The Godfather of Medicaid Expansion in New Hampshire, State Senator Jeb Bradley, is back at it. In an oped in today’s Concord Monitor, Bradley argues that extending Medicaid Expansion makes “fiscal sense.”
First, some background. Medicaid Expansion is part of Obamacare. It is supposed to provide coverage to people whose incomes are too high for standard Medicaid eligibility but too low for Obamacare premium tax credits.
In brief, Obamacare was written so that only people with incomes between 100 percent and 400 percent of the federal poverty line qualify for subsidies. Traditional Medicaid only covered certain individuals making up to 48 percent of the federal poverty line. Medicaid Expansion, which raises eligibility to 138 percent of the federal poverty line was how Obamacare chose to fill this gap.
However, the United States Supreme Court ruled, when it upheld Obamacare in 2012, that States could not be forced into expanding Medicaid. This allowed States the leverage to obtain “waivers” in return for expanding Medicaid.
In 2014, the New Hampshire House was majority Democrat while the Senate was majority Republican. The House, along with Governor Hassan, wanted New Hampshire to enter into expanded Medicaid. The Senate, however, wanted to obtain a “waiver” to use Medicaid to pay for private insurance, and the House and Governor eventually agreed. Details can be found here.
Republicans such as Jeb Bradley pledged that New Hampshire’s participation in Medicaid Expansion would end if federal funding fell below 100 percent. In fact, the law was written so that Medicaid Expansion would “sunset,” that is end, at the end of 2016, which is when federal funding was scheduled to fall below 100 percent. (Under Obamacare, federal funding of Medicaid Expansion is 100 percent in 2014, 2015 and 2016; 95 percent in 2017; 94 percent in 2018; 93 percent in 2019 and 90 percent in 2020 and beyond.)
Once Bradley won reelection, he began changing his tune, revealing that the “sunset provision” was in reality a bait and switch. From a prior post:
According to Bradley, he and his legislative colleagues really didn’t mean it when they wrote the law to say that Medicaid Expansion would be ended if the feds didn’t pick up 100 percent of the cost. No, that sunset provision, Bradley now claims, was a just in case review mechanism, an exit ramp just in case the feds reduced federal funding too much in the future.
Obamacare specifically provides that the federal government pays 100 percent of the cost of expansion in 2014, 2015 and 2016. Then the federal match is pared back to 95 percent in 2017, 94 percent in 2018, 93 percent in 2019 and then 90 percent in 2020 and beyond. It would stay at the 90 percent level unless the Congress changes the law.
So it was known when Medicaid Expansion was passed exactly what was going to happen to federal funding at the end of 2016 and thereafter. If the intent of the sunset provision was to provide an exit ramp if fed funding dipped too low, as Bradley now claims, it could have pegged at 90 percent or any of the intermediate funding levels that Bradley considered the floor.
So now let’s turn to Bradley’s most recent op-ed. Bradley claims that “uncompensated care,” which he defines as health care that hospitals and other providers are legally obligate to provide for free, represents a $400 million stealth tax because these costs are passed on in the form of higher health insurance premiums. Bradley further claims that Medicaid Expansion has reduced this “stealth tax” by $150 million:
Who pays for this uncompensated care? Everyone with an individual insurance policy or employer-sponsored coverage pays higher insurance rates as a result of these uncompensated care costs being shifted into insurance premiums. It’s a hidden tax that several years ago reached $427 million. That amount happens to be the largest single tax in New Hampshire, nearly $80 million higher than the next highest transparent tax – the Business Profits Tax. …
Bradley’s claims about “uncompensated care” have been refuted by the Kaiser Foundation.
To begin with, Kaiser reports that “uncompensated care” is a term of art, and that healthcare providers actually receive compensation for the vast majority of “uncompensated care.” In 2013, nationally approximately $85 billion was classified as uncompensated care. However, only around $21 billion was really uncompensated:
In total, these sources of government funding offset about two-thirds of the cost of providing uncompensated care to the uninsured population ($53.3 billion available in funds to cover $84.9 billion in uncompensated care). With an additional $10.5 billion in charity care that was provided by office-based physicians, there remains $21.1 billion in uncompensated care that is not covered by government funding or physician charity care.
Kaiser also reports that (1) there is no evidence that the uncovered uncompensated care is passed on in the form of higher premiums and (2) that the amount of uncovered uncompensated care is so small in comparison to total healthcare spending that it wouldn’t make a difference in the cost of premiums even if it were passed on:
Some argue that providers in fact cover the cost associated with providing this uncompensated care by charging higher rates to private payers, who in turn may charge enrollees higher premiums. However, there is no evidence that providers have charged private payers higher rates to offset rising uncompensated care costs. Further, the value of this uncompensated care is very small relative to total spending by private payers. In 2013, private health insurance expenditures were $925.2 billion, which means that even if all remaining uncompensated care costs were shifted to private insurers, it would represent only 2.3 percent of total private expenditures.
Bradley’s own numbers belie his argument.
According to Bradley, federal funding for Medicaid Expansion in New Hampshire amounts to $400 million. Bradley puts the cost of “uncompensated care,” at approximately $400 million. If Medicaid Expansion reimburses hospitals for uncompensated care, as Bradley claims, then we should have seen “uncompensated care” or the “stealth tax” drop from approximately $400 million to approximately zero.
Yet “uncompensated care,” or the “stealth tax,” only dropped $150 million. The difference, $250 million, must have replaced private funding of healthcare.