The Headline of the Rolla Daily News this Friday March 1 could have read " Legislature's Actions Could Harm Hospital, and Save Citizens & Children From Mountain of Debt". However, the second part of the headline did not appear, just the part about harming the hosptial did. Perhaps it could have read "Mo Legislature Says It Can't Fix Fed's Mistake" , or "Legislature Wants To Improve Health Care For Poor Before Forcing More Into Medicaid". It is precisely out of concern for our most vulnerable that I believe we should improve Medicaid before considering expanding it. Do we really want to relegate hundreds of thousands of Missourians to permanent second class status when it comes to their health care? This is a complex issue and for those of you who want to to try to understand it better, this article will be a start. I do not pretend to know everything about this issue, nor to have all the answers, but as an orthopedic surgeon and a legislator, I have a unique perspective and I offer my opinions to further the public discourse.
Disproportionate Share Hospital (DSH) Payments
The loss of this funding is the main reason that expansion of Medicaid is such a hot topic now in Missouri. I am not surprised that the Missouri Hospital Association and the leadership of hospitals in our state would advocate for the expansion of Medicaid. The primary driver of that is the fact that ObamaCare drastically reduces a supplemental source of money to our hospitals called DSH Payments. This stand for Disproportionate Share Hospital Payments, and it provides money to hospitals for care provided to patients who are poor and connot pay for their care. ObamaCare will cut Medicaid DSH payments nationally by $18.1 billion between 2014 and 2020. That occurs independent of whether a state chooses to expand Medicaid or not. To coerce states into expanding Medicaid coverage, the ObamaCare drafters told the states that if they did not expand Medicaid as prescribed in ObamaCare, they would lose all of their federal dollars for Medicaid. So they were pretty sure all states would expand as prescribed. The Supreme Court, however, told the feds that it was unconstitutional to coerce the states in that manner. Currently in Missouri, hospitals stand to lose about 704 million dollars over the next 6 years from these reductions in federal subsidy. That is why there is currently the push by the Missouri Hospital Association (MHA) to expand Medicaid at the state level. In my view the demand for expansion currently being made by MHA and individual hospitals is not because they believe that Medicaid is a fundamentally sound and effective program that should be expanded due to its outstanding performance. Instead, they want their DSH payments back, but they are afraid the feds won't give it back because our federal government wants the states to expand Medicaid. The administration wants the hospitals to use their clout with the state legislatures to convince them to do so. My colleague in the Senate, Senator Rob Schaaf has done some research on the schedule for reduction of DSH payments and for the first 3-4 years the reductions are not severe, but later they escalate. This allows time for our hospitals to work with the same people who they worked with in D.C. when ObamaCare was drafted to point out to them the mistake that was made when drafting the bill. The mistake was that DSH payments were reduced for all states, not just the states that expanded Medicaid. If they had realized that they had crossed the line of unconstitutionality by assuming they could force all states to expand Medicaid, they surely would not have wanted to put undue financial stress on hospitals committed to providing care to the indigent. Therefore, the Hospital Associations should seek redress of this error in the law in Washington, D. C., not in Jefferson City, and there is time to do just that. I Sponsored House Concurrent Resolution 17 that calls on the federal government to do just that.
How Good is The Medicaid Program?
If we stipulate that the hospitals need the DSH payments that they have been getting, what then is the best course for the states to pursue? Should the feds reinstate the DSH payments for those states that choose not to expand Medicaid or should the states expand Medicaid? The first choice, reinstating the DSH payments, is relatively straight forward, and resets things back to pre ObamaCare status. The second choice, expansion of Medicaid, calls into question a host of issues regarding the quality of the program and the degree to which it is meeting the needs of all of the stakeholders efficiently and effectively. I for one, am of the opinion that this program is in need of drastic reform, not expansion.
Health outcomes for those on Medicaid are worse than for those who have free market based insurance and in some studies they have worse health outcomes, including higher mortality rates, than for those who have no insurance at all. Having Medicaid is not the same as having access to good medical care. One of the most common methods that states have used to reduce costs in this failed program has been to reduce the payment to the doctors and other providers to the point that many do not participate in the program at all. Those that do participate often restrict the number of patients that they see with Medicaid. By comparison, in our Food Stamp program, the grocer is paid the normal price for the groceries bought with Food Stamps. Therefore there is no shortage of grocers that participate in the Food Stamp program. For Medicaid however, the provider of services has to accept the reduced fixed price of the program which is substantially lower than the customary price for the service. If we place another 300,000 people on the Medicaid rolls in Missouri, I believe some and perhaps many doctors and other providers will cease or reduce their participation in Medicaid, and that would worsen the access problem. It would also make it harder to attract and retain doctors to the state if they are facing a large percentage of their patients that will be in such an inferior program with unrealistic reimbursement. At one point in my orthopedic career, my partners and I did not even submit a charge for Medicaid patients, since the rerimbursement was so low and the bureaucratic obstacles to obtaining even the paltry reimbursement were so substantial. We became so fatigued of denials for payment and of writing letters of appeal and devoting so much staff time to this one program, that we provided the services to patients and did not submit any bill. By the way physicians have never asked for or received any DSH type of payments, they don't have the lobbying muscle or inclination to do so even though they provide a large amount of uncompensated care.
