The Expansion of Medicaid was one of the biggest obstacles to Repealing, Replacing or even Repairing the ACA. Let’s dig into it & understand why.

As usual, the national discussion to repair nearly any Federal program often obscures the important issues that could actually help make a difference. In addition, the media likes to lock-on to buzz words or sound bites to ignite hysteria.  Therefore, attention is on the wrong issues that are actually hyped up in an effort to gain viewers.

Plus, Politicians get side-tracked, either intentionally or not, but they focus on the wrong issue because they all fear the potential of giving their opposition ammunition for their next re-election. Cynical I realize, but am I wrong?

There were at least two such issues obscured by these efforts during the recent GOP efforts to R&R the ACA.
One issue was the promotion of the number of citizens covered under individual plans, either through Exchanges or direct to insurer. That promotion often misstated the variance in the number of citizens covered under individual plans prior to and after the ACA as well as the vast difference in benefits.

But the second issue, that the Press and the GOP either ignored or misjudged, was the impact of the Medicaid Expansion which is what we will discuss today. We’ve talked about Medicaid Expansion before but let’s “expand” that discussion to look at some real numbers. Then, we’ll see why the Dems were so clever with Medicaid Expansion and why so many Governors and GOP Senators are reluctant to give it up.

Nationally, Medicaid enrollment is 73,421,500. Of that total, 14,409,000 are due to the Medicaid Expansion. That’s a growth in Medicaid of over 20% nationally. The reason for the explosion was, of course, the Federal subsidy for ACA Medicaid is 90% so the financial impact is huge.

I’ll use California as an example because its numbers really expose the issues caused by a Governor’s acceptance of the Medicaid Expansion. First, two comments. First,  the California Governor responsible for accepting expansion was Republican Arnold Schwarzenegger (alleged Republican anyway). The second is that if I were from one of the 49 other states I would be PO’ed that Ca has so many people on Medi-cal (Ca calls it Medi-cal instead of Medicaid).

California has roughly 40 million residents. Based on stats from Jan-Mar 2016 Ca had 13,107,000 residents on Medi-cal. That’s 1 out of every 3 residents is covered by Medi-cal, a government entitlement program. Holy cow, does that amaze you? Disturb you?
But, the numbers get worse.

Of the 13,107,000 covered by Ca’s Medi-cal in the Spring of 2016, 3,541,700 are due to Ca’s Expansion of Medicaid. They are called “Newly Eligible”. Stated by percentage, Ca’s Medi-cal population increased 37% from 2014 to 2016. Does that amaze you?

A few weeks ago we discussed the Federal reimbursement share under the standard Medicaid program compared to the Federal share under the ACA. You will remember that the subsidy is structured based on the financial prosperity of each state. For example, under standard Medicaid subsidy, in existence for 50 years, Ca gets about 50% of its Medi-cal cost paid by the Federal government but Mississippi gets 75% paid. Theoretically, I guess Ca is a more prosperous state than Mississippi.

But, as you remember, the ACA subsidy for Medicaid expansion started at 100% then dropped to 90% where it will continue unless changed. There is your first clue.

California gets 50% reimbursement for its regular Medi-cal enrollees but it receives 90% reimbursement for its ACA Medicaid (Medi-cal) enrollees. If the ACA goes away or the subsidy is changed or lowered, then how does Ca cover those 3,541,700 residents that are currently covered by Medi-cal. Those folks get their coverage for free and the ACA is paying for it. Granted, Medicaid, even if it’s called Medi-cal, is not the best insurance but it is free.

Of the 31 states that expanded Medicaid, 14 of them have Republican Governors. Many of those states such as Alaska, Arizona, Kentucky, Maine have GOP Senators. The point is those 14 Governors must balance their budgets each year, unlike US Senators or Congress-folks, therefore, some of those Governors leaned on their Senators to oppose any reform that lowered or eliminated the state’s subsidy for Medicaid expansion.

Back to California, sorry. You can see by the numbers that if the Medicaid subsidy were lowered by any amount that the great State of Ca would have a huge budget issue. Now, Ca could eliminate the coverage provided by Expansion but then those covered residents, some of whom are actually legal and may vote, might stay home on election day.

Or, Ca could maintain the coverage for the “newly eligible” 3,541,700 Medi-cal folks and Ca could pay for the difference between the current 90% subsidy and the 50% paid under standard Medi-cal reimbursements. I don’t even need to do the math for you on that calculation(even if I could do the math) because it will be a staggering number for the Ca legislature to address.

So, when the GOP returns to Repeal &Replace “or Repair” it must do a better job of promoting its intent for this population of people. No question that these covered folks can’t have the proverbial “rug” pulled out from under them. It wouldn’t be fair even if the GOP was willing to accept the political fallout.

The House bill would have allowed for folks to use their subsidy to buy their own private insurance outside of an Exchange and directly from an insurer. Is that a good idea?

So, that’s one reason why so many US Senators and Congress-folks were reluctant to support either the House or Senate’s attempt at R&R. I think a few Senators and Congress-folks opposed these R&R attempts out of contempt for the President while others could not resist the support they receive from special interest group such as Planned Parenthood. Both bills were not good products so it made it easier for opponents to resist even if their reasoning was self-centered or vengeful.

For now, you know the importance of the Medicaid Expansion so that what ever comes out in the coming months you will be informed. At least I hope this helps.

Let me know what you think because we are all in this together.
Until next week.

Mark Reynolds, RHU


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