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State Sen. Jeb Bradley: Can NH taxpayers rely on Washington’s Medicaid promises?

June 03. 2013 5:24PM


The Legislature is facing one of the biggest decisions it has confronted since the Claremont education funding order of the state Supreme Court in 1997: whether to expand Medicaid to 138 percent of poverty as called for by the Affordable Care Act, otherwise known as Obamacare.

Last summer, the U.S. Supreme Court held that the coercive provision of Obama- care which mandated states must expand Medicaid eligibility to 138 percent of poverty is unconstitutional. Every state is now grappling with the same decision: whether to expand eligibility and accept federal monies to cover the state costs — starting at 100 percent reimbursement for three years before decreasing to 90 percent reimbursement.

A report written by the Lewin Group has estimated New Hampshire would recoup $2.5 billion in federal reimbursements over seven years. Sounds like a great deal.

However the old adage “if it sounds too good to be true, it probably is,” should be heeded. Here are several reasons New Hampshire should proceed very cautiously and look carefully before we leap for the promise of federal cash.

First: there are costs to New Hampshire taxpayers. The Lewin report predicts costs of $85 million over seven years — an average of just over $12 million per year. The Heritage Foundation predicts similar costs. Also despite what some claim, federal money is not free money; it will burden our children and grandchildren with more debt.

Second: The Lewin study estimates an increase of 62,000 newly enrolled people in Medicaid, but they also estimate there will still be 71,000 uninsured New Hampshire residents. Despite dramatic increases in Medicaid eligibility it still will not solve the problem of uninsured New Hampshire residents.

Lewin also notes that over 50,000 people newly eligible for Medicaid already have some form of health insurance. Is pushing people from private insurance to Medicaid the right outcome?

Third: Medicaid reimbursement rates to hospitals and physicians are very low. Some doctors no longer accept new Medicaid patients. Given that, it is certainly possible there could also be significant access problems for newly eligible Medicaid patients. Critics also blame low reimbursement as one of the key drivers for New Hampshire’s sky-high insurance rates in spite of New Hampshire having one the nation’s healthiest populations. If Medicaid’s low reimbursement currently shifts costs to privately insured individuals and businesses, dramatically expanding Medicaid potentially increases cost shifting, especially as people migrate from private insurance to Medicaid.

Fourth: A study conducted by Harvard and MIT economists and recently published in the New England Journal of Medicine compared health results in Oregon when Medicaid was expanded by lottery for some Oregonians while others remained uninsured. Those who won the lottery and wound up on Medicaid used significantly more health care services, but the study concluded that “Medicaid coverage generated no significant improvements in measured physical health outcomes in the first two years.” This NEJM study’s lack of improved health outcomes shouldn’t be ignored given the costs.

Fifth: Medicaid fraud, waste and abuse are expensive problems. The Government Accountability Office estimates the national cost is $34 billion annually.

Sixth: States have limited control over program design, eligibility, benefit levels, copayments or percentage of income payments. Traditionally, states have been restricted from making Medicaid changes under what is known as “maintenance of effort rules.” The federal government has indicated states could opt out of the expansion but that could easily change. And realistically, how many New Hampshire legislators in either party would vote to take away an entitlement once people enroll?

Seventh: Can Washington maintain its promised commitment of 90 percent funding. Of all the questions this one has the most profound implications for New Hampshire decision makers. Our nation’s debt is $17 trillion and growing. Additionally, our nation faces huge and potentially unsustainable future funding obligations — primarily for Medicare and Social Security. Given this frightening federal situation, is it reasonable for New Hampshire legislators to assume Washington can keep its promise?

President Obama already proposed a $100 billion Medicaid cut in debt ceiling negotiations. The promise of a $2.5 billion bonanza over seven years would become a nightmare for New Hampshire taxpayers if Washington reneged on its promise and, say, funded the expansion at 50 percent — the current rate. It would likely require an income tax to fill that funding hole.

Given these unsustainable deficits — should New Hampshire now rely upon a Washington promise — a promise Granite Stators know is bald-facedly unrealistic. New Hampshire voters don’t need to be reminded of Washington’s unfulfilled special education promises.

For these reasons, New Hampshire should exercise due diligence. The Senate Finance Committee has recommended a thorough study of Medicaid expansion. This decision will affect our state for generations. Proceeding cautiously would put New Hampshire in good company as 25 other states have also not expanded Medicaid.

Jeb Bradley is a Republican state senator from Wolfeboro.

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