Greg Louganis has nothin’ on John Roberts.
Last month’s Supreme Court ruling on the constitutionality of the Patient Protection and Affordable Care Act (PPACA, Obamacare) produced two large surprises.
One was the needle-threading by Chief Justice John Roberts, as he did a reverse 2 ½ somersaults with 2 ½ twists in pike (degree of difficulty 3.8) in order to justify the constitutionality of the so-called individual mandate (now called the “individual tax except when it’s imposed at the state level” by Republicans).
The second was the ruling that Congress could not force states to expand Medicaid by withdrawing existing Medicaid funding, but could only threaten to withdraw the projected increase in funding that would come with an expansion of the program. That makes it much more likely that states will opt out of Medicaid expansion.
Why would states opt out, and what would be the result if they do?
First, let’s return to the Court’s ruling. The Court said that taking away that much funding would be “coercive” but did not set guidelines as to how much or how little of a penalty would pass constitutional muster. (As an aside, a quick glance at this March 28 Forbes article shows just how accurate the court observers were in predicting what the Roberts Court would actually do.)
Amy Howe, SCOTUSblog
From Amy Howe’s excellent “Plain English” summary over at SCOTUSblog:
At issue is a provision in the health-care law that would require the states to provide Medicaid coverage for virtually all poor Americans under the age of sixty-five – a significant expansion of what the federal government currently requires – or risk losing all of the Medicaid funding that they get from the feds. The states argued that the provision is unconstitutional because the federal funding is so large, and they are so dependent on it, that they really don’t have a choice about whether to comply with the new requirements.
The Court acknowledged that Congress can put strings on the money that it gives to the states. However, it explained that this was not the kind of “relatively mild encouragement” that the Court had approved in earlier cases involving this “coercion” theory – for example, in a 1987 case in which it had held that Congress could threaten to withhold five percent of federal highway funds from states that did not raise their drinking age to twenty-one. Instead, the Medicaid provision goes too far and is more like a “gun to the head.” Having said that, however, the Court made clear that Congress could still attach some strings to the Medicaid funds. Specifically, even if it can’t take away all of the funding for states that don’t comply with the new eligibility requirements, it can still withhold the new Medicaid funds if states don’t comply. So although the Obama Administration lost on this issue, it’s probably a loss that it is willing to live with for now, as few states (if any) are ultimately expected to turn down the new Medicaid money, even with the strings.
It’s that last sentence that now resonates. Indeed, some states have loudly and publicly announced their intentions to refuse Medicaid expansion. Is this a bluff, or is it really likely to happen?
First of all, why did Congress write Medicaid expansion into the law? There are an estimated one in six Americans — 50.7 million — are uninsured (about the same number as those who voted for George W. Bush in 2000).
Currently, about 58 million Americans (20 percent of the population) are covered by Medicaid. These individuals are at or below the Federal poverty level. (For 2012 in the contiguous 48 states, that’s $11,170 for an individual or $23,050 for a family of four.)
The Urban Institute estimates that about 15 million would qualify for Medicaid under the expansion if all states adopt the PPACA provisions. That’s clearly a large chunk of the uninsured, about a third of the 50.7 million.
These individuals, who are mostly the working poor, sit at or below 133 percent of the Federal poverty level ($14,856 for one, $30,657 for four). If their employers do not offer health coverage, then they have been forced to buy health insurance on the open market. The average premium paid for an individual was $2,196 per year and the average family insurance bill would be $4,968 per year. Bear in mind also these are high-deductible policies, suitable only for insulation against major medical expenses. The average deductible is $2,935 for individuals and $3,879 for families. This is not a plan that will allow you to get your kid’s skinned knee cleaned and dressed for free, or even for a $25 co-pay.
Rather, the working poor are either uninsured or they have high-deductible policies. That means that they will wait until the last possible moment to seek health care. When they do, it will be in an expensive hospital setting rather than in a much less expensive community health clinic setting.
Bruce Siegel, MD, National Association of Public Hospitals
The nation’s “safety net” or “charity” hospitals are understandably worried that states will opt out, and are actively lobbying state governors and legislators to try to prevent that from happening. For example, Bruce Siegel, head of the National Association of Public Hospitals was interviewed by the Washington Post’s Sarah Kliff:
We see this as a huge problem. We’re not surprised at how it’s happening. We’ve seen some states and some governors turn back federal money in the past few years. You look at the stimulus dollars, for example. They could very well turn down Medicaid money.
You look at Florida, with Gov. Rick Scott there. He’s had a fairly uneasy relationship with the hospitals in that state. It’s been contentious over Medicaid for the last two years now. So I would take it all very seriously.
Siegel continues that public hospitals have a razor-thin operating margin:
The average American hospital has an operating margin of 7 percent. The average among [public hospitals] is 2 percent.
We project that if you took away DSH [payments to hospitals to compensate them for caring for the uninsured], the margin drops to negative 6 percent. If that happens, you can’t keep up a negative 6 percent margin for more than short time. After a year or two, you have to think about what happens next. You’re having to think about what you shut down after a year or so.
