GOP Governors Fall for Obamacare

Last week, New Jersey Governor Chris Christie became the 8th Republican governor to enact the Medicaid expansion portion of the Affordable Care Act (Obamacare). Like Governors Scott, Kasich, and others, Christie has said the Medicaid expansion will help his state’s poorest residents.

This kowtow to Washington is disappointing, if not unexpected – the power of the Beltway is hard to resist, especially when a behemoth of a law like Obamacare begins to take effect. However, the claim by these governors that Obamacare will help their poorest citizens through expansion of Medicaid raises several important points that none of these governors has answered.

First, according to the Kaiser Foundation in November 2012,

An estimated additional 21.3 million people would enroll in Medicaid by 2022, a 41% increase compared to projected levels without the ACA.…However, even without the Medicaid expansion, Medicaid enrollment will increase due to provisions in the ACA that will lead to increased participation among those currently eligible for but not enrolled in Medicaid and CHIP (including children). If no states expand Medicaid, Medicaid enrollment would rise by 5.7 million people, and the number of uninsured would drop by 28%.

In other words, no matter what the governors do, the number of people on Medicaid will increase (see the nearby chart, courtesy of Just Facts). Which means the demand for medical care will go up…and yet it is doubtful that the supply of doctors will keep up with this demand. Which means longer lines for less care. Are these governors ready for the public relations and health care disasters longer lines will create, especially as the economy continues to be weak and thus the ability of poor people to rise out of poverty is diminished?

Second, doctors have long had issues with Medicaid reimbursement rates, and for a time rejected many Medicare patients as well when reimbursements started to shrink before the so-called “Doc Fix” was implemented. This should not be a surprise, considering that Medicaid reimbursement rates in 2009 were 58 percent of those of private insurers, and Medicare averaged a reimbursement rate of 80 percent in the same year. (For some context, the reimbursement rate for Medicare would be 55 percent in 2013 if the Doc Fix wasn’t in place.)

But fear not! The designers of the Affordable Care Act have a solution! According to a Centers for Medicaid & Medicare Services (CMS) report from May 2012, reimbursement rates for Medicaid will jump to 73 percent of those of private insurance companies in 2013, and 77 percent in 2014. The hope, it appears, is that the increased payment rates will entice doctors to accept Medicaid patients despite the increased demand and corresponding long lines.

This plan sounds all well and good, but as with any Washington-based solution, it is greatly flawed. Increased demand for Medicaid services means more people clamoring for services from the same doctors currently turning away Medicaid patients but accepting Medicare patients. Doctors will be forced to choose who they will take care of – Grandma or Grandkid. Since Medicare has long had an access advantage over Medicaid due to better reimbursement rates, logically Grandma will suffer more as Medicaid suddenly becomes more attractive.

Fortunately for Grandma, this enhanced reimbursement rate only lasts two years. According to CMS, rates will drop back down to 58 percent of private insurance reimbursement rates in 2015, meaning doctors will be back to turning away Medicaid patients. Which means the long lines will continue, as more people are in Medicaid but not receiving care, and care will diminish. As a result, the government will be forced to find another solution for its current “solution,” much like the individual mandate was created to fix the abuse of emergency rooms by the uninsured…which became a problem only after a 1986 law from Washington forced all emergency rooms in Medicare-accepting hospitals to treat all patients.

Unfortunately for both Medicare and Medicaid patients, the government’s coverage of care gets progressively more tenuous as time goes on. CMS projects that if Obamacare is fully implemented, Medicare reimbursement rates would drop to 26 percent of private health insurers by 2080, and Medicaid reimbursements would continue to hover around 60 percent of private insurers. CMS also estimated in 2010 that 15 percent “of hospitals, skilled nursing facilities, and home health agencies” would have “negative total facility losses” of 25 percent by 2030 and 40 percent by 2050.

In other words, CMS expects all of the major federal health care programs to lower reimbursement rates drastically and/or cause providers to lose money.

These governors can claim all they want to that they are helping their states’ poorest citizens by expanding Medicaid. In reality, they are simply setting up patients across all age groups for long lines, a lack of care, and eventually an implosion of the entire American health care system – an implosion exacerbated by the Affordable Care Act. They should be ashamed of their surrender to the federal bureaucracy, and prepare themselves for principled Tea Party opposition if they continue on this path.

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