False Choices Cloud Medicaid Expansion Debate

Who says Georgia can’t have first-rate schools, a quality health care system and a public safety net that offers support to some of the most vulnerable Georgians? Some state leaders who oppose Medicaid expansion in Georgia, that’s who.

Bills to make Medicaid expansion more difficult are rushing through the Legislature, rationalized by claims that the cost of covering 500,000 uninsured Georgians will inevitably result in cuts to education funding. That is one poor trade-off state leaders could choose, but there is nothing inevitable about it.

Since the federal government pays 100 percent of the cost of expansion through 2016, the earliest the Georgia budget would need to adjust to the cost of expansion of Medicaid is 2017. Once expansion-related revenue from the insurance premium tax is counted, revenues will actually outpace expenses the first three years.  So for three years more than 500,000 Georgians will get health insurance while the state makes money.  Factor in the economic impact of the $3 billion federal contribution per year that comes with Medicaid expansion, and the resulting tax revenues and it becomes even more profitable to the state.

People disagree about the future cost of Medicaid expansion in Georgia. Opponents roll 10-year projections into one scary-sounding number without any nod to the positive revenue gains.  If you emphasize costs and ignore financial returns, that doesn’t add substance to the Medicaid expansion debate.

An honest accounting shows the net cost of expansion is about half of the numbers expansion opponents cite as unaffordable – $210 million per year beginning in 2017, rising to $500 million per year by 2023. Of course, that is only one side of the ledger. Once you count increased revenues, Georgia’s net cost is about half that. And, of course, the state will make a profit through 2016.

Does Georgia suffer from such a lack of leadership and foresight that we are unable to plan for an increase in the state budget of less than 2 percent five years from now?

Let’s not lose sight of the fact this discussion is about more than just cold numbers in a spreadsheet. This is a moral and humanitarian issue. How important is it to Georgia to provide health care access to its uninsured people when they’re ill? How much does Georgia value its rural hospitals? Enough to prevent continued hospital closings in small communities, with the health problems and economic devastation that follows? 

To hear some people frame the question, Georgia must either choose to expand Medicaid to help 500,000 uninsured people, or the state can work to properly fund a quality education.

That is a false choice.  It is a shame some of Georgia’s leaders seem to have so little faith in what is possible for Georgia.

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1 thought on “False Choices Cloud Medicaid Expansion Debate”

