A Second Opinion

Governor’s projections for ACA questioned

Calculations for the cost of extending Medicaid in Nebraska as a critical piece of the Affordable Care Act have been incomplete and probably overstated, said experts at committee hearings of the Nebraska Legislature last week.

No voice in Nebraska has spoken louder against the Medicaid extension than Governor Dave Heineman’s, saying it would cost “hundreds of millions of dollars” and “lead to reduced funding for the education of Nebraska’s children or higher taxes on middle class Nebraskans.”

But Omaha State Senator Jeremy Nordquist says he doesn’t even have to wait for the final numbers. A member of the Appropriation Committee, he says he and Lincoln Senator Kathy Campbell, Chair of the Health and Human Services Committee, are drafting a bill to extend Medicaid because preliminary data are compelling when savings and reductions in expenditures are included. And, he says, he’s impressed with positive outcomes of other states that have made fuller analyses. 

Changing the nature and reach of Medicaid was a building block of the Affordable Care Act, aka, Obamacare. The Supreme Court’s decision in June that states could not be forced to change Medicaid threatened the Act’s design, potentially leaving millions without health insurance.  

Opening Medicaid to more people who could not afford insurance any other way (those below 139 percent of the federal poverty level), is expected to lessen risk in the private insurance market. It’s expected that younger, healthier people will move into newly competitive insurance markets, with subsidies, if necessary. In theory, their presence will press premiums lower.  

Tom Bergquist, Deputy Director of the Legislative Fiscal Office, now working on an extended fiscal analysis as part of his budget duties, told lawmakers that he could come close to calculating the figures in the 2010 “Milliman Report,” relied on by the Heineman administration if he used high end estimates for participation in Medicaid. The report, however, estimates primarily the State’s costs. 

Legislators heard from others that without calculating savings from the extension or recognizing indirect revenues, total costs would be overstated and impact not understood.   

Joy Johnson Wilson, Health Policy Director of the National Conference of State Legislatures, presented September “Issue Brief” of the Robert Wood Johnson Foundation with an outline for financial analysis of Medicaid expansion for states, naming large factors to consider.

In addition to those considered by the consultant are
• Savings from transitioning the current Medicaid population to the newly eligible group, because the federal rate of reimbursement will change from 57 percent to 100-90 percent;
• Savings from reducing state programs to assist the uninsured; and
• Other revenue gains and savings beyond the State Budget and the economic activity generated statewide by the inflow of federal money from the extension itself.

A link to the complete brief is available at TheReader.com

In an interview, Senator Nordquist pointed to sources of savings like the Nebraska Comprehensive Health Insurance Pool, a $23 million item to underwrite high-risk individuals that would be unnecessary under Medicaid extension and reduction in State payments for mental health services. He said Michigan has calculated large savings from the latter.

“I’ve received a preliminary estimate of $2 million for reduced costs of medical care for State prisoners,” said Nordquist, referring to the possibility of Medicaid coverage for care provided outside Corrections institutions in community hospitals. 

Nordquist said these savings do not take into account reductions that could come to Nebraska counties by elimination of “general assistance,” counties’ provision of care to those in need who do not qualify for any other program. Lancaster County testified it would save up to $2.8 million a year. Nordquist said Douglas County would probably save at least twice as much.

Among those watching with great interest are Nebraska’s hospitals. Most people have heard that the alternative to insurance or Medicaid is emergency rooms and some of that care rolls into the uncompensated care that hospitals provide. Extension of Medicaid was part of the Obamacare design to reduce that unpaid care. 

Providing data and insight at the hearing was Jim Stimpson, Director of The Center for Health Policy, at the University of Nebraska Medical Center. Stimpson reminded lawmakers that hospitals currently receive federal payments to offset unpaid care, some of which will be phased out in 2014 when reforms begin. In an interview, Stimpson said data from an Urban Institute model indicate that without a Medicaid extension, health care providers in Nebraska will deliver an average of $178 million in uncompensated care in each of the first six years of the Affordable Care Act. If the Legislature extends Medicaid, that could be reduced to an average $70 million a year.

For more complete information, an August report of the Center for Health Policy, “Medicaid Expansion in Nebraska under the Affordable Care Act,” authored by Stimpson, is available at TheReader.com.

posted at 05:15 pm
on Wednesday, December 05th, 2012

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