Talking (lack of) Medicaid expansion in North Carolina

Me talking from the 9:30-14:30 mark with Tim Boyum on Capital Tonight about North Carolina’s decision to not go ahead with Medicaid expansion at this time. If you put the search term Medicaid into the side bar you will get many recent posts on the expansion issue.

Medicaid v. Medicare payment rates

Austin Frakt has a nice post noting that the ability of states to reduce Medicaid spending via private insurance/managed care is driven by how generous (and thus more expensive) a State’s Medicaid program payment rates are in the first place. The lower the payment rates to begin with, the less room there is for reduction in cost. Basic math and logic (corner solution), but a good point to keep in mind.

I want to highlight another point he made about the relative payment rate of Medicaid as compared to Medicare for health care services. Generally, in teaching undergrads, you provide a rank ordering of payers: private insurance is the best, then Medicare, with Medicaid being the lowest. This is true on average, but of course, each State has a specific Medicaid program. The variation in the chart of Medicaid-to-Medicare index that Austin linked from this paper really caught my eye:

• There is tremendous variation in the relative generosity of Medicaid by state (the index includes primary care, OB, hospital inpatient, surgery, radiology, psychotherapy and lab tests)
• There is nothing that says a State cannot make Medicaid the better or even best payer in the States. See Alaska and Wyoming (red states at that!)
• North Carolina looks to have a Medicaid-to-Medicare ratio of between 90-95%
• This chart arrays states alphabetically so they aren’t stacked up on one another for ease of visual consumption; the only thing going on is the Medicaid-to-Medicare payment ratio

Update: Obviously it could be the Medicare rates as well, but Anchorage, AK at least has a high Medicare wage index (that is built into Medicare payments) of 1.21; similar to Long Island, NY.

update: fixed the title; did say Medicaid v. Medicaid

Florida moves ahead with Medicaid

Surely everyone has heard now that the Governor of Florida has reversed course and is planning to take the Medicaid expansion (along with some waiver ideas for the program; hint Republican run states, you have lots of leverage; HHS is desperate to say yes).

Gov. Scott’s decision is especially notable since he was such a vocal critic of the ACA, and Florida was the primary plaintiff in the case that got the Supreme Court to review the constitutionality of the ACA, which resulted in the Court’s ruling that made the Medicaid expansion voluntary. And now Florida’s Governor says they will go forward with it.  As many have noted, yesterday will be a big one in the history of the ACA, from both a policy but most importantly a political perspective.

I think now the question is not what state will next take the Medicaid expansion, but which state will be the last?

What is Medicaid crowd out?

Crowd out is when the presence of public insurance (like Medicaid) causes someone with private insurance (such as that provided by an employer, or more rarely individually purchased) to drop private in lieu of public coverage.

Senator Berger has said that 400,000 (80%) of the estimated 500,000 persons who would be newly insured by Medicaid if the state undertook the expansion under the ACA would be dropping private coverage for Medicaid, an estimate that is not backed up by any reasonable assessment of the existing evidence (here is author of the study Sen. Berger cites saying he gets it wrong; today’s N & O has more). It is hard to precisely estimate the crowd out effect of expanding Medicaid, but there certainly will be some. More plausible estimates for N.C. are likely in the 5% to 15% range, but it is difficult to precisely estimate the impact of such a big chance in Medicaid eligibility.

I want to try and clarify what the question is when discussing crowd out. It is how many people represented by the gray area below, now have private health insurance, and who after the Medicaid expansion will instead be covered by Medicaid? (N.C. IOM slides; below is #5):

• For childless adults, that is how many people with incomes of between $0 and $15,415 today have private insurance, and who will drop this coverage and take up Medicaid after the expansion?
• For working parents, lets say two parents and 2 kids, it is how many such families of 4 with incomes between $15,587 and $31,809 will drop their current private health insurance for Medicaid?
• For non-working parents, now lets say single parent with 2 kids, how many such families of 4 with incomes between $10,274 and $26,344 will drop their current private health insurance for Medicaid?

Using the family of 4 example and Duke University’s health insurance, if one parent was employed at Duke and they picked the family coverage in the Duke plan my family chooses, they would have to spend $414 per month in premiums, or between one-third (if salary was $15,587) and one-sixth (if salary was $31,809) of their gross salary, before they even paid any of the deductibles and co-pays for actually using care (we spent around $3,100 last year per a quick tax document look).

