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.”

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

  1. Matt says:

    I hear what you’re saying, but I think the opt-in model is entirely reasonable. Seems to me it was in one of Reid’s versions of the bill.

    I’ll be surprised to see more than a handful of states, if that, refuse to expand. They might grumble, but turning down a big influx of money into one’s state economy tends not to be in policymakers’ dna.

  2. Kathryn Baer says:

    As you well know, Matt, I’m not a lawyer. But I see a critical difference between the Court’s ruling and an opt-in that’s part of a particular piece of legislation.

    The federal government’s power to withhold funding is its most powerful enforcement tool. Recall that it, rather than the 14th amendment, was how school systems were desegregated and hospitals compelled to admit black patients.

    Can states now refuse, with impunity, to comply with, say, an expansion of civil rights protections in federally-assisted programs? Improvements (sorely needed) in TANF? I’d be rather surprised not to see the Medicaid ruling cited as a precedent for challenges to future changes in federal/state programs.

    I agree that most states won’t turn down the extra federal funding for their Medicaid programs. I suspect some will, however — at least initially. They’re likely to be the states that exclude the most poor people because expansion will be most costly for them.

    In this respect, the ruling undermines a fundamental goal of the ACA. A legislative fix is theoretically possible, but politically unimaginable — at least, to me.

  3. […] I earlier wrote, the ruling essentially lets states retain their current Medicaid eligibility […]

  4. […] ACA proponents jumped on the findings too, arguing in part that protection from medical bankruptcy is a good enough reason to expand Medicaid, as the law initially required. […]

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