Red States Are Reinventing Medicaid to Make It More Expensive and Bureaucratic

New Republic

January 18, 2015

By David Ramsey,

Since the implementation of the Affordable Care Act’s Medicaid expansion in 2014, 23 states have refused the federal money to offer health insurance to their low-income residents, depriving almost 4 million people of coverage. Slowly, some of the holdout red states are finding a way to say yes, but only if they can claim a conservative twist on expanding coverage.

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Meanwhile, Iowa is now imposing low premiums, tied to a wellness program, on some beneficiaries. “The administrative complexity of the system the state is contemplating is somewhat mind-boggling,” Joan Alker of the Georgetown University Health Policy Institute commented when Iowa’s waiver was approved, adding that “[t]he wellness program is of questionable policy value.” Indiana’s proposal includes small premiums and savings accounts tied to different benefits packages, leaving advocates for beneficiaries worried that low-income adults “face categorization into a bewildering array of benefit plans and options.”

 

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“All of those ideas, leaving aside their policy merits, they all presuppose a pretty intensive level of government involvement in people’s lives,” Alker, an expert on Medicaid waivers, told me by phone. Alker points out that the original proposal by Pennsylvania suggested that the state would eventually be tracking everything from cholesterol level to work history to legal record. (In the end, the feds accepted just four of Pennsylvania’s initial 24 waiver requests.) The implicit bargain has been to offer a social safety net for the poor, but only via an intrusive nanny state.

This is a familiar story: see Florida’s program to drug-test welfare recipients,which lost money and was struck down by the courts. When it comes to programs for poor Americans, some conservative reform efforts lean toward administratively cumbersome, paternalistic programs. Backers of these programs argue that they encourage “personal responsibility,” but implementing them does carry a price tag.

“There’s no question in my mind that the administrative costs associated with these approaches are something that we need to keep a very close eye on,” Alker said. “Fundamentally we know that Medicaid has much lower administrative costs than private insurance. Then you add on top of it all of these different policy objectives that are driven by intense politics. Intense politics don’t usually make for good policy.”

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In the meantime, Alker worries that the complexities may discourage people in these states from accessing care. “I don’t have any confidence on the ground that beneficiaries will be clear on what’s going on because the policy itself is very, very complicated,” she said. “I think what’s disheartening about the situation is that the research is very clear that charging premiums to very low-income people will deter enrollment and that charging co-payments will deter them from getting needed care.”

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