How many such people have private insurance now and would later be covered by Medicaid? The punch line is that there aren’t going to be that many people in this category because there aren’t that many who can afford/would choose to pay that much of their income for health insurance. That is why the ACA uses Medicaid to provide coverage for persons up to 138% of poverty.

As always, for people opposed to the Medicaid expansion, especially our elected leaders: what is your alternative? Do you have a better plan?

Does the N.C. Chamber of Commerce have a position on the Medicaid expansion?

Whether to expand Medicaid or not under the auspices of the Affordable Care Act is one of the biggest decisions facing our General Assembly and Governor this year. The North Carolina chamber of Commerce is oddly silent on this crucial issue (I cannot find mention of it on their website; if I missed it, someone point me to it; they do have a general opposition to the Affordable Care Act). I asked the director of public policy of one of the largest branches of the Chamber and s/he confirmed that they had no position on the Medicaid expansion. South Carolina’s Chamber is similarly non-committal.

In Virginia, the Chamber of Commerce has come out in favor of the expansion:

Simultaneous Medicaid reform and expansion is supported by health care providers, business groups including the Virginia Chamber of Commerce, and patient advocacy groups. Supporters of Medicaid reform and expansion cite the budget savings Virginia will realize as federal funds can be used to cover expenses currently paid by the commonwealth, job creation and better access to coordinated care for patients as reasons to support expansion without delay. (emphasis mine)

Why is the North Carolina Chamber of Commerce silent on the Medicaid expansion? They are big supporters of what the General Assembly has done on Unemployment Insurance (they had a full page add in today’s Raleigh News and Observer thanking those who voted yea) and are a fairly Conservative group that tends to support Republican candidates and causes. However, some of their biggest members are decidedly for the Medicaid expansion. These big time Chamber members have held their fire and been quiet, for now.

In spite of what the General Assembly did this week, I still think the final result goes something like this. Governor McCrory declares victory and announces that his administration has cleaned up the mess they inherited in Medicaid (I think there are both real issues to be fixed/addressed and politically motivated overstatements about both the problems and their making an expansion impossible). The hospitals will agree to essentially self finance all or part of the state’s share to expand Medicaid, which also will provide both political and revenue cover to help make the preferred Republican tax reform proposal add up (shifting as much as possible to sales/consumption taxes and away from income taxes, both corporate and personal). The intangible effect of North Carolina being between Virginia moving ahead, and the deep South saying no to the expansion, will intensify the pressure to move ahead, in what is now a tug of war between ideology and practical problem solving mixed with self interest.

The one thing that could really change the calculus would be for Republicans to identify a coherent strategy to expand health insurance coverage outside of the Medicaid expansion, or to use an expansion for leverage for bigger changes in the program. Do they have any ideas? If they bring them forth, I will seriously consider them on this blog. Here is an example of one I suggested over two years ago.

More on North Carolina’s Medicaid decision here, here, here, here, and here.

update: fixed a typo and Rose Hoban noted on twitter that a N.C. Chamber of Commerce representative confirmed to her that they have no position on Medicaid expansion in North Carolina.

Steve Pizer says Senator Berger misreads his study

Senator Berger says in today’s News and Observer that the Medicaid expansion available via the Affordable Care Act will not expand insurance coverage by ~500,000 persons as analysts have claimed. He cites a study conducted by researchers from Boston University and Harvard, two of whom are friends and colleagues of mine (and I used to blog with them). I asked the studies lead author what he thought of Senator Berger’s claim based on his research, and here is what he (Steve Pizer) wrote to me:

Although it’s true that Medicaid expansion nationally will result in substantial numbers of individuals moving from private to public insurance, in a state like North Carolina this will be much less of a problem. North Carolina has relatively high uninsurance rates and currently restrictive Medicaid eligibility policies. This means new Medicaid enrollees in North Carolina will have lower incomes and be more likely to be uninsured than in many other states. In related research with the same colleagues as the study cited by the Senate President, we demonstrated that low-income individuals with chronic health conditions like diabetes and asthma and/or disabilities like difficulty walking are disproportionately likely to be uninsured in states with restrictive Medicaid eligibility policies like North Carolina. The proposed Medicaid expansion would be an effective means to reduce uninsurance in this vulnerable population as well as among the low-income population more generally.

