Medicaid: To Expand Or Not To Expand
By Senator Peggy Lehner
April 02, 2013
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As the Ohio legislature considers the Governor’s budget proposal, the issue of Medicaid expansion has drawn a lot of attention. Given the complexity of the issue it is not surprising that there is a lot of confusion over exactly what it all means for the citizens of Ohio.

Medicaid is a joint federal and state funded program that provides health care coverage for some of the poor in our country. The federal government pays approximately 64 percent of the bill and the state makes up the balance. In exchange for that funding, the federal government mandates that certain services be covered as well as certain people, but each state may elect to expand both the services and eligibility. For example, Ohio has elected to include dental and vision coverage as well as expand coverage to include children whose families make less than 200% of the poverty level ($46,000 for a family of four).

What is often misunderstood is that Medicaid only provides health care coverage to children and pregnant women below 200% of poverty, some extremely poor parents of children, the disabled, and seniors. Totally uncovered are able-bodied, childless adults between 21 and 65, regardless of how poor they may be, unless they are also disabled. A very large percentage of these folks are actually working but their income falls below the poverty level. Anyone working at or near the minimum wage falls into this category. This is the group of people often referred to as “the working poor” and they account for the largest percentage of uninsured patients in the health care system. This is also the group of people who would be provided coverage under the proposed Medicaid expansion.

Prior to the Affordable Care Act (“Obamacare”) becoming law, the federal government provided a subsidy to hospitals to cover at least some of the cost hospitals incurred for taking care of the uninsured, a bill that runs into the billions of dollars across the country and approximately $360 million here in Ohio. Under the ACA, however, that reimbursement is significantly reduced. Since it is assumed that all people will have some sort of coverage, the federal government no longer feels the need to provide this assistance to states. There are two problems with this notion. First, even among those who are working, it is likely that many will remain without insurance because it will be less costly for the employer to pay a penalty than to provide insurance. Second, while the proposed Medicaid expansion would cover these people, a recent Supreme Court decision makes it optional for the states to extend coverage to the uninsured category described above. Whether or not to take that option is what we are currently debating.

If Ohio choses to extend Medicaid coverage to those below 138% of poverty level ($15,451 for an individual), the federal government will pay the entire bill for the first three years, and then over the next seven years decrease their share down to 90%, leaving the states to pay 10% at that point.

Some legislators are concerned that the federal government will renege on the deal, leaving Ohio holding the bag to cover a much higher percentage of the cost. There is also legitimate concern over where the federal government is getting the money to cover this program.

However, the feds have put Ohio and other states in a precarious situation because without any federal subsidy to cover the cost of the uninsured patient, the people of Ohio will be left covering these costs. Insurance premiums will continue to rise as hospitals pass the costs onto those who have insurance. Perhaps most troublesome is the fact that those without insurance will continue to struggle with severely limited health care, resulting in a lot of hidden costs to our society. Without access to private physicians they will have no choice but to turn to hospital emergency rooms for the most basic of care. Money will have to be pulled from other important state programs to cover these costs. It is for these reasons that groups as diverse as the Chamber of Commerce, hospitals, and churches are advocating for expansion.

There are legitimate concerns on both sides and the legislature will continue to debate this issue over the next few months. Unfortunately, we also have to deal with those who believe they can continue to fight Obamacare by just saying “no” to Medicaid expansion. It is time that we recognize that we are dealing with a new reality, like it or not, and strive to make the most responsible fiscal decisions based on that reality.

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