It seems odd that such an unwise idea as opting out of Medicaid would even make it to the level of serious public debate. As long as states keep floating such irresponsible proposals, we’ll keep blogging about why it’s such a bad idea. This week, we bring you a blog post from Edwin Parks of the Center on Budget and Policy Priorities titled “Opting Out of Medicaid Not Just Unthinkable but Unwise and Unnecessary.”
Edwin writes that opting out of Medicaid would be a terrible idea because:
- Most Medicaid beneficiaries — including those who cost the most to cover — actually can’t be shifted into the exchanges because they won’t be eligible for the federal tax credits. Only people with incomes between 100 and 400 percent of the poverty line will qualify for the credits, which means no poor Medicaid beneficiaries (except for some legal immigrants) will qualify. For example, poor people with disabilities, who have the highest medical needs of any Medicaid beneficiaries and incur the most costs, won’t be eligible for the federal tax credits. Similarly, anyone who is eligible for Medicare won’t be eligible for the federal tax credits, so the millions of seniors whose incomes are low enough to qualify them for supplemental Medicaid benefits (like nursing home and other long-term care services) as well as Medicare won’t qualify. This group alone represents 35 percent of all Medicaid costs.
- The loss of federal Medicaid funds would likely force states to slash their remaining health programs. Under current law, the federal government picks up 57 percent of the cost of a state’s Medicaid program, on average. Since states will be unable to shift most of their Medicaid beneficiaries — and very few of the higher-cost people who constitute the bulk of current spending — into the exchanges, they’d have to somehow make up for the loss of these federal funds. Unless states were willing to as much as triple their current contributions to the cost of health care, they would have to severely curtail their health care spending. Many would likely end up eliminating publicly funded coverage for large numbers of low-income children, pregnant women, parents, people with disabilities, and seniors. Most of these people could well end up uninsured.?For the people who remained eligible for publicly funded coverage, states might scale back benefits. Possible reductions include benefits that are important to people with disabilities and children with special health care needs, such as mental health care and therapy services, which Medicaid covers but private insurance typically doesn’t. States might also increase cost-sharing charges, which means fewer people would receive needed health care. And although states have already sharply reduced their reimbursement rates for Medicaid providers (such as doctors and hospitals) to help close their budget deficits, they would have to further lower their rates — at the same time that providers would face rising costs for uncompensated care costs as the ranks of the uninsured swell.
- The federal government will pick up nearly all the costs of the Medicaid expansion. Claims that the health reform law’s Medicaid expansion will impose unaffordable burdens on states ignore the fact that the federal government will cover virtually all of the cost — 96 percent of the cost over the next ten years,according the Congressional Budget Office. The expansion will add just 1.25 percent to what states were already projected to spend on Medicaid over that period in the absence of health reform.
Well said Edwin. I hope this ill-conceived idea will fade away as quickly as it appeared as it is distracting states from efforts to deliver the benefits of the Affordable Care Act to their residents as soon as possible.