TOPICS > Health

States taking Medicaid opt-out option leave ‘larger impact than expected’

October 7, 2013 at 12:00 AM EDT
As the effects of the shutdown take hold, longer-term fights over safety net programs continue. Jeffrey Brown talks to Jacob Hacker of Yale University and Stephen Parenti of the University of Minnesota about how states opting out of the Affordable Care Act's Medicaid expansion has stranded some uninsured Americans.
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JUDY WOODRUFF: Next, we look at the strength of the social safety net in the United States. The federal government shutdown is jeopardizing some programs immediately, and it comes at a time when there are bigger questions about whom the government should help.

Jeffrey Brown has our look.

JEFFREY BROWN: They were singing last week, but today, as federally funded Head Start programs in at least nine states began to lapse, there was no school for the children at the Little River Preschool in Cherokee County, Georgia.

DONNA ADAMS, Georgia: They’re only going to be 3 one time in their life, or 4 one time in their life. And so if they miss out on learning during those really important moments of those years, it will impact the rest of their life. And so this is a critical time of interruption.

JEFFREY BROWN: Even as the shutdown’s effects take hold, longer-term fights over safety net programs continue, prominently including food stamps.

Last month, the House voted to cut the program by $40 billion over 10 years. The bill passed along party lines after heated debate.

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REP. ERIC CANTOR, R-Va.: And most people don’t choose to be on food stamps. Most people want a job. Most people want to go out and be productive, so that they can earn a living.

And if others — and there may be some that choose to abuse the system. That’s not out of the realm of possibility. Frankly, it’s wrong for hardworking middle-class Americans to pay for that.

REP. DAN KILDEE, D-Mich.: Republican desire, for whatever reason incomprehensible to many of us, to deprive even the neediest Americans with a basic necessity, food, this bill would shamefully and literally take food out of the mouths of nearly four million children, seniors and disabled.

JEFFREY BROWN: Also still under scrutiny, of course, the Affordable Care Act, signed into law three years ago and intended in large part to help the nation’s poor and uninsured.

But last week, when people tried to sign on to health exchange Web sites, some found they didn’t qualify for subsidies to buy coverage. Many were supposed to be covered by an expansion of Medicaid. But a Supreme Court ruling allowed states to opt out of that expansion, and citing costs and other objections, more than 20 did.

As a result, the Congressional Budget Office estimates that three million fewer people will be eligible for coverage under Obamacare. A recent analysis of census data by The New York Times found Southern states were hit hardest; 68 percent of eligible African-Americans are excluded, as are two-thirds of all single mothers.

Paul Sweeney is a Virginia resident stranded without coverage. He’s an adult without children and unemployed. Under the new law, he would have qualified for Medicaid, but his state opted out.

PAUL SWEENEY, Virginia: Medicaid and Medicare was put into a system to help people just like me. And, like I said, I’m not qualified. You don’t know what I want to say about it, you know? It’s just — that’s not right.

JEFFREY BROWN: His doctor, Basim Khan, said Sweeney is just one of many of his patients facing a tough path.

DR. BASIM KHAN, Virginia: The vast majority of my patients are uninsured. Many of them are unemployed, and the others work low-wage jobs without — without health insurance, and they’re certainly not able to afford their own health care since. So — and they’re not covered — they’re not covered by Medicaid.

JEFFREY BROWN: Several Republican governors have expressed interest in expanding their Medicaid programs, but their legislatures remain opposed.

For some perspective on the state of play, we’re joined by Jacob Hacker, professor of political science at Yale University and director of the school’s Institute for Social and Policy Studies. He worked on the blueprint for the health care law. And Stephen Parente, a health economist at the University of Minnesota, he was part of a team that filed an amicus brief against the law when it was being argued before the Supreme Court.

Well, Jacob Hacker, let me start with you, and let’s start with the Affordable Care Act. How big a problem and surprise is this, the number of people not covered?

JACOB HACKER, Yale University: It’s a big problem, and it is a big surprise as well, because when the Affordable Care Act was passed, the Medicaid expansion was seen as a crucial way of reaching uninsured Americans.

Medicaid is less costly than private health insurance through employment, and it’s been growing — its costs have been growing more slowly than many people realize. It’s grown in enrollment, but its costs have risen at about the rate of the growth of the economy. So Medicaid was seen as a big part of the expansion.

But when the Supreme Court ruled that this Medicaid expansion was optional, a large number of states, 26 in all, right now are saying that they’re to the going to move forward. And this matters because those are precisely the states where many of the uninsured and poor Americans are concentrated. And so it’s the low levels of eligibility for Medicaid in these states that is the problem, because these people who are below 133 percent of the poverty line are not eligible for subsidies for private health insurance under the — that are available under the Affordable Care Act.

And so they’re left without a cost-effective option for health insurance.

JEFFREY BROWN: Well, let me ask Stephen Parente.

As we said, you opposed the law originally. Are you are surprised as well by how this has turned out, and what consequences do you see?

STEPHEN PARENTE, University of Minnesota: Well, the consequences are that people will have less coverage. I’m not that surprised.

I’m a little surprised at the number of states that have come out. When we looked at this before, we estimated in an article that got published in the last year only six or seven states might opt out. And so its a larger impact than expected.

JEFFREY BROWN: As the — let me stay with you — as the law is kicking in now, will pressures mount one way or another on hospitals, on states? What unanswered questions do you have?

STEPHEN PARENTE: Well, the question is, what states will give in to this? Because there’s a lot of money on the table.

Hospitals gave a deal back to have the Affordable Care Act go forward. And the amount of money on the table, there’s about $180 billion that otherwise could not, may not be going to some of these states. The state legislatures and governors are going to face a lot of pressure from hospitals, because they’re going to be squeezed as this program expands and not have necessarily the revenues to cope with that expansion.