We think there are essentially three options. One is you start cutting back on services. You start figuring out what isn’t bringing in much revenue. And that could be things like community clinics or trauma services. You make some hard decisions.
You may be forced to go to local taxpayers. You find yourself basically putting this in the lap of taxpayers and tacking on the bill for your uninsured to their bills.
In the worst circumstance, you simply decide you can’t go on in that situation and close your doors. It’s a pretty grim menu of choices.
Revenue sources for public hospitals, 2010 data. Source: NAPH.
The “DSH payments” in the above quote refer to what pays for the uninsured when they show up in the Emergency Room of Big City Charity Hospital. It’s an acronym for Disproportionate Share Hospital payments, and they go to the hospitals that treat more Medicare and Medicaid patients than any others. Overall, about one-third of revenues come from current Medicaid patients, and these DSH payments are threatened by states that appear to be poised to refuse the Medicaid expansion provisions in PPACA.
Republican state governors are publicly threatening to refuse the Medicaid expansion funds. These governors feel that the offered funds — 100 percent of costs initially, then 90 percent — are a “Big Lie” that will never materialize.
Governors Rick Perry (R-Texas), Phil Bryant (R-Mississippi), Rick Scott (R-Florida), Bobby Jindal (R-Louisiana) and Nikki Haley (R-South Carolina) have all said they’ll opt out of Medicaid expansion.
Even the conservative (or at least, not-liberal) media, like the editors at the Lubbock (Texas) Avalanche-Journal, hate Obamacare but also aren’t keen on Perry playing politics with Medicaid expansion.
Other, more moderate Republican governors, such as Bob McDonnell (R-Virginia), Dave Heineman (R-Nebraska), Gary Herbert (R-Utah), Bill Haslam (R-Tennessee) and Matt Mead (R-Wyoming), are taking a more nuanced, “I’m staking out a negotiating position” approach, by asking for the money as block grants rather than as direct payments for services.
Which of these positions is politically wise will depend critically on who gets elected (or reëlected) President on November 6.
Related articles
- Governors put off health care questions, for now — BlueRidgeNow.com (blueridgenow.com)
- Governors come out swinging over Medicaid (msnbc.msn.com)
- My Little Golden Book of the ACA Supreme Court Decision (delong.typepad.com)
- A Gap in Health Coverage (nytimes.com)
- Governors’ Reactions to Medicaid Expansion Reflect Complexity of Issue (nytimes.com)
- The Most Overlooked, And Important, Part Of The ObamaCare Decision (outsidethebeltway.com)
- The Supreme Court’s Bizarro World Health Care Ruling (reason.com)
- Conservative Governors Are Right to Resist Medicaid Expansion (johnmalcolm.me)
I think this Medicaid expansion will probably follow the same arc as the response to what Bart liked to call “Porkulus”, with Republican governors:
1.) calling the program evil, predicting it will lead to the downfall of the nation, and announcing their staunch refusal to participate
2.) appearing in photo-ops for local consumption, posing happily with huge cardboard replicas of federal checks designated to fund essential programs in their states
3.) claiming in hindsight that the whole program was evil, did nothing whatever to help their state or any other, and will now probably lead to the downfall of the nation.
filistro, that’s the same pattern that went on with Medicare and Medicaid and Social Security as well. Any federal program that actually helps people.
I think it likely that there will be at least one state that will actually refuse Medicaid expansion. I do think that most of the 26 states that filed suit were just trying to overturn Obamacare and didn’t exactly care how they did it. Now that the SCOTUS has had their say, I think we’re down to five hardcore states (as listed above, Texas, Florida, Mississippi, Louisiana, South Carolina).
If I were going to handicap this, I’d say those five states (in likelihood that they will refuse the money) are:
1. Florida
2. South Carolina
3–5. No one.
Five more states will make noise about it, but eventually go along. They’re just trying to get the best deal they can. However, their negotiating position is quite weak.
Let’s take Mississippi, since it’s the example I know best. There is one “charity hospital” in the state, the University of Mississippi Medical Center. While most of the physicians and staff there are Republicans, they’re powerful Republicans. My ex-boss there is now the Chancellor of the entire University of Mississippi system, not just the medical center, so he’s got even more power than before. He and others will argue strenuously that you can’t leave the hospital hanging there.
Look at the three options that Dr. Siegel lays out above. Gov. Bryant won’t cut back services, he won’t raise taxes directly on Mississippians, and he won’t shutter the hospital. Ergo, he’ll be forced to accept the Medicaid expansion. That gives him political cover: he didn’t raise taxes on Mississippians, the evil Federal Gubmint did it.
Similar political situations exist in Texas and Louisiana, which is why I think they are going to make the same decision Mississippi makes, and for the same reasons.
