal poverty line. And they can’t get adequate, affordable health insurance through their employers.

The initial size of the subsidy is based — as it must be — on their income at the time they purchase or renew their health insurance. The lower their income, the bigger the subsidy.

What if their income rises substantially during the year? They’re unemployed at the beginning, but get a job, for example.

Under current law, they have to repay the excess they received, but only up to a fixed amount. Congress established a limit so that people wouldn’t choose to forgo health insurance because they might get stuck with a big repayment.

As the Center on Budget and Policy Priorities notes, Congress has twice raised the repayment cap to offset the costs of other health care legislation.

House Ways and Means would eliminate the cap altogether. The repayment some people could face would be more than five times the amount of the penalty they’d have to pay for not having health insurance.

An estimated 350,000 people — mostly the healthiest — would chose the penalty over the potential shock to their budgets later. Some, of course, would then be devastated by unexpected health care costs.

Meanwhile, people still in the insurance pool would, on average, have higher health care costs. So premiums would rise and, with them, the costs of subsidies.

The added stress on the exchanges would undermine the basic structure of the ACA — not an unintended consequence for the Republican majority. Nor is the outrage some people would feel when hit with a big repayment bill.

More support for the ACA repeal Republicans promise, if the Supreme Court doesn’t kill the law first.

Well, the House Ways and Means proposals, in their current form, won’t even get a vote in the Senate. But what we see here is that bad ideas don’t die just because they’re not enacted right away.

We should expect to see these and others resurface when House and Senate negotiators sit down to work out a way to avert the across-the-board cuts due to begin next January.

Lots of pressure. Lots of horse-trading then.

UPDATE: The House vote on these proposals, the food stamp cuts and some other nasty things I haven’t written about is now scheduled for Thursday, May 10. If you want to weigh in, the Coalition on Human Needs has an editable letter that will automatically go to your Representative.

CHN has also just posted a clever, informative video that shows what the proposals will mean in human terms. Well worth five minutes of your time.

Why I’ve Little to Say About the Ryan-Republican Budget … But Say It Anyway

I feel I ought to write something about the Ryan-Republican budget plan. I’ve been advised to call it that because it represents the platform Republicans are running on.

I’ve  read the Path to PovertyProsperity twice now. Both times got infuriated, which usually gets my blogging juices flowing.

But I’m stuck for a fresh topic. So I’ll write about that because the reasons are telling.

Proposals Replicate Last Year’s

One reason it’s hard for me to figure out what to write is that the new budget plan is in many ways the same as last years — at least for the issues I cover.

As you’ve probably read, it does take a new tack on privatizing Medicare. But the end results would be the same — costs increasingly shifted to seniors, ultimately less health care — and death of the traditional Medicare option the plan supposedly preserves.

So far as safety net programs are concerned, the two the Path gives specifics about are basically rehashes of the 2011 Path proposals.

Change Medicaid from a cost-sharing program to a block grant. Link increases in federal funding to population growth and the overall inflation rate rather than to health care costs. And let states do whatever to cope with the cost crunch.

Well, I wrote about that last year.

The Center on Budget and Policy Priorities has updated figures, but the bottom line is still the same — many millions of low-income people without health insurance, fewer services and/or higher co-pays for those fortunate enough to still qualify.

Same deal for the food stamp program. Once again, the budget plan would convert it to a block grant, using the deeply-flawed Temporary Assistance for Needy Families program as a model.

There’d be new work requirements for participants — and time limits, even apparently for the nearly 30% of households that have income from work. Also apparently for those too young, too old or too disabled to work — well over half of all participants.

And again federal funding would be capped at a level far below projected costs.

But I’ve already written about this attack on the safety net too.

The only news is that the block grant would kick in one year later and cut federal spending by more — at least $133.5 billion over the first 10 years, rather than the $127 billion estimated last year.

Plan Lacks Specifics

The other reason I find it hard to write about the budget plan is that it’s egregiously short on specifics.

The food stamp program, for example, is lumped into a category called “other mandatory,” i.e., all programs that don’t depend on annual appropriations for funding, except for Social Security, Medicare, Medicaid and a couple of other health care programs.

Jim Horney, CBPP’s Vice President for Federal Fiscal Policy, tells us that the budget plan reflects $1.2 trillion less than projected spending for these programs under current policies.

So even if one accepts Congressman Ryan’s assumed savings in farm subsidies and the federal retirement plan, there’d still be $900 billion in savings unaccounted for.

Where would they come from? Subsidized school meals and/or other child nutrition programs? Supplemental Security Income for low-income elderly and disabled people? Unemployment insurance? TANF (again)?

All of the above?

The same question mark hangs over non-defense programs that depend on annual appropriations — education and job training, housing assistance, veterans benefits, food safety, law enforcement, highways and a whole lot more.

Funding for these programs would be cut $1.2 trillion more than under the caps Congress agreed to last August. Where would the ax fall? Or rather, how close to the ground — and when?

Drastic Changes Deserve Informed Debate

Speaking of the mandatory programs, Horney concludes that “it would be a real travesty” to pass a budget like the Ryan-Republican plan “without a full and honest debate about [the cuts] and without leveling with policymakers and the public what cuts the … budget envisions.”

I think the same is true for the so-called non-defense discretionary programs. True, it’s up to the House Appropriations Committee and its subcommitees to decide exactly how to apportion the cuts.

But we ought to be told straight out how the Ryan-Republican budget would transform our country — because it surely would.

A preliminary analysis by the Congressional Budget Office indicates that, by mid-century, there’d be virtually no funding left for anything except defense, Social Security, the major mandatory health care programs and interest on the debt.

The rest of the federal government would, as arch-conservative Grover Norquist wishes, have been shrunk so small it could be drowned in a bathtub.

Surely this merits more debate than the annual budget process allows — and a full, frank accounting to base it on.

UPDATE: After I posted this, I discovered that the House Budget Committee had published a report that essentially spells out the Fiscal Year 2013 plan in greater detail. It says that block granting the food stamp program would save $122.5 billion over the first 10 years.