JEFFREY BROWN: Jacob Hacker, what do you — what — what questions do you have, particularly vis-a-vis the low-income people?

JACOB HACKER: Well, I think we don’t know yet what’s going to happen in some of these states.

There are governors who are pushing to go forward. And, as Steve was saying, hospitals are going to really start to feel the pinch. Remember, this isn’t just the uninsured who are not getting coverage. But it’s also hospitals that treat people who are uninsured who are not able to get revenue for that care.

I think there’s another question, a more fundamental question, which is, how are we going to feel about the fact that in half the nation you have very generous Medicaid coverage levels, you are going to see expansion of the law, but in many of these states, you have to have income that is below 25 percent of the poverty line to have coverage?

And that means that there’s — really, we’re leaving the most vulnerable Americans, working — 60 percent of the working uninsured, according to The New York Times, out of coverage. And I think that that is — that really raises some fundamental questions about how we design our policies and about how we feel about the safety net and about poverty in our society, especially poverty among workers.

JEFFREY BROWN: Well, let me ask Stephen Parente, because it does raise the larger safety net questions, both in health care and more broadly.

STEPHEN PARENTE: Right.

JEFFREY BROWN: Do we — where are we now, when you add up these kinds of things? Are we a divided nation where some states provide certain kinds of programs, others don’t? Or what do you see?

STEPHEN PARENTE: We’re where we were. What essentially…

JEFFREY BROWN: Where we were?

STEPHEN PARENTE: Where we were even before the Supreme Court law, before — really probably before 2008. Different states have different preferences on what they choose to expand.

And so what the Supreme Court did was more or less leave it to the states’ decision to go forward.

JEFFREY BROWN: Is that a good thing?

STEPHEN PARENTE: It’s — I think, from my perspective as a conservative, it is, because if that state wants to go forward, it can, and it does it in its due legislative process.

Now, if your goal is a priority to get as many people covered as cheaply as possible, Medicaid expansion is the best policy option to use. But, at the same time, if you are a patient in one of those systems, you might not get the access to the care you expect, because the reimbursement rates for that vehicle is so low that even though you can count off the numbers and say, yes, we checked the box, we have technically people covered, people aren’t going to be getting care.

JEFFREY BROWN: Jacob Hacker, I take it you don’t think that is a good thing.

JACOB HACKER: No, I don’t think it’s a good thing. And I don’t think it’s the case that Medicaid is not providing good coverage for people.

I mean, if you look at the numbers, not only is it a cost-effective program, but we know from the increasing amount of research that has been done on Medicaid that it provides a substantial amount of financial protection. I don’t think it’s a good thing for two reasons.

One is that over the last decade, we have seen a massive erosion of private health insurance, and that’s particularly true among people who work in lower-wage jobs. If we want to have an economy that is providing people with basic economic security, it’s going to have to come through this fairly cost-effective program that we as a society have supported.

It’s got very strong public support, so I think that this is a real problem and one that we need to address.

JEFFREY BROWN: When you — Stephen Parente, when you broaden out from Medicaid to food stamps, to Head Start, to the other kind of programs, has there been so much focus on the middle class of late that we are not paying attention to these programs, or are folks like you and governors paying enough attention? Where are we?

STEPHEN PARENTE: I think these things become politicized and too polarized.

I think there definitely needs to be a strong safety net. I do agree that too much focus has been put on the middle class and having a contract with the middle class, rather than having the safety net be strengthened, rather than having Medicaid and the food stamp programs actually be strengthened to avoid fraud in those programs. They have to be better managed in those programs.

And just to add, Medicaid does work fairly effectively. But at the same time, it’s working effectively because managed-care plans have been running well over half of the Medicaid program for the last decade. That’s what Republican governors would like to do is to say, give us block grants to continue that progress, to move these programs forward, and then we will see a better outcome for the Medicaid population.

JEFFREY BROWN: Jacob Hacker, how do you see — and, again, Medicaid, food stamps, all of these safety net type programs, playing into what we’re seeing in Washington now, the kind of politics we’re seeing?

JACOB HACKER: Well, it’s obviously a very polarized debate.

I think we should keep in mind that the reason that we have seen an increase in the share of Americans who are on Medicaid is because of the erosion of workplace health insurance. And the reason we have seen so many more Americans on food stamps is because we just want through the greatest financial crisis since the Great Depression.

The people who receive these benefits, two-thirds of those receiving food stamps are the elderly, disabled and children. They are very vulnerable. And food stamps also is a crucial lifeline in our economy, because those benefits go back into our economy and allow people to purchase.

So, we have a lot of evidence that programs that are particularly targeted at helping vulnerable children are really important for improving their productivity and their health outcomes over the life course. And Medicaid is a crucial part of that. Food stamps are a crucial part of that.

And given the economic crisis we have been through, it’s not surprising that more Americans are relying on these programs. And I think we should be saying right now, you know, what is — as a nation, if we believe it’s a priority to get out of this economic crisis and to improve our economy over the long term, we need to be investing in improving the life chances of young Americans who are facing this terrible economic situation.

JEFFREY BROWN: All right, let me give Stephen Parente a last word on that.

STEPHEN PARENTE: It’s not that we don’t want to help the young and we don’t want to help the elderly. We just want the money to be well-managed and focused in a pretty good way.

If the recession is over, as the president has said, and we’re moving forward, then the growth of this program should be going down, not up. That’s principally the concern that conservatives have.

JEFFREY BROWN: Stephen Parente and Jacob Hacker, thank you both very much.

STEPHEN PARENTE: Thanks.

JACOB HACKER: Thank you.