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  • Medicaid Surprises in Stimulus

    The Senateneeds to take its time with Obama’s Trillion Dollar Debt Plan. There are jut too many permanent government expansions tucked away inside this bill, especially on the health care front, including these four:

    Surprise #1—Congress as a predatory lender.

    Surprise #2—Former C.E.O.s and out of work politicians could Qualify for Medicaid

    Surprise #3—New Eligibles will Have to Wait.

    Surprise #4—Gain Medicaid, lose your doctor.

    Follow us across  the jump for detailed explanations of each surprise…

    Surprise #1—Congress as a predatory lender.

    States are so anxious for the temporary increase in the federal share of the cost of Medicaid, they are failing to read the fine print. The increased federal share really just represents a deferred payment for the states. When the temporary increase expires, the states will in effect have to make a balloon payment that would put predatory lenders to shame. Pity the governors and state legislators who will have to come up with the money the year after the federal funds disappear.

    Here is how it works. Medicaid is a matching program, with the total cost shared between the federal government and the states. The federal share varies by the relative wealth of a state. A wealthier state has a lower match rate than a poorer state, but never less than a 50 percent match rate.

    As a simple example, let’s assume low FMAP State A’s total Medicaid spending in year one is $5.72 billion. In this state, the federal share is $2,864,679,000 and the state share is $2,855,390,000. Under H.R. 1, the federal government will increase its share by 4.9 percentage points plus a little bit more due to rise in unemployment. So the state receives an additional $319.6 million from the federal government, thereby reducing its share of the cost to $2,535,790,000. Total spending remains the same (which also means there is no “stimulus”).

    Now let’s assume that total Medicaid spending rises by 8 percent the following year to $6,177,674,520 and that the temporary increase has expired so the federal share will return to its original level in the previous year. The new federal share will be an 8 percent increase of $229,174,320 to total $3,093,853,320 which leaves the state with providing $3,083,821,200. This is not an 8 percent increase but a 21.6 percent increase from the adjusted state share as a result of the “stimulus.” The state has to increase its spending by $548,031,200 from $2,535,790,000. The $548,031,200 consists of $228 million as a result of the 8 percent increase plus $319.6 million which is what it received from the federal government in the stimulus.

    A state with a high federal matching rate could face a 79 percent increase in order to make up the difference!

    Surprise #2—Former C.E.O.s and out of work politicians could Qualify for Medicaid

    H.R. 1 creates new categories of eligibility for Medicaid for persons who are unemployed. Since there is no other income or asset test, former executives whose companies the federal government is bailing out and even the former governor of Illinois could qualify. Workers with lower income will be taxed to pay for the cost of providing health insurance to individuals who could have far more assets but who are temporarily unemployed. We would hope someone can explain why someone who became unemployed prior to or after the arbitrary dates in law is less deserving of assistance than someone was became unemployed during that time.

    Surprise #3—New Eligibles will Have to Wait. Even though the federal government will provide 100 percent of the funding to meet the cost of these individuals as long as the cost is incurred before January 1, 2011, states will still face certain constraints of time and process. Depending on which option the state chooses, individuals may remain eligible after January 1, 2011, but the state would no longer receive 100 percent federal funding. This means the state will have to come up with its share of the cost or terminate their eligibility, a prospect that will slow outreach the closer to the end of the program. The delay and uncertainty perhaps explains why only a small percentage of unemployed workers will actually be helped.

    In the meantime, it will likely take 6 to 8 months from enactment for individuals to actually enroll in Medicaid. Even bypassing the normal federal regulatory process, the Centers for Medicare and Medicaid Services will have to provide subregulatory guidance to the states. In most states, state legislatures will have to enact state laws adopting which of the five different eligibility categories the state will use. A state will have to change its eligibility and payment systems to correctly identify these individuals and to ensure proper match rate. These changes take time to put into place, regulations have to be written, eligibility workers have to be trained, and computer systems have to be modified and tested, and managed care contracts will be amended. Once in place, a state may take up to 45 days to determine whether the individual is eligible.

    If expansion of Medicaid was chosen because it would be the “fastest” method for covering individuals, it would be instructive to understand which alternatives were considered.

    Surprise #4—Gain Medicaid, lose your doctor.

    Becoming eligible for Medicaid does not mean you will see the same doctor as under private health insurance. Access continues to be a problem in Medicaid due to low reimbursement rates and the “hassle factor” providers face in dealing with Medicaid. One-third of ambulatory Medicaid visits are to hospital emergency rooms or hospital outpatient departments, twice rate of those with private insurance or Medicare. In a survey of Medicaid directors, 36 state officials concede that access to specialty care poses some or significant problems.

    When it comes to the Medicaid provisions, there is both more and less to them than meets the eye.

    Posted in Obamacare [slideshow_deploy]

    2 Responses to Medicaid Surprises in Stimulus

    1. Ozzy6900, CT says:

      Great story but it just proves that Government cannot run anything without screwing it up!

    2. MOE MICHIGAN UN-EMPL says:

      WHAT A BUNCH OF CRAP!!!

      WHY SHOULD FORMER C.E.O.S AND FORMER POLITIANS BE ELIGIBLE?

      WHEN SO MANY AMERICANS WHO NEED IT DO NOT GET THE BENIFITS

      OF MEDICARE

      WE ALL KNOW THAT THOSE PEOPLE WERE VERY HIGHLY PAID!!!AND COULD

      AFFORD INSURANCE/ AND SO MANY LOW-INCOME PEOPLE HAVE TO SUFFER

      WITH NO INSURANCE OR PAY A VERY INFLATED PRICE FOR IT WHEN THEY

      HAVE NO JOB? HOW ARE WE SUPPOSED TO PAY OVER $1000.00 A MONTH FOR AN INSURANCE/WITH NO JOB???

      THAT'S MY SITUATION FOR YEARS NOW!!! AND I'M HANDICAPPED SO I M

      FORCED TO MAKE THOSE PAYMENTS AND IT'S GOING TO COST ME MY HOME/JUST KEEP MYSELF INSURED:(

      IT'S A BUNCH OF BULL-SHIT!!!

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