Updated to repair numerous broken links. Medicaid, the federal health care program for the poor that now covers one in every ten Montanans (Note 1), can be expanded to cover another 70,000 Montanans (Governor Bullock’s numbers), bringing $6 billion and 12,700 new jobs (Note 2) to Montana over the next eight years.
But that will happen only if Republicans in the legislature (at least 12 in the House, 5 in the Senate) agree, a very iffy prospect at best. I think the most likely outcome is something resembling the Arkansas plan for using Medicaid money to buy private health insurance policies for those eligible for expanded Medicaid (people whose income is 100–138 percent of the federal poverty level).
There are five bills, four by Democrats, one by Republicans, that form the nexus of Montana’s Medicaid expansion debate.
Two Medicaid expansion bills will be heard in the House Human Services Committee today beginning at 1500: HB-458, introduced by Rep. Pat Noonan (D-Ramsay; 5 miles west of Butte), and the governor’s bill, HB-590, introduced by Rep. Chuck Hunter (D-Helena). Noonan’s bill is a pure implementation of the Affordable Care Act’s (Obamacare) expansion of Medicaid. Bullock’s bill, which wraps Medicaid expansion in a package he calls Access Health Montana (PDF), is much more complicated and appears to me to allow the de facto privatization of Medicaid expansion.
Two Democratic State Senators, Christine Kaufmann (Helena) and Dave Wanzenreid (Missoula), also have introduced Medicaid expansion bills. Kaufmann’s, SB-393, appears identical to Noonan’s bill, and will be heard by the Senate’s Public Health, Welfare, and Safety Committee on 27 March. Wanzenreid’s bill, SB-395, expands Medicaid in the manner most favorable to the Montana Hospital Association, which reportedly wrote most of the bill. Its hearing in the public health, welfare and safety committee also is scheduled for 27 March. These bills keep Democratic proposals alive if, as expected, the bills by Hunter and Noonan die in the House.
Rep. Liz Bangerter (R-Helena) is carrying the Republican response, HB-623, to Democratic efforts to expand Medicaid. Bangerter’s bill creates a 12-member citizens council on health care reform, all appointed by Republican legislative leaders, and what appears to amount to a voucher system so that those eligible for expanded Medicaid can purchase private health insurance policies on the federal health insurance exchanges. HB-623, introduced on Saturday, 23 March, was referred to the House Human Services Committee, but as of Monday morning, 25 March, no hearing date had been set.
Like Montana, Arkansas has a Democratic governor (Mike Beebe) and a legislature controlled by Republicans (anti-government health care Republicans; there’s no other kind). According to the New York Times, the White House, led by Obama confidant Valerie Jarrett, is encouraging states led by officials dubious of Medicaid expansion “…to expand Medicaid by subsidizing the purchase of private insurance for low-income people, even though that approach might be somewhat more expensive…:”
Ohio and Arkansas are negotiating with the Obama administration over plans to use federal Medicaid money to pay premiums for commercial insurance that will be sold to the public in regulated markets known as insurance exchanges.
Republicans in other states, including Florida, Louisiana, Pennsylvania and Texas, have expressed interest in the option since Gov. Mike Beebe of Arkansas, a Democrat, received a green light from Kathleen Sebelius, the federal secretary of health and human services.
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The idea of using “premium assistance” to buy private insurance for new Medicaid beneficiaries is a sharp departure from the 2010 health care law, in which Congress expanded Medicaid to cover the poorest Americans and assumed that people with higher incomes would obtain private coverage through the exchanges.
According to the National Journal:
Health and Human Services Secretary Kathleen Sebelius had to reach back some 25 years into Medicaid law to find the obscure clause that may permit such a move. Under that provision—buried in a long sentence of the Social Security Act—states can use federal Medicaid dollars to buy private health insurance. Recent regulations, but not the law itself, say such arrangements must be cost-effective.
A legal memorandum by Health Reform GPS’s Sara Rosenbaum discusses the statutory language upon which Sebelius is relying. At the Washington Post’s Wonk Blog, Sarah Kliff interviewed Rosenbaum, who said she thought the Arkansas solution would be very popular.
I agree. And it will be popular not just with Republican officials who are ideologically opposed to Medicaid. As the NY Times reported:
The idea appeals to many doctors and hospitals because they typically receive higher payments from commercial insurance than from Medicaid.
“We supported the expansion of Medicaid before this idea came up, and we are more excited now,” said David W. Wroten, the executive vice president of the Arkansas Medical Society. “Providers of all types would be paid at private insurance rates, and that will help recruit physicians for Medicaid, especially in rural areas.”
“Advocates for beneficiaries are torn,” reports the Times:
On one hand, they want to provide coverage to as many people as possible, and the use of private insurance may be the only way to entice Republicans to support the expansion of Medicaid.
On the other hand, they say, private insurance will often be more costly than Medicaid, in part because it pays higher rates to health care providers. They said they feared that higher federal costs would fuel demands in Congress for cutbacks in Medicaid.
In addition, many advocates prefer Medicaid because it has strict limits on co-payments and deductibles and provides benefits that may not be available in commercial insurance. These include long-term care, dental services, medical equipment and even personal attendant services for some people with severe disabilities.
Federal officials said state Medicaid programs could provide these extra services as a supplement to private insurance.
Advocates of the Arkansas plan will argue that competition on the exchanges for private health insurance will bring down costs. Don’t believe it. Private insurance costs more because of insurance company profits and higher than Medicaid payments to hospitals and physicians. It also costs more because as private insurers multiply, risk pools shrink and become less stable, which requires higher premiums to hedge the increased underwriting risks.
Moreover, none of this gratuitous complexity improves the lives of low income people, who, like all save those who can afford private health care purchasing consultants, seldom have the time or information to benefit from being forced to choose among competing private health insurance plans.
Keep an eye on today’s testimony from hospitals and physicians. If those who favor expanding Medicaid endorse the Arkansas solution, there’s no hope that Montana can avoid some kind of de facto privatization
Montana’s Medicaid expansion predicament, incidentally, is further proof that Obamacare is an expensive, hideously and gratuitously complex, abomination that must be replaced by a zero dollar, everyone covered for everything, federal single-payer health care system.
(1) 2013 Montana Medicaid Report, pages 21–22. Montana Department of Public Health and Human Services.
(2) $6 billion question. Mike Jopek, Flathead Beacon, 20 March 2013.