Keeping ObamaCare—It’s about the (Medicaid) Money


This week’s health policy roundup, curated by Jane M. Orient, MD:

The crucial pressure to renege on ObamaCare repeal may have come from Republican governors. One of the people Sen. John McCain of Arizona met with before casting his decisive “nay” vote on repeal was Republican Governor Doug Ducey of Arizona. And Sen. McCain was surely hearing from the Arizona Medical Association (ArMA), which claimed that cuts to Arizona’s Medicaid program, which is 100% managed care, would be “devastating.”

Former Gov. Jan Brewer, an alleged conservative, rammed the Medicaid expansion through the Arizona legislature. This was arguably illegal because it did not get the two-thirds majority needed to pass a tax increase. The “assessment” levied on hospitals was held not to be a “tax.” ArMA’s argument was that the state had to get its share of the federal money, or else New Mexico or some other state would get it.

While the “skinny” repeal did not “cut” Medicaid (i.e. restrain the slated increase in Medicaid outlays), it did “sunset the funding for the Prevention and Public Health Fund after FY 2018. (Note: While it hasn’t received the same media notoriety as Medicaid cuts, the elimination of this fund would have been devastating to Arizona’s public health infrastructure.),” according to ArMA’s Medicine This Week email bulletin.

Dropping the individual mandate would lead to a drop in Medicaid enrollees (and thus per member per month fees to Medicaid Managed Care) notes Avik Roy: “in 2026 the plurality of the impact of mandate repeal on coverage is not coming from the individual market, but from people dropping out of Medicaid, even though Medicaid is effectively free to the end-user.”

As Doug Badger points out, states “aren’t fighting for the poor; they’re fighting for a discriminatory reimbursement arrangement that keeps federal dollars flowing to their states.”

The Senate bill that would have required states to pick up a little more than one-quarter of $896 billion in spending over nine years ”would, on average over the period, pay wealthy states like New York and Connecticut the same matching percentage for nondisabled adults as it pays Mississippi for the medical care its disabled Medicaid recipients receive.”

Some Medicaid dollars trickle down to actual medical care to the poor. But first, they fund administrative costs. In Arizona, that amounted to nearly $1 billion in one year just at the level of the contractor (a managed care organization), not counting the state government or provider level. Then there were pre-tax profits of nearly $230 million to contractors that year. Plus nearly $400 million was transferred to other state agencies from 2012–2016.

It is assumed that those Medicaid dollars improve health. For years, however, “studies have shown that patients on Medicaid…do no better, and sometimes do worse, than those with no insurance at all,” writes Avik Roy. The Left, however, dismisses all research findings that fail to show that government makes people healthier. Roy calls them “the Medicaid deniers.”

Although Medicaid is claimed to be “popular,” Roy notes that in the Oregon Medicaid lottery, “of the 35,169 individuals who “won” the lottery to enroll in Medicaid, only 60 percent actually bothered to fill out the application. In the end, only half of those who applied ended up enrolling. Remember that this is a program on which we will be spending $7.4 trillion over the next ten years, a program that Obamacare throws 11 to 17 million more Americans into, because of the hundreds of thousands of lives that Medicaid will supposedly save.

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