January 23, 2013

Think About It……..                                                                                                           January 23, 2013

When the U.S. Supreme Court gave the green light to Obamacare, it struck down the power of the federal government to force states to expand their Medicaid programs. As it was passed by Congress, the Affordable Care Act (ACA), mandated that all states expand Medicaid coverage to include those earning income up to 138% of the federal poverty level. If any state refused to do so, the federal government could take away all federal Medicaid funding, even the Medicaid funding that existed prior to the passage of the ACA. The Court ruled that this component of the ACA exceeded the authority of the federal government and struck it down.

Because of this ruling, according to the Alaska Policy Forum, each state now has the option of expanding its Medicaid coverage but cannot be forced to do so.  Therefore, each state must decide what it will do, including Alaska.

The lure of Medicaid expansion seems tempting: more citizens will get Medicaid coverage and additional federal taxpayer dollars will flow to each state to cover these new Medicaid beneficiaries. The federal government will, in effect, be paying for all of it, for the first three years. But, there are several problems with this scenario.

The first problem is that the federal government has been drowning in red ink for the last four years. It has been operating in the red more than sixteen trillion dollars. Since the federal government is not bound to pay for the first few years of expansion, Alaska cannot trust that a future Congress will have the money to continue to pay for the expansion.

The second problem is that once Alaska makes the promise to cover a new group of individuals, by law, the State cannot go back on that promise. To make even partial changes to the program requires a long and onerous process that requires federal approval. There is no flexibility.

Finally, Alaska already spends too much. If Alaska expands its Medicaid coverage, there will be additional Medicaid recipients which will necessarily increase the state operating budget. Even without the Obamacare Medicaid expansions, state expenditures have skyrocketed over the last ten years. Juneau has spent far more than previous years while the population growth has been insignificant.

According the Alaska Hospital and Nursing Home Association, uncompensated care, where health care services are provided and the bills left unpaid, reached $178 million in 2010. The reason this is significant for every Alaskan who pays their bills, is that hospitals and nursing homes who don’t get paid, will charge more to others in order to make up the difference. The idea is that by enrolling in Medicaid those who cannot pay, health care costs for everyone will be reduced.

But, the plan won’t work. The same report also found that providers were “underpaid” $232 million. How could a provider like a hospital be underpaid?   By the government, of course. Medicare and Medicaid pay less than private insurers. Because they pay less, providers charge the private insurers more to make up the difference.  Putting more people on Medicaid will drive up the costs for everyone not on Medicaid. 

Fortunately, the U.S. Supreme Court has given Alaska a choice. It has ruled that Alaska cannot be coerced to expand the existing Medicaid program to the levels envisioned in the ACA.  However, if the State of Alaska ever decides to make the affirmative choice to expand Medicaid under the ACA, what would stop a future Congress from changing the rules after the fact? Clearly the answer is we could do absolutely nothing about it.  We would be stuck and a future court is not going to allow us to opt out if we have already chosen to opt in regardless of broken federal promises to pay.

There are better and more innovative solutions Alaska could pursue to make health care more affordable and reduce the ranks of the uninsured. Alaska has options, but we will be severely limited in our pursuit of those options by expanding Medicaid under the terms laid down by politicians in Washington, D.C. who have no stake in our state’s fiscal health.

Think About It!      JCD     01-23-2013

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