Harver Health Insurance Counter Fraud Group

Tokyo: Where is the Health Care Poverty Gap?

The Affordable Care Act is already cutting health care costs, especially at
hospitals that in the past provided charity care for uninsured, low-income
patients. The reduction in charity care in states that have expanded their
Medicaid programs with federal funds means the costs for this care are no
longer being shifted to insured and self-paying patients, which makes
health insurance more profitable for hospitals and insurers without
increasing consumer costs.

But this drop in costs is happening only in the states in about half of the
nation that have expanded their Medicaid programs. The other states
mostly in the South and the Plains have been involved in political
struggles that have blocked expansion of health insurance for their poor
residents.

Expanding state-run Medicaid assistance programs has been called critical
for the success of the new federal health care law. In states that havent
expanded Medicaid, it is currently available to those who have incomes at
or below the federal poverty line, which in 2014 is $11,670 for a single
person and $27,910 for a family of four. In the states that have expanded
their Medicaid programs, the eligibility level is 138%, or $16,104 for an
unmarried person and $37,375 for a family of four.

The federal health law was written with this expansion in mind, and it
offers most people with incomes ranging from 138% to 400% of the federal
poverty level the opportunity to be eligible for federal subsidies as they
purchase health care policies through the new health insurance exchanges.

These subsidies were to be paid for by decreases in Medicare
reimbursements to hospitals and doctors. The U.S. Supreme Court decided
that the federal government could not force states to expand their Medicaid
programs, but the cuts in Medicare reimbursements did not change.

Unfortunately, the cutoff point for a subsidy was set at 138%, leaving those
between 100% and 138% with no options in the states that didnt expand
their Medicaid programs. The resistance to Medicaid expansion is creating
a poverty gap.

Its a crime, Lisa Dubay, a senior fellow at the nonpartisan Urban
Institute, said of the poverty gap. These are the most vulnerable people in
our society. They have no other access to health care. We have no way to
take care of them and that just seems wrong.

Aside from the ethical dilemma of not providing health care to low income
people who dont have the ability to purchase subsidized insurance, there is
a significant financial cost for the states that arent expanding. This cost is
being passed on to providers and insurers alike, and they are beginning to
exert pressure on state governments to agree to the federally funded
expansions.

In the states that havent expanded Medicaid, at least 4,805,380 people are
in the poverty gap. These people wont receive federal subsidies to help
them purchase insurance, and they will continue to require costly charity
care that is shifted to those with insurance and self-payers.

The Americans who fall into the poverty gap in their state also wont be able
to get preventive care they need and this in turn could shorten their lives.
In addition, the number of bankruptcies will continue to grow, as nearly 2
out of 3 filings are caused by medical bills. No one can predict the outcomes
of these efforts, but one thing is certain: The ones who are suffering the
most are those being left behind in the health care poverty gap.

Heres a closer look at four states Maine, North Carolina, Utah and
Virginia that havent expanded their Medicaid programs with federal
funds. These states have adopted widely differing approaches to the
question of Medicaid expansion.

Maine

In Maine, Gov. Paul LePage, a Republican, who has vetoed legislative
attempts to expand Medicaid in his state, cites the future costs once the
federal subsidies for expansion end. The Democratic majority in the
legislature plans to continue to introduce and pass legislation aimed at
expanding Medicaid for the 24,390 people who are in the poverty gap.

Jeffrey Austin, vice president of government affairs and communication at
the Maine Hospital Association, said the states 39 community-governed
hospitals need Medicaid expansion to make up for scheduled cuts in
Medicare payments.

The logic behind the tradeoff is sound, he said in testimony. Hospitals
will receive less reimbursement under one program (Medicare) in order to
expand another program (Medicaid). When the Supreme Court ruled that
Medicaid expansion was optional, it did not rule that the associated cuts
were optional as well. So hospitals across the country faced the prospect of
significant pain (Medicare cuts) without the bargained for gain (Medicaid
expansion). That is why you have seen significant hospital advocacy in favor
of expansion in Maine and across the country. So it matters to us that
people understand 100% federal financing of expansion in large measure
equates to hospital-nancing of expansion. Hospitals can not afford $30,
$50 and $100 million annual cuts in Medicare without the benefit of
Medicaid expansion.

North Carolina

In North Carolina, GOP state legislators have refused to expand Medicaid
for the 318,710 people in the poverty gap, and are considering cuts to the
states Medicaid program. Two weeks ago, 100 members of the North
Carolina Hospital Association joined together to tell states legislators how
difficult these cuts would make their job of delivering health care to current
Medicaid participants. They told lawmakers that government programs pay
for 2 out of every 3 patients hospitalized statewide and generally at rates
that are below the cost of care.

They mean truly people getting care, people not, people getting jobs, and
for some hospitals, they may mean survival, said Democratic Rep. Rick
Glazier.

In recent years, after control of both houses shifted to Republican hands,
the conservative agenda that trimmed rights and cut back on social services
set off widespread citizen protests called Moral Mondays. To date, over
1,000 people have been arrested statewide for acts of civil disobedience.

Utah

In Utah, Republican Gov. Gary Hebert is trying to work with the federal
government to create a program to use federal funds slated for Medicaid
expansion in his state to help the 57,850 who would be in the poverty gap
purchase private insurance plans. The governors plan would use federal
Medicaid funds to purchase health care insurance for all residents earning
less than 138% of the federal poverty level.

Unlike other Medicaid expansions, this proposal would allow Utah to drop
the eligibility to 100% of the federal poverty level in three years, when
federal officials expect the states to pick up 10% of the cost of the expanded
Medicaid programs.

Opponents of the proposal are worried that employers will cut back on
insuring low-earning employees and that at the end of the three-year pilot
project, there will be more uninsured residents if the state returns to the
100% level. Utah House Speaker Becky Lockhart said she would rather use
$35 million in state funds for limited coverage. Attaching ourselves as a
state to Obamacare is extremely concerning to me, she said.

Virginia

In Virginia, a court battle is brewing between Democratic Gov. Terry
McAuliffe and the GOP-led state legislature over 190,840 people in the
poverty gap. Citing a moral imperative, McAuliffe tried to use his existing
executive powers to create a procedural path to provide Medicaid to
Virginias 400,000 potentially eligible adults.

Secretary Hazel will have a plan on my desk by no later than September 1st
detailing how we can move Virginia health care forward even in the face of
the demagoguery, lies, fear and cowardice that have gripped this debate for
too long, McAuliffe said about Bill Hazel, the states Secretary of Health
and Human Services. Virginias House GOP leaders warned the governor
that they will block him.

We are prepared to challenge this blatant executive overreach through all
available avenues, including the court system, said a joint statement
recently by Republican House Speaker William Howell.

McAuliffe just vetoed seven items, including an amendment passed by
Republicans that stated Medicaid cant be expanded unless the General
Assembly explicitly appropriates money for it.