In other words, the Medicaid expansion will be more efficient at covering the uninsured in some states as compared to others. States with relatively low eligibility standards will get more insurance bang out of the Medicaid expansion than others. North Carolina is one such state, simply because our current Medicaid eligibility levels are so low (a childless adult can NEVER qualify for Medicaid today in North Carolina,no matter how low their income; see table 3). In Massachusetts, the Affordable Care Act is in many ways is irrelevant because of what the state had already done, for example. Not so in North Carolina, because of what we have not done by way of voluntary Medicaid expansions.

The bottom line of the Supreme Court’s decision making Medicaid ACA expansion voluntary was to say to states like North Carolina, “you don’t have to take money to expand health insurance from California, New York and Massachusetts if you don’t want to.” Our elected leaders are saying just that, which is in their power.

However, I expect to hear something other than what they are against.What is their alternative? What are they for? Where are the costs of uncompensated care going to be shifted if not covered by Medicaid? How much will this cost the state? You get the idea…

N.C. Gov. McCrory: Federal Exchange & no Medicaid expansion now

Word this morning that Gov. McCrory has decided that North Carolina will have a Federal ACA exchange, and that we will not undertake the Medicaid expansion now. Several quick points:

• Having the federal government run the exchange is a reasonable option. I would prefer that North Carolina do so because it would give our state more flexibility, but Republicans who control the N.C. General Assembly are still saying they are opposed to the ACA while offering no alternatives. Under these circumstances, going with the federal exchange makes sense.
• Gov. McCrory is saying the Medicaid system is too broken to expand, and he is worried about the long run federal cost share issues. Both are a dodge. The Republicans in the General Assembly are opposed for ideological reasons and both the Speaker of the House and the President of the Senate want to run for U.S. Senate, so they are thinking about the upcoming primary. Other states like Arizona have explicitly said they will roll back Medicaid expansions if funding shares change over time; such concerns could easily be dealt with via legislation, and the state could likely get quite a lot of flexibility for other Medicaid changes they desire by linking them to an expansion. Here is a post with lots of links on the benefits of Medicaid expansion. IF you think that expanding health insurance coverage is an important enough goal to warrant using public policy to achieve that goal, then the expansion is a no brainer. Will the Governor or the General Assembly offer an alternative?
• I have been predicting that N.C. will do the Medicaid expansion in spite of the state being run by Republicans; I will stick with that prediction for two main reasons, noted below.
• First, the tax reform that Republicans prefer is to use a sales tax as much as possible to collect tax revenue (good report on options). Get rid of exemptions, broaden the base and all that. However, hospitals and health systems are typically exempt from sales tax, as are professional services for everyone. The desired Republican tax reform route for Republicans will be a massive tax increase on hospitals and health care systems. For them, they are surely going to balk at a large tax increase sans the Medicaid expansion. And if they balk, then other’s want out (like the Realtors) from the sales tax, and that starts to unravel the plan.I also predict that they will raise quite a fuss about expectations of providing uncompensated care when an option such as the Medicaid expansion exists (Diaz v. North Carolina).
• Second, and perhaps most importantly, North Carolinians of all stripes are quite vested in the idea that we “aren’t the deep South.” I have lived in this state for 42 of my 45 years and this sentiment is broadly shared. To the North is Virginia that looks to be going ahead with a Medicaid expansion linked to revisions of the program despite having a Republican Governor and Legislature, and to the South is South Carolina and the rest of the deep South that is not planning to do a Medicaid expansion. North Carolina is squarely in the middle, both literally and figuratively. I predict that as this image settles in, it will not be a comfortable place for this state to remain for very long.

Medicaid is not one program (again)

There is a lot that could be said about Rick Martinez’s column in this morning’s Raleigh, NC News and Observer, but I want to focus on one point: Medicaid is not a monolithic program. Instead, it covers kids, pregnant women, elderly persons living in Nursing Homes who are also poor, and the long term disabled.

Says Martinez:

Medicaid mismanagement has very real consequences for you and me. North Carolina has the highest annual Medicaid delivery cost, $6,098 per patient, in its eight-state region. Georgia delivers Medicaid at a cost of $3,979 per patient. The national average is $5,535. It simply doesn’t make sense to expand Medicaid in North Carolina under Obamacare until these fundamental problems are corrected.

