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Obamacare primarily expands Medicaid

Is Obamacare living up to its expectations?

This article originally appeared on heartland.org.

Four years ago, the White House pitched The Affordable Care Act as something that would make ‚??affordable, high-quality care‚?Ě accessible to an estimated a 50.7 million uninsured Americans.

But a recent analysis by a conservative think tank calls into question whether the Affordable Care Act, commonly referred to as ‚??Obamacare,‚?Ě is living up to its expectations.

The Heritage Foundation did an analysis in October and found 71 percent of the combined increase in health insurance coverage during the first half of 2014 was due to the expansion of Medicaid. The analysis stated that Medicaid enrollment grew by 6.07 million individuals out of a total of 8.50 million individuals who gained coverage during those first six months.

‚??Given that increased enrollment in Medicaid accounted for 71 percent of the net growth in health insurance coverage during the first half of 2014, the inescapable conclusion is that, at least when it comes to covering the uninsured, Obamacare so far is mainly a simple expansion of Medicaid,‚?Ě the Heritage Foundation analysis concluded.

Yevgeniy Feyman, deputy director of the Center for Medical Progress at the Manhattan Institute, said the goal of health insurance reform was to increase the number of people with insurance through the private sector. ‚??It was not so much to get people into Medicaid,‚?Ě Feyman said. ‚??The bulk of insurance coverage is supposed to be coming through the private sector.‚?Ě

Expansion on state-by-state basis

The expansion of Medicaid to help cover some of the uninsured was originally supposed to be national in scope. As originally written, states were required to expand Medicaid coverage for low-income adults up to 138 percent of the federal poverty level or face severe penalties.

 But in 2012, the U.S. Supreme Court ruled it was unconstitutional to require states to expand the program, leaving states to decide for themselves whether or not to expand Medicaid. Through August of 2014, 27 states plus Washington DC have agreed to expand Medicaid while 21 states have rejected expansion so far.

Two states, Idaho and Indiana are currently considering expansion, according to the Kaiser Family Foundation.

Both states have Republican governors. Idaho‚??s Governor, Butch Otter, has not supported expanding the program but an advisory group appointed by him in 2012 recommended expansion. There is speculation he may try in 2015 to expand the program.

In Indiana, Governor Mike Pence has proposed expanding the state‚??s Healthy Indiana Plan (HIP), which allows low-income Indiana residents to purchase state-subsidized insurance with high deductibles and contributions to a savings account, similar to many private plans offered in the private sector. But critics say Pence‚??s proposed expansion would eliminate or curtail many of the consumer-oriented features and cost-saving measures in the original HIP, while adding an expensive new entitlement to the budget.

Michigan expansion debated

The expansion of Medicaid made front-page headlines in Michigan in June of 2013 when a GOP-controlled legislature and a Republican governor passed expansion legislation.

Jack McHugh, a legislative analysis for the Michigan think tank Mackinac Center for Public Policy, said when people apply for coverage through the federal exchange in Michigan, if they come in at or below the poverty level, they are automatically enrolled in Medicaid.

‚??That has consequences that can be ugly,‚?Ě McHugh said. ‚??Medicaid is notorious for being a program that pretends to offer coverage but lowballs provider reimbursements so badly that beneficiaries often can‚??t find care. ¬†Increasingly, the insurance policies offered through Obamacare exchanges are looking very similar. Stingy provider reimbursements and extremely narrow provider networks mean individuals often can‚??t find care, or can‚??t get the care they need.‚?Ě

In Michigan, the Senate Fiscal Agency estimated that the expansion would apply to people living at the federal poverty level, or about $30,000 per year for a family of four. The state said there as 320,000 Michigan residents covered by Medicaid in the first year and, a number expected to increase to 470,000 by 2017.

Governor Rick Scott‚??s office said that federal government would cover Michigan‚??s 2014 Medicaid costs, which was estimated to be $206 million. But critics of Michigan‚??s expansion of Medicaid said relying on federal government promises to cover the future costs of Medicaid is risky, especially with the growing U.S. debt approaching $18 trillion.

Jack McHugh of the Mackinac Center said it is more likely the federal government will renege on its claim to reimburse states for the increased costs for Medicaid expansion. ‚??Fiscal realities and the incentives in the system make it almost certain that those promised matching amounts will be nibbled down in coming years,‚?Ě McHugh said.

Concern about Medicaid quality and access

Because Medicaid pays just 47 percent of what Michigan primary care physicians get from private insurers, getting access to care is often more difficult than for those with private insurance. The Mackinac Center‚??s McHugh said it would be better for families eligible for the Medicaid expansion to instead have been placed in the federal exchange that would get them a private health insurance policy.

McHugh echoed the observation that simply expanding Medicaid wasn‚??t what proponents of Obamacare pitched.

‚??People imagined they were going to get health care the same way they were through their employer,‚?Ě McHugh said. ‚??Medicaid, there is no competition. It has a bad reputation for quality and access. It provides poor access to what is widely considered sub-standard health care.‚?Ě

Tom Gantert (Gantert@mackinac.org) writes for Michigan Capitol Confidential.

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