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Obamacare’s Medicaid Deals With States Are Deceptive

Posted Jun 02 2013 3:20am


Stanley Feld M.D.,FACP, MACE.

Tennessee Gov. Bill Haslam (R.) has asked the Obama administration for flexibility in implementing Obamacare's Medicaid expansion; he has been rebuffed.

It is becoming clear to me that the Obama administration is heavy on the posturing and light on the reform. The goal seems to be to have the healthcare system fail completely in order to create a public panic.

The panic will result in the federal government taking over the healthcare system completely and instituting a healthcare system that controls patients, physicians and hospitals.

Some might call it socialized medicine. I call it total impingement on incentive, initiative and innovation which will decrease productivity and economic growth.

This is all being done by the Obama administration with a total disregard for cost. President Obama’s assumption is cost overruns can be covered by increased taxes. However, he is not considering the effect of increased taxes on economic growth. He is also not considering the effect of increasing taxes and increasing the money supply on purchasing power. An increase in economic growth usually translates to an increase in GNP and increased federal revenue.

Several examples come to mind immediately.

  1. States who have thought out the Obamacare expansion of Medicaid through health insurance exchanges have discovered that they are going to have tremendous cost overruns when the federal government stops paying the total costs. Originally the federal government was going to share the costs with the states.
  2. The 100% federal funding will be in effect only from 2014 to 2016. Then the states pick up their share of the burden. The problem is the federal government will continue to control all the rules. This leaves no room for states to be innovative.
  3. We have seen HHS refuse to give Indiana’s Medicaid improvement plan a waiver even though it is wildly successful. Its success can be attributed to several factors.
  4.  It provides incentives for patients not to overuse the system.
  5.  It expands the income requirements for eligibility into the system.
  6. The definition of poverty is an obsolete 1955 definition. Obamacare eligibility requirement is 133% of the poverty level or $14,400 per year.
  7.  Indiana requires eligible consumers to put up a small percentage of their income (2-5%) to enter into its Medicaid system. It also permits recipients to put money not spent into a health saving account for future use.
  8. The effect of this is to encourage patients not to overuse the healthcare system and not to show up in emergency rooms for care that can easily be performed in less complex facilities.
  9. Simple observations have led to intensive studying of the population that costs the most money to treat. 

 It turns out that, “According to a report released earlier this year by the Agency for Healthcare Research and Quality, 1 percent of patients accounted for roughly a fifth of all health care spending in 2009, or more than $90,000 per person. Five percent of patients accounted for half of overall health care costs. By contrast, 50 percent of patients accounted for only 3 percent of health care spending, the AHRQ report found.”

The high spending by this small percentage of high utilizers is not linked to a patient simply being uninsured without access to a primary care physician.

According to a recent report from the IMS Institute for Healthcare Informatics, 1 percent of patients in a survey of 10.6 million health plan members accounted for 25 percent of their plan's total costs, and 5 percent accounted for slightly more than half, mirroring the AHRQ survey.

Most ER physicians and social workers know who shows up in emergency rooms over and over again and which patients are readmitted to the hospital over and over again. These physicians also know the reason for this. However, no one ever asks these physicians the reasons.

Isa Gorman analyzed the data of the value of insurance for the indigent in saving lives.” Does Lack of Health Insurance Kill? ” She demonstrates that all the studies that support the notion of a lack of insurance are in error.

The Richard Kronick study proves they are wrong.

Kronick found that “adjusted for demographic, health status, and health behavior characteristics, the risk of subsequent mortality is no different for uninsured respondents than for those covered by employer-sponsored group insurance at base line.”

 He concluded that “the Institute of Medicine’s estimate was that lack of insurance leads to 18,000 excess deaths each year is almost certainly incorrect.”

Arkansas Gov. Mike Beebe (D.) first announced that he had reached a deal with the Obama administration to use the Affordable Care Act’s private insurance exchanges to expand coverage to poor Arkansans.

His Democratic base for the deal congratulated Governor Bebee. Arkansas was able to accept health insurance exchanges. The Republican majority in the state’s congress was skeptical. 

Governor Beebe reached a deal with Kathleen Sibelius to provide the poor in Arkansas with higher quality private insurance through the health insurance exchanges.

“Then the Good Friday memo came from HHS stating that its deal with Arkansas is not that different from its traditional endorsement of the use of private managed-care plans to administer the Medicaid benefit.”

“The memo makes clear that it will only permit state variations on the coverage expansion that are “comparable” to what HHS would have spent otherwise.”

“The HHS memo explicitly states that these private plans cannot modernize the design of Medicaid insurance to make it more cost-effective.”

 Governor Beebe was surprised and deceived.

“A  Good Friday memo  from the U.S. Department of Health and Human Services, however, splashes cold water on that aspiration. It’s now clear that the Beebe-HHS deal applies a kind of private-sector window dressing on the dysfunctional Medicaid program, and it’s not obvious that the Arkansas legislature should go along.”

According to the law these low income individuals will be automatically enrolled in Medicaid with significantly expanded insurance coverage. Medicaid has been plagued by concerns about its quality, access, and financing virtually since its inception.

Obamacare is supposed to add 17 million new patients to the rolls of Medicaid.

Medicaid had posed a severe fiscal threat to many state budgets. The federal restrictions on the states Medicaid program’s management has limited the state’s ability to manage states budgets and adjust payment of the severe low reimbursement to Medicaid providers.

The result has been severe underpayment of physicians. The underpayment resulted in a lack of physicians’ participation in the Medicaid program and limited access to care. In turn this has led to significantly worse outcomes and higher mortality rates for Medicaid recipients vs. private insured and Medicare.

“Under the Obamacare, individuals and families with incomes between 138 percent and 400 percent of the Federal Poverty Level (FPL) will be eligible for generous premium subsidies and cost-sharing credits, which they can use to offset the cost of purchasing private insurance on state or federal insurance exchanges created under the law.”

I have a feeling Governor John Kasich (R) of Ohio fell for the same bogus deal as he agreed to sign up for the health insurance exchanges. His Republican base is screaming their lungs out.

He will get his rude awaking soon as HHS changes the deal he thought he got.

Medicaid is a failed program medically and fiscally. Adding more recipients is not going to solve Medicaid problems. Accepting the health insurance exchanges is going to make the states’ budget problems worse.

An innovative program such as Indiana’s Health Plan can do much more toward making Medicaid viable. The Obama administration has objected to this plan.

Why? I can think of several possible reasons including the desire to have the healthcare system result in total collapse.

 The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone

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