Tuesday, May 02, 2017

Medicaid is cheaper. Ergo...

In Inside National Health Reform (2012), John McDonough, a former Senate aide who was in at the birth of the ACA, recounts how the ACA's threshold for expanded Medicaid eligibility came to be set at 133% of the Federal Poverty Level (de facto 138% FPL, as everyone gets 5% of income discounted). In so doing he highlights a rather obvious fact about Medicaid: it's cheap.
The decision to go higher than 100 percent of the federal poverty level in the Senate and the House were driven by dollars. The Congressional Budget Office, the nonpartisan congressional advisory body, estimated much higher costs to cover individuals through an exchange rather than through Medicaid because the latter pays medical providers much less than private insurers can get away with and because Medicaid administrative costs are much lower. In the early summer of 2009, when Senate Majority Leader Harry Reid and the White House pressured Baucus to abandon plans to tighten the federal health insurance tax exclusion as a financing source, Senate Finance leaders and staff scrambled to find new revenues and to hold down costs—moving from 100 to 133 percent of the FPL for Medicaid eligibility was one important step in that direction. Why not 150 percent? Finance officials knew there were existing Medicaid populations at 133 percent of the FPL, including children up to age six and pregnant women, while there were none at 150 percent of the FPL—it would be a more difficult and complex change. Further, governors and some Democratic senators felt going higher than 133 percent of the FPL was a line they were not willing to cross: 133 was it.

The key moment for House leaders came in September 2009, when President Obama set a $900 billion limit on the total price tag for health reform in his joint address to both houses of Congress. House leaders had planned on a 133 percent FPL threshold, and the Obama spending limit persuaded them to move to 150 percent of the FPL to drive down further the cost of their legislation. In the January 2010 House-Senate dialogues, House leaders pushed for the 150 percent FPL limit, though Senate negotiators emphasized they would not have sixty votes for that level of Medicaid eligibility. After the Massachusetts special election, when the Senate bill became the path to a bill signing, the issue dropped off the table. The final number was 133 percent (p. 149)
Along the way, McDonough matter-of-factly notes another point about Medicaid:
Medicaid is an insurance program without deductibles, without co-insurance, and with minimal co-pays, something that triggers middle-class resentment, though for individuals and families with no economic resources, cost sharing often results in patients obtaining no services and delaying medical treatment until their conditions get worse and more costly to treat (p 149).
As I've noted before, interviewers have picked up a good deal of Medicaid envy among Trump voters, including those enrolled in ACA Marketplace plans, often on the wrong side of the ACA's deductible cliff at 200% FPL. It seems that many people would accept Medicaid's narrow networks in exchange for minimal cost-sharing.

All of which reinforces my conviction that the ACA marketplace should be structured basically as managed-Medicaid-plus, like the Basic Health Programs established under the ACA by Minnesota and New York for people in the 138-200% FPL income range. Why not allow a phased buy-in, with proportionate cost sharing and age-rating, for people at any income level who lack access to employer-sponsored or other insurance?

If these low-cost exchanges became a genuine fallback for the middle class, as the marketplace now is for the working poor (with low cost-sharing up to 200% FPL), I believe that the networks would gradually widen, with hopefully-finite upward pressure on provider payment rates, perhaps settling a bit below or at Medicare levels. As takeup and acceptance grew, the next step would be to allow employer buy-in, as a 2009 New York proposal for something very like the BHP the state later founded envisioned.

Medicaid-for-all-who-need-it, gradually swallowing the healthcare system.  That, incidentally, is the only way Trump -- as his buddy Christopher Ruddy has recognized -- can fulfill his healthcare promises.

1 comment:

  1. It is obvious that Medicaid expansion should have been the solution for gaps in our healthcare system. You open the system for buy in with pricing increasing as income increases. Much simpler to administer than ACA with the exchanges.