  1. Due to many obvious lies commandeered by the Republican Party in their successful 2010 campaigns and the lack of guidance by the Democratic Party, I enrolled and completed an online course (Health Policy and The Affordable Care Act) offered by the University of Pennsylvania. Out of the many facts about the ACA that I learned from that course, the fact that overwhelmed me initially was the statements made saying, “The United States have the best health care system in the world…” were completely false. As a matter of fact, the only part of the health care system we ranked number one in from a study of 30 developed nations was cost. We actually ranked 24th out of 30 nations in regards to quality. This country was paying more for less quality.
    The main goal of the ACA was to improve quality while reducing cost. Our health care system is extremely complicated, therefore, the ACA is a carefully planned legislation to improve quality and reduce cost and required more than a ten page bill. It required thousands of pages and four years to implement.
    For all those congressmen, super PACs, and political activists who say they want to scrap the ACA and return back to our previous status, let’s just look at what was happening to the cost of our health care system before the ACA. An Aetna article titled ‘The Facts About Rising Health Care Cost’ stated, “Total health care spending in the United States is expected to reach $4.8 trillion in 2021, up from $2.6 trillion in 2010 and $75 billion in 1970. To put it in context, this means that health care spending will account for nearly 20 percent of gross domestic product (GDP), or one-fifth of the U.S. economy, by 2021.” This projection was made before the passing and implementation of the ACA.
    The increase cost would have even a greater effect on states budgets. States are required to balance revenue with spending. The increase in health care costs required states to either increase revenue by higher taxes or cut spending on other expenses which included higher education and k-12 education. Most state governors refused to increase taxes, delayed immediate cuts to k-12 education because of funds from the stimulus, and simply relied on cuts to higher education. Thus higher public educational institutes had fewer funds and had to increase tuition. Later, after the stimulus, states made cuts to k-12 by laying off school employees including teachers, increasing class size, and cutting back on other school resources.
    To understand the effects of an increase in health care cost had on states as well as other factors involved, we could look at a report by the Kaiser Commission on Medicaid facts titled ‘State Fiscal Conditions and Medicaid’ written in January 2009. There were some interesting facts presented in that report. It included facts that stated, “Medicaid, the program that provides health coverage and long term care support services to 44.5 million people in low-income families and nearly 14 million elderly and disable people, is financed by the federal government and the states, and administered by states with broad federal guidelines. Demand for Medicaid increases when the economy is weak requiring states to manage increases in enrollment and spending just as states budget conditions are most constrained….. In addition to providing health care coverage, Medicaid spending generates economic activity at the state level. Medicaid funding supports jobs and generates income and tax revenue within the health care sector and other sectors of the economy due to the multiplier effect. Medicaid’s economic impact is intensified because of federal matching dollars. Reductions in state spending for Medicaid result in declines of federal dollars so a state with a 60 percent match rate must cut Medicaid spending by $2.40 to save $1 in state Medicaid spending. Cutting Medicaid during a downturn can worsen the economy…”
    In order to relieve the states until there was enough time for the ACA to reduce health care cost, the ACA expanded Medicaid to 136 percent poverty level and covered each state at 100 percent matching funds for the first 3 years and 90 percent for the next seven. By expanding Medicaid to 136 percent, it would reduce the number of uninsured; thus decrease the number of people required to use the emergency rooms (which is the most expensive care in hospitals) and further reduce health care costs to the states as well as its citizens. However, after a Supreme Court ruling that states had the right to not accept Medicaid expansion, some governors chose to opt out of Medicaid expansion. At the time of writing the legislation, no legislators contemplated this ruling or that governors would opt out (especially since it was 100 percent federal matching funds for the first 3 years). A few fiscally responsible Republican governors accepted Medicaid expansion but over twenty Republican governor rejected Medicaid expansion. The only logical reason that I firmly believe this happened is that these governors were gambling (with its citizens’ money) that by not accepting Medicaid expansion, the health care cost would certainly rise. When the insurance companies decide their premiums in October of this year, the premiums would be higher for those insured. Thus the Republicans could boast how they told you premiums would go up because of ACA (Obamacare as they call it). With millions being forced to use emergency rooms (of course unless Deal has his way and just let uninsured people become chronically ill, have babies born dead, or die) it’s a safe bet that there will be an increase in the cost to hospitals for health care and the premium will increase. However, the bet could never be won if the citizens knew the governors were holding cards under their sleeves. I guess that’s why we have legislators trying to make it illegal for officials to inform citizens in Georgia of the facts about ACA.
    I would like to conclude by saying I learn a lot about the Affordable Care Act from the course I took online at the University of Pennsylvania. The most important part of my learning was that our country as well as our states needed to reform our health care system. We desperately needed to reduce the cost of health care while at the same time improve the quality. That’s why a Democratic President with Democratic legislators accepted a plan developed by a conservative think tank (Heritage Foundation) and successfully implemented by a Republican governor (Mitt Romney) to make sure it was a nonpartisan effort and all hands were on deck. It was definitely a conservative plan that included private industry (private insurance companies), state rights (all states were given the chance to develop their own exchanges), and personal responsibility (a mandate that required all financially abled citizens to be responsible for their health care). At the time, the Democratic President or the Democratic legislators didn’t realize the firmly followed agenda of the secret meeting (a meeting by Republican leaders to oppose every agenda, plan, or issue of our newly elected President even if agreed with their own ideas). That’s one reason it is difficult for Republicans to develop a new plan; ACA was their plan. A repeal of the ACA would put us right back where we started; we would continue pay more for less quality in our health care system; and the cost to our country as well as our states would be countless lives and countless dollars.

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