Medicaid Debate Heats Up

Member Group : Lincoln Institute

As budget talks heat up in Harrisburg, the time is nearing for a decision on whether or not to expand Medicaid under Obamacare—and the hospital lobby is out in full force to make sure that happens. If they succeed, they will have hooked lawmakers into sending Pennsylvania out onto a fiscal ledge, where only the whims of the federal government would determine if and when we go over the edge.

During the 2009 Obamacare debate, large hospital chains agreed not to protest over losses of subsidies to help them care for the uninsured– in exchange for the financial boon they would receive through a larger Medicaid population and thus more government payments. Now that the Supreme Court has ruled that states have the option not to expand, lobbyists for corporate hospitals are hustling to make sure their bottom line stays intact—regardless of the results for patients and taxpayers.

The special interests jumped on an April report from the lobby group the Hospital and Healthsystem Association of Pennsylvania that estimated expansion would create $3.2 billion in annual economic growth for the state. The commissioned report was followed by another from the state’s Independent Fiscal Office (IFO) that found an average of $454 million in annual savings in the first decade of expansion. The eye-popping numbers caused Democrats and lobbyists to increase the pressure on Governor Corbett, who has bravely stood in opposition to the costly expansion, to cave in.

There’s just one problem: both reports make a pretty incredible assumption. They take at face value the say-so of our dysfunctional federal government that they will provide 100 percent of initial funding and 90 percent of the funds to take care of each state’s new Medicaid population—for Pennsylvania, this could be up to one million new people – in perpetuity.

In the meantime, there’s another story in the news every day about the failure of Obamacare to push premium rates down and about costs to the federal government exploding. Does anyone really believe the federal government won’t simply adjust their contribution rate down once a long-looming budget crisis begins in earnest? The President, himself, has suggested cutting these generous promises in a moment of fiscal clarity. With the federal balance sheet in shambles, states should expect that the cost of expansion will be dumped back on them sooner rather than later, further sinking state budgets that are already underwater—and that will be on top of the $2.8 billion this project will cost in the first ten years. That means money diverted from other necessities like schools or roads and bridges, or else more tax hikes for Pennsylvania families.

Governor Corbett has called out the Pollyannas throughout the legislative session, even sending a letter to the IFO to address some of the rosy assumptions in their numbers. But, the pressure on him is building as these groups insist that their financial windfall will also be Pennsylvania’s.
That’s why it’s important to point out what it really is that we’ll be getting with our hard-won tax dollars: more of the same broken system that’s already failing patients, doctors, taxpayers and state governments.

Medicaid is simply bad medicine. Nearly a third of doctors in Pennsylvania refuse to even take new Medicaid patients because of the dismal reimbursement rates they receive. That makes Medicaid patients seven times as likely to be rejected from a family physician. Astonishingly enough, surgical patients are 13 percent more likely to die than patients with no insurance at all—and 97 percent more likely than those who carry private insurance.

As a one-size-fits-all system, Medicaid essentially makes states the de facto administrators of a federal program, with no wiggle room to make the program work logistically or financially for their individual populations.

Spending almost $3 billion to condemn more people to poor-quality care and an inflexible, broken program isn’t reform—it’s doubling down on a debacle.

Instead, states ought to reject expansion as a first step in pressuring the federal government to provide real reform to this system. Both Washington State and Texas lawmakers have passed laws asking for their Medicaid allocation as a block grant so they could be free to figure out the system that best serves their states. In the coming weeks, Pennsylvania also has the opportunity to be on the vanguard of true Medicaid reform.

By supporting expansion instead, Democrats and a handful of Republicans in Harrisburg are driving the fiscal car closer and closer to the precipice; and it’s increasingly foolhardy to rely on the feds for a guard rail.

Jennifer Stefano is state director of Americans for Prosperity-Pennsylvania. She hosts "The Stefano Show" on WNTP-AM (990) on Saturday nights at 9 and is a commentator for Lincoln Radio Journal.