Kriegel: Fix Medicaid, Don’t Expand It

March 26, 2013

Editor’s note: The following testimony was delivered by Henry Kriegel, Deputy State Director, at hearings before the House Human Services Committee on March 25, 2013.  It is edited here slightly for print purposes.

Medicaid, while nobly intended to serve the needs of the impoverished, is in need of repair.  Expanding it will marginalize our health care system leading it further towards medical mediocrity.   It will also represent further implementation of the President’s new health care law in Montana, a policy rejected by nearly two-thirds of Montanans who voted in favor of LR-122.  (See also, (See also “Eight Reasons Why ObamaCare’s Medicaid Expansion is Wrong for Montana”)

HKatHB590Hearing 300x295 Kriegel: Fix Medicaid, Don’t Expand It

Kriegel testifying against Medicaid expansion

The Affordable Care Act, known more commonly as ObamaCare, originally mandated the states to expand Medicaid eligibility to 138% of the federal poverty level, which is approximately $15,000 per individual and $32,000 for a family of four and to all childless adults lose all federal Medicaid matching funds.  The US Supreme Court ruled that provision of ObamaCare unconstitutional and left it to the states to decide whether to expand the program.  Fully one-third of all states are rejecting Medicaid expansion and less than half are embracing it.

AFP-MT is asking you to reject Medicaid expansion not because of the political implications but because it is bad public policy. Expanding Medicaid will further devalue the quality of this program’s medical care, it may limit access to care for all Montanans and it may drive private practitioners either to hospitals—a step closer towards a single-provider/single-payer system or it may drive them out of practice altogether.

Research indicates that Medicaid results in poorer health care.  According to Center for Studying Health System Change, Health Tracking Physicians Survey published in September2009, in the United States, Medicaid surgical patients are twice as likely to die as those with private insurance and 13% more likely to die than even uninsured patients.   Individuals on Medicaid that have coronary artery bypass surgery are 50% more likely to die than patients with private coverage or Medicare. Lastly, Medicaid cancer patients are 2 to 3 times more likely to pass away than other patients.  Expanding Medicaid in Montana is likely to compound this problem.

Instead of incentivizing success, young adults will be incentivized to poverty in order to qualify.  The impact of this cultural shift from self-reliance to government dependency will be felt for generations to come.

Because Medicaid is means tested, expanding Medicaid provides a disincentive for success, especially for younger populations.  Young, single and healthy individuals are thought to comprise 44 percent of the newly eligible Medicaid participants.  Many of these are college students and have inexpensive health insurance already. Why shift them to Medicaid at taxpayer expense?

Medicaid is costly.   Despite promises for 100% federal funding for the first few years, the federal government, with $17 trillion in debt excluding unfunded liabilities, is virtually broke and is an unreliable partner.  Additionally, according to a Heritage Foundation study, Montana would have to pay up to $138 million in Medicaid administration costs through 2022—costs that are not covered by federal dollars.

The primary purpose of expanding Medicaid is expanding health care access but in fact this bill may result in decreased quality care and may limit access to medical care for everyone.  Including up to 70,000 new participants in Medicaid may overwhelm our medical infrastructure. We simply don’t know if the current system can bear more participants statewide or on a county by county basis. Hiring of more administrators for the program or even more physicians may not necessarily improve patient outcomes nor guarantee access.

Expanding Medicaid may drive out more doctors from private practice.  This would put a further crimp on rural Montana where there are fewer doctors now.  Due to the regulatory burdens, nearly 30% of doctors nationally do not accept new Medicaid  patients.  It greatly increases patient work load and provides lower reimbursement.  Medicaid also interjects the federal bureaucracy into the doctor-patient relationship.  Instead of providing best individualized treatment needed by the patient, doctors are limited to providing what Medicaid will reimburse.

There are many things we “know” about Medicaid that should cause concern.    Medicaid already comprises 25% of our projected 2015 budget.   And once expanded, there is very little likelihood of turning back, despite the sunset clause and very little incentive and likelihood of studying and improving it.

There are many things “we know we don’t know” about Medicaid expansion—can the system accept up to 70,000 new patients; will it drive more doctors out of private practice, will it reduce health care access; will it create a larger dependent class of young, healthy and single participants; can we depend on the federal government for full ongoing funding?  These unknowns are even more disconcerting.

Do we really want Montana to be the guinea pig for Medicaid expansion or should we step back, study it and see its impact on other states?

Expanding Medicaid is a core provision of ObamaCare.    Medicaid expansion is a large step towards establishing a single-payer/single provider system, which is rejected by Montanans.  We have spoken on that issue this past election when voting for LR-122.

Proponents have argued that this is a jobs creation bill. There are numerous studies which show that increased government spending does not lead to job growth but actually reduces economic growth and  wage growth.  They have argued that if we don’t expand Medicaid, our tax dollars will be going to other states when in fact, Montana receives more federal funding than we contribute.  Hospitals have overstated the alleged problem of “cost-shifting” from patients without insurance coverage to patients with coverage. Many uninsured people still pay their bills, sometimes at higher rates for the same services than what insurance allows. National studies show the true rate of non-payment to hospitals is only around 3%.  This is lower than the bad debt percentage in many industries – Even national credit card companies show 4% uncollectible.Lastly, free federal dollars for Medicaid expansion is very enticing.  However, nothing in life is truly free.  As the indebted federal government prints and borrows more money it devalues our currency and assets and burdens our children and grandchildren with even more debt.

I wish we could solve Medicaid’s problem by throwing more money at it but that’s not real life.

Rather than expand a system in need of improvement, AFP-Montana recommends we study ways to reform and innovate the system, which is what HB 604 promises to do.  Oppose HB 590 and fix Medicaid first.

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