Medicaid expansion: Buy now, pay later

bUYnOWpAYlATER2Like many of the consumer advertisements that proclaim ownership of big ticket items for “only pennies a day” the  promise of federal funding for Medicaid expansion under Obamacare should carry the familiar Better Business Bureau warning: “If it sounds too good to be true, it probably is . . . ”

Obamacare included a requirement that states expand Medicaid eligibility for all individuals and families up to 133 percent of the Federal Poverty Level, however, a U.S. Supreme Court decision allows states to opt out of the Medicaid expansion requirement.
The federal government has promised to pick up the tab for most of the Medicaid expansion when it is implemented in 2014, but states would be required to pay for 10 percent of it by 2020. So far the governors in 26 states are supporting expansion, although many have yet to get their respective legislatures to pass the laws needed to make it happen.

Proponents of Medicaid expansion like to demonize skeptics as “hating the poor” or “blaming the victims” but as a recent study published in the New England Journal of Medicine makes clear, “Medicaid coverage generated no significant improvements in measured physical health outcomes.”

In Michigan, Governor Snyder has proposed setting aside projected savings from patients that are now covered by state general funds that would be covered by federal funds under the expanded program. The savings set aside would be used to cover the eventual 10 percent that Michigan would have to cover after federal funding is reduced in later years. Snyder says that his plan provides funding for 100 percent of the Medicaid expansion in Michigan until the year 2035.

Republicans in the state House have introduced legislation that seeks to make further changes to any Medicaid expansion in the state by limiting coverage for non-disabled adults to four years and include cost sharing of five percent. The bill would also require the federal government to fund 100 percent of the expansion beyond the current time limit and provide incentives for healthy behavior and fraud reporting.

The proposed improvements depend on the discipline of future lawmakers and governors to keep their hands off the funds set aside when another budget shortfall looms or some other politically popular purpose presents itself. They also depend on the discipline of future lawmakers to hold to the reforms proposed, such as enforcing the four year cut off in benefits to non-disabled adults down the road. Many of the lawmakers proposing these reforms will not be in office when the tough decisions would have to be made.

While the governor and Republicans deserve credit for trying to make the best of the situation imposed on states by the passage of Obamacare, the reality is that the “low monthly payment” promise of Medicaid expansion funding comes with a big balloon payment in the future. Just as municipalities in Michigan have had to deal with the impact of state budget cuts in revenue sharing, a similar situation exists in the states as efforts to reel in federal spending are implemented. It is highly unlikely that the current funding match offered under Medicaid expansion would be spared from similar scrutiny in the future after states have taken the expansion bait.

Left holding the bag, states like Michigan would find it difficult, if not impossible, to stuff the Medicaid expansion genie back in the bottle.

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About Charles Owens

Charles Owens has been advocating the interests of small business in the Michigan Legislature for over 25 years, beginning with his tenure at the Michigan Institute of Laundering and Dry-cleaning and currently with the National Federation of Independent Business / Michigan. As the State Director of one of Michigan's most respected small business organizations, Owens is responsible for directing the NFIB in its mission to maintain the viability of small business in the face of expanded legislative and regulatory challenges. Owens has been an active participant in the legislative debate over numerous landmark Michigan issues including: the Michigan Environmental Protection Act, inheritance tax, tort liability reform, Unemployment Insurance reform, Workers’ Compensation, and Michigan Occupational Safety & Health Act (MIOSHA) issues. Owens and the NFIB spearheaded the efforts of other small business groups in the fight for fairness and equity for small business in the debate over the repeal and replacement for the Michigan Business Tax. Owens is a 25 year member of the Capitol Club, a dedicated group of association executives committed to the advancement of legislative advocacy for their respective organizations. In 2005 he was elected by his peers to be President of the organization. In 2006, Owens was ranked as number five of the top ten single interest individual lobbyists in Michigan by Inside Michigan Politics. Under his leadership, NFIB was also ranked in the top twenty lobbyist organizations and top ten single interest lobbying organizations by the same publication. Originally a native of Rockford, Illinois, Owens graduated from Northern Illinois University with a Bachelors Degree in Finance and Business Administration. follow on twitter: @OwensNFIB
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