Category: Impact

Despite the surge in enrollment and spending—or perhaps because of it—Medi-Cal, California’s Medicaid program, has failed to fulfill its stated goal of improving health-care access for the indigent and disabled. A recent report from the Santa Clara County Civil Grand Jury highlighted the conundrum many of the state’s Medicaid enrollees face: “You’ve Got Medi-Cal, but Can You Get Medical Care?” By extending Medi-Cal to younger, healthier people—many of whom could be better served by the kind of bare-bones private insurance that ObamaCare outlawed—California has made it harder for those who most need low-cost care to get it.

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A decade after the nation’s top hospitals used all their advertising and lobbying clout to keep their tax-exempt status, pointing to their vast givebacks to their communities, they have seen their revenue soar while cutting back on the very givebacks they were touting, according to a POLITICO analysis.

Hospitals’ behavior in the years since the Affordable Care Act provided them with more than 20 million more paying customers offers a window into the debate over winners and losers surrounding this year’s efforts to replace the ACA. It also puts a sharper focus on the role played by the nation’s teaching hospitals – storied international institutions that have grown and flowered under the ACA, while sometimes neglecting the needy neighborhoods that surround them.
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Sioux Falls Specialty Hospital in South Dakota is regularly full. Its doctors and nurses often have to work longer hours or perform elective surgeries such as hip or knee replacements on weekends.

“In many cases, patients have to wait forever,” said Dr. R. Blake Curd, an orthopedic surgeon and the hospital’s CEO. “We don’t have the physical capacity to take care of them.”

He would like to expand the hospital by adding beds or rooms, but he isn’t allowed to do so because of the Affordable Care Act, or Obamacare. The law largely bans the expansion of hospitals such as Curd’s, which are partly owned by doctors. New physician-owned hospitals also cannot be set up unless they forego government reimbursement from Medicare or Medicaid.

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Democrats loudly complain that people will lose health insurance if the Affordable Care Act is repealed. They never mention those who lose jobs because the ACA remains.

The ACA includes a penalty on employers that fail to provide “adequate” insurance for full-time workers. Thanks to the ACA, hiring the 50th full-time employee effectively costs another $70,000 a year on top of the normal salary and benefits.

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Health insurance cannot really be insurance because human health is un-insurable: human beings are not machines or buildings whose function or condition can be ascertained objectively. Yet, an objective assessment of damages and costs is essential for any contractual arrangement to function in a sustainable manner.

Consider, for example, that medical care is based on the legal principle of “medical necessity.” Medical necessity is invoked when, presumably, there is an impairment in the patient’s health that could be remedied by a medical intervention. But medical necessity is a perniciously elastic concept that cannot possibly satisfy the precise contractual requirements of insurance.

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The struggles faced by Presidents Obama and Trump since the passage of the Affordable Care Act have created the impression that it’s impossible to successfully reform American health care. On the non-group market, premiums have soared, networks have narrowed, individuals have refused to enroll, and insurers have fled the marketplace. But despite the dysfunction of the market that was the primary focus of the ACA’s reforms, employer-provided coverage and the Medicare program have never been in better shape. Under those arrangements, which cover the majority of Americans, spending growth has abated, quality of care is improving, and premiums are rising at the slowest rate in recent memory. President Obama tried to claim credit for these trends, but they actually date to 2003, when President Bush pushed his own signature legislative achievement, the Medicare Modernization Act, through Congress.

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The health care industry killed Hillarycare in the 1990s and cut deals to shape Obamacare more to its liking in 2009. But now, as Republicans push a sweeping and widely reviled health bill through Congress, the industry has often appeared declawed in the biggest health care fight of the decade.

It’s a deliberate strategy, interviews with nearly 20 lobbyists and other experts suggest. Health industry groups generally don’t love Obamacare enough to jeopardize their ability to shape the rest of the Republican agenda — including big corporate tax cuts. They also fear incurring White House retaliation.

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Obamacare provides states with a greater incentive to expand Medicaid to able-bodied adults than to cover services for individuals with disabilities. States receive a 95 percent match this year (declining to 90 percent in 2020 and all future years) to cover the able-bodied, but a match ranging from 50-75 percentto cover individuals with disabilities, while more than half a million are on waiting lists to receive home or attendant care.

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Most people agree that Medicaid should help the poor, particularly those whose poverty is related to their age and disability. However, the Affordable Care Act requires the federal government to pay a much greater share of the medical bills for nondisabled, nonpregnant adults than it does for elderly individuals, people with disabilities, children, and pregnant women.

The share of state Medicaid spending paid for by the federal government—known as the Federal Medical Assistance Percentage, or FMAP—had remained relatively unchanged throughout the program’s history until Congress and the executive branch changed that share, providing a strong incentive for states to expand Medicaid coverage to this new population of nondisabled, nonpregnant adults.

The new FMAP formula and expansions created two significant problems:

• The federal government rewards states much more generously for providing services to individuals who fit the new criteria than to individuals who arguably are more in need of assistance
• The Medicaid expansion overlooks differences among states in their capacity to fund services for this new population, benefiting states with high per capita income at the expense of low-income states.

As it considers repeal and replace legislation, Congress should reexamine this arrangement.  Congress should seek to devise a Medicaid financing structure that treats eligible populations equitably and recognizes the differences in fiscal capacity among states.

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