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Charles Arlinghaus: A Medicaid expansion compromise it's not

February 11. 2014 4:23PM

The Republican state Senate leadership has announced a plan to significantly expand the state's Medicaid program. The details are not yet available. Evaluating whether the deal involves any significant element of compromise or is just a slight variant of a dramatic expansion of the state's Medicaid system depends on the details, but early reports are not promising.

The federal health reform popularly known as Obamacare rests on three major components: individual and employer mandates to buy insurance, a regulatory and purchasing structure called an exchange (or sometimes confusingly referred to as a "marketplace"), and a roughly $1 trillion expansion of Medicaid.

One of the primary metrics to consider in any potential expansion plan is the effect on total Medicaid enrollment. Today Medicaid is not a program for all low-income citizens. Instead, Medicaid covers people only within certain categories (like children, certain disabled populations, pregnant women or women with breast or cervical cancer). Other low-income categories of people, most notably single childless adults, are not covered at all.

The primary goal of Medicaid expansion is to change the program so it covers every low-income person regardless of category. The governor has proposed covering the lowest-income breast and cervical cancer patients through Medicaid and letting those eligible for exchange subsidies be covered instead through that federal program. The state program would be targeted to the lowest income levels, while others would be shifted out of the program. A compromise might do such a thing, but this one doesn't.

In New Hampshire, prior to any expansion, average state monthly Medicaid enrollment was roughly 135,000 people, or about 12 percent of the state's population under the age of 65. The newly eligible population being considered for the expansion program amounts to 100,600 people, according to the consultants hired by the state.

Oddly, elected officials like to describe the program as covering an additional 50,000 people. That public relations number assumes that only half of those eligible will take up the free health care being offered to them. In contrast, the Urban Institute found nationally that 72 percent of the currently eligible are actually enrolled in Medicaid. There aren't New Hampshire-specific numbers, but among children, the vast majority of our current Medicaid cases, our take-up percentage is four points higher than the national average.

Since early estimates came out, many factors have made Medicaid more attractive to the newly eligible population. All current expansion proposals require those with access to private insurance (through a spouse or employer, for instance) to take it and have the state pay for all premiums and copays. In those circumstances, the incentive will be for people to keep their insurance and have the state make their payments.

What's more, the state has started to implement a $5.37 million grant to promote both Medicaid enrollment and the health insurance exchange. Another $580,000 was given to take two large groups that have been lobbying for expansion and hire them as "navigators" to help people interact with the exchange, the majority of whose participants are Medicaid eligible.

Policymakers should ask what the expected total enrolment in Medicaid will be and if anything is being done to apply the notion of sliding eligibility scales to higher income populations.

Further, while language is sometimes used to pretend there is a substantive difference between the approach that recently passed the House and the so-called compromise, the accounts so far indicate that there is no real difference. For anyone with existing insurance or access to it, the plans are literally identical. For the rest of the 100,000 newly eligible people, both ideas would use the same Medicaid dollars to provide the same Medicaid coverage to the same Medicaid population through the same Medicaid providers administered by the same three private companies with which we contract for regular Medicaid. You might be forgiven for thinking that's the same thing.

The only real difference is that the Senate plan would reimburse providers at private insurance rates, which are roughly three times as high as Medicaid rates. That hardly seems designed to lower costs.

Compromises typically involve both sides getting something they want. In that respect, this compromise doesn't look typical. Perhaps when the details come out in the next few weeks this won't look simply like a 50 percent expansion of the state's Medicaid program that is simply what the governor proposed six months ago, but with a different title.

Charles M. Arlinghaus is president of the Josiah Bartlett Center, a free-market think tank in Concord.

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