Thursday, January 31, 2013

Noses, faces, Medicaid expansion

As policy choices go, the direction North Carolina should take with respect to Medicaid expansion couldn't be clearer. However, we live in interesting times.

Medicaid is a public health insurance program for certain groups of poor and needy people, mostly poor children, poor elderly people, poor blind and disabled people, and recipients of federal cash assistance. With the exception of pregnant women and some parents, NC's Medicaid program generally does not cover able-bodied, working-age adults. Not surprisingly, hundreds of thousands of poor and near-poor working-age adults in the state are uninsured.

Provisions of the Affordable Care Act (ACA) are supposed to change that, starting in 2014. The ACA allows states to expand Medicaid eligibility to all low-income people, living in households with incomes below 133 percent of the federal poverty line. For the first three years of the expansion, the federal government will pay 100 percent of the costs. Starting in 2017, participating states will have to contribute $1 for every $9 that the federal government pays.

In the original legislation, states risked losing all their federal Medicaid money if they chose not to expand their programs. However, the Supreme Court decision upholding most of the ACA scaled that back, and non-participating states will now only forfeit the federal funds directly tied to the expansion. The Supreme Court made it less costly for states, like NC, controlled by the Party of No to, um, say "no."

While NC lawmakers have the ability to say "no," they would be hurting the state far more than they would be helping it.

Health insurance coverage. The Kaiser Family Foundation and the Urban Institute estimate that the expansion will increase the number of North Carolinians with health insurance by 387,000 and that other provisions of the ACA will further increase insurance coverage by 408,000. Overall, the percentage of NC residents without insurance would fall by half, with roughly half of that amount being due to the Medicaid expansion. Put another way, 387,000 people will go without health insurance if the legislature turns the program down.

Health. NC already has below-average health outcomes; the United Health Foundation ranks NC 33rd among the states. The poor outcome is due in part to the large number of residents who lack health insurance. Ultimately, those health disparities contribute to shorter lives. The average age-adjusted death rate in NC in 2011 was 790.8 per 100,000 people, far above the national average of 740.6. If Republican lawmakers truly "respect life," they will support the expansion.

Jobs, jobs, jobs. There are more prosaic reasons to support the expansion--it will bring a ton of federal money into the state and boost the economy. The Kaiser Family Foundation and the Urban Institute estimate that the expansion will bring nearly $44.7 billion in federal money into the state over the next ten years, while costing the state $5.1 billion. Thus, the net inflow is about $4 billion per year. The new Medicaid funds will be spent on health care jobs. A state with a sputtering economy and the fifth highest unemployment rate in the country can ill afford to pass on nearly $40 billion in net federally-funded spending.

Better health outcomes (again for working-age adults) also mean higher productivity, which will improve NC's competitiveness, bolster businesses' bottom lines, and put more money in workers' pockets. Because poor health interferes with work, expanded insurance will also increase the labor force, reduce work intermittency, and lower poverty. The expansion is a "pro-business, pro-growth" policy.

Why might lawmakers turn it down? In a word, spite. The Party of No has a chance to nullify part of Obamacare. If the President supports something, Republicans reflexively reject it. Lawmakers seem willing to do this despite the harm to the lives and well-being of the poor and the hit to the economy--willing to cut off the nose to spite the face.

Cheering on the Party of No will be its many elderly pull-up-the-ladder-I've-got-mine supporters, who will be secure in their federally-funded Medicare and will continue to consume vast amounts of Medicaid funding.

Other NC residents can console themselves over the next few years as they write their checks to the IRS to pay for Medicaid expansions (and the attendant benefits) in other states.