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Charles Arlinghaus: The NH Senate's Medicaid trap

March 04. 2014 4:37PM

Tomorrow's vote on the Senate Medicaid expansion plan is less a pitched battle between competing ideologies than a disagreement about the President's approach to uncompensated care and whether this plan offers any real element of compromise.

Senate leadership crafted a plan that would make approximately 100,600 low income citizens eligible for Medicaid expansion. They estimate that only half of those eligible would apply, though my own estimate, based on data in the state-commissioned Lewin analysis, is that it would be more than 80,000 — roughly similar to the current "take-up rate" for the program.

Various rationales have been put forth each week for the program. The latest is the old canard of uncompensated care. The plan's authors have suggested that the uncompensated cost of the uninsured using emergency rooms and other hospital services is a hidden tax and that this plan eliminates or lowers that hidden tax to benefit all of us and lower New Hampshire's insurance rates, which are among the highest in the nation.

This argument is used routinely to justify giant government health care expansions by both parties. In 2009, Barack Obama suggested "those of us with health insurance are also paying a hidden and growing tax for those without it — about $1,000 per year that pays for someone else's emergency room and charitable care."

The Senate Medicaid expansion plan's authors paraphrase the President and go on to suggest that this will in fact lower your health insurance rate — an assertion so indefensible even the President never made it.

Of course that claim is wrong. Uncompensated care makes up just 2.3 percent of total health care expenditures, and only about half of "uncompensated care" is charity care, the unreimbursed care hospitals give to patients below 200 percent of the federal poverty level. Even if the Senate Medicaid expansion plan reduced the rate of growth of something that amounts to 1 percent of health expenditures, it wouldn't help.

The state spends $100 million in payments to hospitals to help with uncompensated care, but those payments won't decline at all. What's more, the experience with Medicaid expansion suggests exactly the opposite: charity care will increase faster, not decrease. A decade ago, Maine expanded Medicaid and charity care didn't decline. Instead, it grew much faster than it did here by any definition. Oregon's Medicaid experiment found that emergency room use increased by 40 percent rather than declining as predicted.

The real debate is over whether you believe this is a compromise. It isn't. The biggest difference between the Senate plan and the governor's is that hers didn't end. The Senate plan technically only lasts for 2.5 years and has to be reauthorized.

Republicans would have you believe this is a huge concession and means the program simply will not continue past the period of 100 percent federal funding. The Democrats don't care and don't even mention it. It's because they know that no Legislature ever could bring itself to cancel coverage for 50,000 people once it got started.

Nor do even the Republicans act as if this is a temporary program. They have one approach for the first year and then ask for a waiver to come up with a new and different approach for the last year, just in time to expire. No one spends that kind of time and effort making changes for the last year of a temporary program. There is an implicit and not very secret expectation that this program will live on for years to come.

Finally, the Senate Medicaid expansion plan adopts a so-called "private option" often described as "neither public nor private, the worst of both worlds." Under the new Medicaid managed care plan now in place, the state has some control through competitive bidding to award contracts. In contrast, the Arkansas–style "private option" just has the state pay premiums with little or no competitive pressure. It's why virtually every conservative health policy expert in the country has warned against adopting this non-reform.

Very preliminary results from Arkansas are horrible. Costs are much higher than projected and keep getting higher each month. According to a new Foundation for Government Accountability study, Arkansas could face a shortfall of $16.6 million if they reach their goal.

At least Arkansas did cost estimates. Our own state Senate is being asked to vote tomorrow on a plan with no fiscal note, no estimates of enrollment, not even a rough guesstimate of cost. We do fiscal notes for bills to act with our eyes wide open. When a fiscal note is not forthcoming for a plan that has been in existence for at least five months, there's usually a reason.

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

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