You can calculate a per patient spending amount but it does not mean that much because the needs of the different types of persons covered by Medicaid differ so much. And differential coverage decisions by states (states have choices about how far up the poverty scale to cover persons today) make a simple per capita comparison dubious. Here is a Kaiser Family Foundation comparison of North Carolina’s per patient expenditure amount versus the nation as a whole (I reproduced the table that is at this link, 7th table down, below):

The only meaningful comparison across states is aged v. aged, children v. children, etc. I am not going to go and dig this up for the comparison states used in the N.C. Auditors report. For the national comparison we have lower per capita Medicaid expenditures for dual eligibles (Aged), and higher for the disabled, adults and children.

The Medicaid expansion that is available to North Carolina under financially advantageous terms would mostly expand coverage to adults, particularly men who are single (who can never qualify for Medicaid, regardless of how low their income may be, under current rules).

My point is that please, please, please, if we as a State are going to talk about Medicaid, lets get straight that it is not one monolithic program. The issues facing each group are not the same. And we can address inefficiencies in one part (or all parts) of the program while expanding coverage, quite easily. The people who are saying they are against the Medicaid expansion because of inefficiencies were against the expansion before that. Just own it.

update: revised for clarity

Ohio Gov Kasich goes forward with Medicaid expansion

Ohio’s Republican Governor John Kasich announced today that his state would go forward with the Medicaid expansion, including his desire for continued dialogue with the Obama administration about changes he would like to see in Medicaid. I captured this slide from the Governor’s presentation on why he is expanding Medicaid coverage by between 575,000-675,000 Ohioans via Medicaid:

I was watching him live, and will later link to a video of his discussion, but here is a quote that gives a sense of his clear-eyed announcement:

“I, as all of you know, am not a supporter of Obamacare,” Kasich said at a Monday press conference. “But I think this makes great sense for the state of Ohio.”

Ohio is using the expansion to also move to simplify eligibility categories in Ohio, he said in his presentation from several dozen to three. Further, Ohio and the administration are discussing increased flexibility in Medicaid that would allow buying some low-income beneficiaries into private insurance in Obamacare exchanges (my book suggests moving in this direction).

Tonight, the N.C. State Senate is to vote on a bill to go the other way and not expand Medicaid. As of yet, I have not heard of any alternative that Republican leaders may have. This post has lots more info on North Carolina’s Medicaid choice.

 

N.C. Medicaid Audit

The North Carolina State Auditor released a report yesterday showing cost overruns and mismanagement in the state’s Medicaid program. Interestingly, I found that none of the media outlets writing about the story linked to a copy of the actual audit.

The bottom line is that N.C. Medicaid spent ~6.3% of its total cost on administrative costs; a range of states with similar (in terms of total dollars) spent between 1.73%-5.44%, with the average of the 10 comparison states being 4.56% of the total spent on Administration (see table on page 18 of report if you want more details).

The report notes that there are tremendous differences in how states organize and manage their Medicaid administrative functions (like eligibility determination, benefit design and coverage, appeals, contracting, etc.) with obvious differences in cost. This is not the sort of list you want to be at the top of, so there is obviously room to improve things.

I will read this more fully, but the central issue looks to me to be that the Division of Medicaid Assistance (Medicaid) was only responsible for ~one-third of the administrative charges/costs that accrued to the State’s Medicaid program, meaning that other portions of the state HHS were (rightly in concept) incurring Medicaid-related administrative charges, but that the amounts are too high and need to be better controlled and coordinated so as not to waste money.

Medicaid has new leadership in Carol Steckel. Here is an interview with her in 2009 talking about the role of Medicaid when she was the Medicaid director in Alabama and more recently she had the same job in Louisiana. She has a great deal of Medicaid experience at both the state and federal level (she used to work for the federal office of Medicare and Medicaid, now called CMS) and her arrival should hopefully bring some insights into improving the efficiency of North Carolina’s program. Update: here is a slide deck authored by Carol Steckel I found on the web on Louisiana’s recent Medicaid reforms.

A last plea on Medicaid. It is not one program, but at least 3. It provides health insurance for:

• low income persons, now predominantly children, pregnant women and parents due to current eligibility rules. This is the part of the program that could be expanded by the ACA by moving toward a simple standard of everyone with income below 133% of poverty level. Most of the these folks are relatively well and young.
• dual eligible persons who have Medicare because they are old, and Medicaid because they are disabled and/or because they have spent down and become poor by paying for nursing home care (your responsibility until you eradicate all your expenses, then Medicaid will pay until you die). Most of these folks are incredibly sick and costly.
• Long term disabled. These are among the most vulnerable members in our society and could range from people with spinal cord injuries to spina bifida, to mental disabilities.