Again, it comes back to a worldview. If you believe that Medicaid expansion is going to save money (as I do), then you wonder how any state could refuse it (as Amy Howe does). If you believe that Medicaid expansion is going to raise taxes, then you oppose it. I think both Gov. Scott and Gov. Haley honestly believe that, and I think they’re wrong, but I think the experiment needs to be done.
Sadly, in doing the experiment, the working poor of the states of Florida and South Carolina will suffer.
Also problematic is that like California’s experiment with Prop 13 and direct democracy, undoing the damage is not going to be pretty.
This argument that “gubmint health care means raising taxus” sticks in my craw. We need to kill this meme.
Health care has to be paid for, and it has to be paid for one of three ways (or some combination thereof). 1) You go to the doctor or the hospital, and you pay for it out of your own pocket. 2) You buy health insurance, and it covers some of your medical expenses (plus some of the expense of people who have no insurance), and you cover the rest yourself. 3) There is a single-payer government plan, that everyone pays into, and that covers some or all of everyone’s medical expenses.
Of these three, the least expensive is the third. (The portion of your money that goes to overhead alone is 20% less for Medicare than for the average insurance policy.) Single-payer is the most efficient, and delivers the most consistent care across the whole nation, at the least cost to individuals.
Gubmint health care raises taxes, yes — but by less than the amount that it lowers insurance premiums and out-of-pocket expenses. You, as an individual, get better care at lower cost.
Plus, it creates jobs. More health-care workers (because more people can afford care!)> Plus, businesses, both large and small, wouldn’t have to worry about providing health insurance, which lowers their cost to hire new employees.
A job-creating universal single-payer plan would lower your health insurance costs while it also lowers unemployment.
Let’s kill the “raise your taxus” meme. Okay, the money to pay for heath care in a single-payer plan comes out of a bucket marked “taxes” instead of a bucket marked “retirement fund”, which is where you need to pull from if you get really sick under your current insurance plan. But your private “tax” bucket is a hell of a lot smaller, and won’t kill your future.
Why pay more for lousier health care, simply because you are afraid of the world “tax”?
dc,
I understand, and I know you know I understand. But you’re not thinking like a true Son of the Cult of Norquist.
Here’s the simplest version of the logic: health care in America costs so much because there are so many freeloaders. The acceptable code words for “freeloaders” are “waste, fraud, and abuse”. That’s where Rep. Joe Wilson (R-Loony Toons) was coming from when he said “you lie!” to President Obama as Obama was laying out the basics of ObamaCare. Rep. Wilson is convinced that immigrants will sop up all the tax dollars and resources of hard-working Americans. He’s wrong, but you have to acknowledge it’s still his belief.
If that argument fails, either within the person’s own mind (internally) or in an open debate (externally), then the backup argument is, “sure, it’s expensive, but it’s the best in the world!”
The only way we’re going to see what a disaster this will be is by letting a state like Florida do the experiment. I’m perfectly willing to find out that an Ayn Randian system works just fine there, and that people start getting excellent health care for less money because of the magic of the free market. I’m also perfectly willing to believe in unicorns.
When the Florida Experiment fails, then we’ll be right and they’ll be wrong, and Florida will have a lot fewer people in it. (Not because of deaths, per se, but because the working poor will vote with their feet and leave the state, just like they left Las Vegas or Detroit.)
Has Rick Perry threatened secession yet? If so, I’ve missed it. Maybe the response last time* has cooled his jets.
*“Good luck and don’t let the door hit you on your way out.”
DC,
In theory, anyway. It’s too early to tell if that will prove to be the case in practice.
I disagree. If done right, it should reduce healthcare industry jobs, by reducing waste and the greater expense of late treatment for things that could have been done more cheaply had they been caught and treated earlier. It might increase employment in other sectors, but the inputs are too numerous and complex to be clear.
That’s how it’s worked in other countries. You are correct that it’s hard to say how it would work here — except that Medicare delivers quality care cheaper than private insurance does (which is why Medicare exists).
I guess we’ll have to institute a single-payer system so we can compare predictions.
Another effect of a robust single-payer system might be to allow more people to retire earlier, since older workers won’t be afraid of losing employer-assisted health insurance. This could allow more younger workers into the workforce. Younger workers tend to be less expensive for employers, which could mean more could be hired. Hard to say exactly how that would affect the economy, but I’m willing to find out. You’re right, it’s complex.
It may be useful to note that political issues are seldom effectively pursued though a recitaition of the complexities, and more often succeed at the ballot box through catchy and pithy distillations of a confidantly-stated position. It’s true, we desperately need the in-depth policy discussions. Rational choices can’t be made without them. But as you frequently point out, that too-seldom leads to desirable outcomes, due to various political realities.
When one side issues bumper stickers and sound bites, and the other produces nothing but white papers, voters too often go for the former. What we need is the latter to be distilled down to the former (from Heritage Foundation to Rove and Luntz). It’s true that simplification inevitably leads to some level of imprecision and unavoidable misstatement, even if a given imperfectly-stated position represents the better course. I guess that is all complex, too.