The Republicans’ Medicaid Cruelty

Jeff Madrick

“The essential American soul,” claimed D.H. Lawrence, “is hard, isolate, stoic, and a killer.” While the rejection by five state governments of the Affordable Care Act’s Medicaid expansion may not precisely illustrate Lawrence’s heated observation, it does suggest a contemporary vein of cruelty in America that is deeply disturbing.

A new study published in The New England Journal of Medicine shows that providing greater medical insurance coverage for the poor has saved lives. Moreover, the ACA’s expansion of Medicaid requires little state money, since the federal government will pick up more than 90 percent of the costs over time, and 100 percent of the costs for the first few years. Yet Texas, Florida, Louisiana, South Carolina, and Mississippi—which together account for more than a sixth of the overall US population—have already rejected the plan, and as many as twenty other states, including New Jersey, Missouri, Iowa, Nebraska, and Nevada, have indicated they may follow suit.

Furthermore, these states already have among the highest numbers of citizens with no health insurance. Twenty-five percent of non-elderly Texans have no health insurance, for example, compared to the national average of about 18 percent. If the Obama Medicaid reforms were fully implemented, 15 to 17 million of the nation’s 50 million without health insurance would be covered. In a report just issued in late July, however, the non-partisan Congressional Budget Office estimates that the Medicaid expansion will only cover some ten million more, or a full third fewer than anticipated, because of the rejection of the plan by large states like Florida and Texas and others who have not yet formally announced their intentions.

This is particularly troubling in view of how important the Medicaid expansion is to low-income Americans. The two Harvard economists who authored the NEJM study have found that there are 6 percent fewer deaths in several states that had expanded Medicaid in earlier years compared to nearly contiguous states that did not. Fortunately, according to the recent CBO report, three million of those who will not be covered in states that reject the Medicaid expansion will qualify for and probably buy insurance through another provision in the ACA—a program that provides subsidies to buy insurance for those who earn between 100 and 400 percent of the federal poverty level, which is $22,350 for a family of four.

What has enabled states to reject the expansion is the curveball thrown by the Supreme Court in its decision in June to uphold President Obama’s Affordable Care Act: not only did the court argue that the states need not participate in the new expansion, which the Obama administration had intended to be mandatory; it also said that the federal government could not withhold Medicaid payments for states that decide not to participate. Thus, the court created a way to undermine one of the most admirable achievements of the ACA, a sweeping expansion of a medical safety net for the neediest.

Its worth considering for a moment why this matters. Few Americans, unless they are poor, understand the limitations of the existing Medicaid program. Although it was created in 1965 to provide insurance to poor families, it is administered by state governments, which are allowed to set their own eligibility requirements and other standards. In many states, this has meant that a working family only qualifies if it earns no more than 63 percent of the poverty line—about $14,000 a year for a family of four. An individual who is not a parent does not qualify for Medicaid at all, no matter how low his or her income. Some states like New York and Massachusetts are far more generous, and children of poor families are generally covered nationwide. But overall, Medicaid has left far too many in need without coverage.

In contrast, the ACA expands coverage to all individuals, whether parents or not, who earned up to 138 percent of the poverty line—nearly $30,000 for a family of four. And it does so largely without forcing states to increase their spending on health care. The federal government will finance the ACA through tax increases, mostly on better-off Americans, notably an increase for Medicare taxes for individuals making $200,000 or more. There will also be future reductions in the reimbursements for some programs, especially the Medicare Advantage programs that people can buy to pay all their healthcare and which many believe have been too generously subsidized by the federal government.

In view of the modest financial demands made on the states, why are states with sizable populations of under- or un-insured people trying to sabotage the expansion? Typically, governors argue they cannot afford it. Governors are worried that more of those who already qualified for Medicaid will now sign up. Some governors say the federal government won’t be able to keep its financing promises and they will be left holding the bag. And some even say their state budgets can’t afford the small portion of costs, at most several percent, that they will have to pay. Governor Rick Scott of Florida, for example, has made the wild claim that it would cost Florida some $1.9 billion to comply with the expansion.

But the hard numbers simply do not support these arguments. The new CBO report estimates the federal government will cover 93 percent of all costs over ten years, and 90 percent after that. Moreover, because more of the poor will be covered, the costly emergency medical care they often receive at the last minute in ER rooms will be reduced, saving states money. Meanwhile, the Center on Budget and Policy Priorities has shown that the huge sums mentioned by Governor Scott are based on extreme assumptions that don’t bear out historically and misunderstandings about how the new plan will work.

And there is a further cruelty in rejecting the Medicaid program. Under the ACA, subsidies for premiums don’t begin until people make 100 percent of the poverty line. Those who earn less, yet still don’t qualify for traditional Medicaid, will simply have to pay unaffordable market prices if they want insurance. One hint about the true motives of these states is that the governors who are either rejecting or leaning towards rejecting the federal program are overwhelmingly Republican. It has become clear that they are driven by political grandstanding about big government. Indeed, had it not been part of the bigger ACA package, such a piece of remarkable legislation as the Medicaid expansion would likely never have passed, because it is a social program aimed at the poor—a form of government activism that many conservatives are ideologically opposed to. The states that have indicated their opposition to the expansion, as noted, are already typically ungenerous to the poor, and have very low eligibility rates for Medicaid. The calculation of the governors is that a war on the poor is good politics these days in about half of America.

A nation that can’t summon a natural compassion for the poor—that can’t understand that many Americans face hardship in circumstances that no amount of personal responsibility can surmount—is losing its moral bearings. As more people experience the benefits of Obamacare, including the Medicaid expansion, resistant states may well be pressured to adopt the program over time. We cannot be certain yet which way the nation will turn. One thing we do know is that if Obama loses the November election, much of the health care reform may be overturned before it has had a chance to have much impact, and those waging war against the poor will enjoy another victory.

This article was originally published by the New York Times. Copyright New York Times.

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