Does Medicaid Encourage Thriftiness?
A fundamental building block of ObamaCare was to coerce the states into expanding Medicaid by withholding funds for all Medicaid patients from states that did not expand the program and that was a major way they were going to get more people "insured". This essentially commits these folks to second class citizen status in terms of their health care, and pre-ordains that they will have to endure rationing, poor access, and substandard health outcomes. All-the-while, the taxpayers foot the bill for a program that allows patients to seek care from as many providers as they want, in whatever setting they choose (often the ER), resulting in poorly coordinated care without any cost or downside to the recipient. There is no incentive for the Medicaid recipient to act as a discerning consumer of health care services or to conserve on cost in any manner whatsoever. I was recently contacted by a nurse in the front lines of health care who discovered that a Medicaid recipient had gone to 40 different doctors in the recent past. I have also become aware of a recipient who went repeatedly to ERs with complaints of kidney stone pain in an apparent effort to obtain narcotics. This individual had 8 CT scans looking for kindey stones in the last several months- all normal. On one ocassion, when a urine sample the patient provided was suspected of being intentionally contaminated by a drop or two of blood, a catheterized urine specimen was completely free of blood. (blood in the urine is a sign of a kidney stone). Could it be that this person was feigning kidney stone pain and putting some blood in his/her urine sample in order to bamboozle the doctor into prescribing narcotics? I am also aware of a patient who presented on multiple occassions to ERs with a dislocated shoulder, and who could voluntarily re-dislocate the shoulder once it was put back in place, and did so in the ER. Could this be a ruse to obtain narcotics? My point is that there is no down side to abusing the system for drug seeking or in other instances for convenience and with complete indifference to cost. Anyone who works in health care could give examples of abuses of the system that are all too common. Of course, not everyone who receives services through the Medicaid program ignores expenses because it does not cost them anything, but enough do to make a difference. In the Missouri House, we are looking for ways to improve our Medicaid system. Rep. Barnes has introduced a Medicaid reform bill. I attended a 2 day meeting in Florida hosted by the Foundation for Government Accountability, called the Medicaid Cure Summit, to learn more about Florida's efforts to reform Medicaid. I also heard from Dr. Colyer, the Lieutenant Governor of Kansas who has championed Medicaid reforms in Kansas. I have Sponsored HB 608 to reform Missouri Medicaid by empowering patients and incentivizing them to obtain health care as a discerning consumer, with an awareness of cost. I will describe this proposal in Part 2 of Why Missouri Should Not Expand Medicaid.
The Woodwork Effect & Medicaid Expansion
While the cost of newly eligible individuals would be paid for 100% by the federal government for the first three years, those who are currently eligible, but not enrolled are the state's responsibility. With only about 2/3 of those eligible enrolled now, that means that when the individual mandate takes effect, many of these folks who are eligible but not enrolled will sign up for Medicaid to comply with the law and avoid the 'tax'. This will occur without any changes to our eligibility criteria. We will face our own organic Medicaid expansion due to the individual mandate. In my opinion, this is ample reason to reform Medicaid, but to be cautious about bringing even more recipients into the system until we see how many more we will have just from what is called the Woodwork Effect.
Our Nation's Debt is a Threat to All of Us
Federal money is not free money. One of the reasons I decided to get into politics instead of remaining as a full time orthopedic surgeon was due to the fact that our federal government was spending so much money that we didn't have. In fact when I went to Washington, D.C., in the fall of 2009, I carried a sign in front of the White House that read, "This Huge Debt is Financial Child Abuse." I firmly believe that. If we take 7 or 8 billion dollars from the federal government in the next 8 years, and if other states do the same, we increase our federal debt by more than half a trillion dollars. For more information on this , take a look at this study from the Kaiser Commission on Medicaid and the Uninsured:
Our Debt to GDP Ratio is Climbing to Dangerous Levels
Our Debt to GDP ratio continues to climb and went from 102% in the fall of 2012 to 106.45% now, based on current GDP and national debt figures.
As detailed in publications of the Congressional Budget Office, a Brooking Institution paper authored by Alan J. Auerbach (University of California, Berkeley) & William G. Gale (Brookings Institution), and a Princeton University Press book authored by Carmen M. Reinhart (University of Maryland) & Kenneth S. Rogoff (Harvard University),
The following are potential consequences of unchecked government debt:
¨• reduced "future national income and living standards";
¨• "reductions in spending" on "government programs";
¨• "higher marginal tax rates";• "higher inflation" that increases "the size of future budget deficits" and decreases the "the purchasing power" of citizens' savings and income"
¨• restricted "ability of policymakers to use fiscal policy to respond to unexpected challenges, such as economic downturns or international crises";
¨• "losses for mutual funds, pension funds, insurance companies, banks, and other holders of federal debt"; and• increased "probability of a fiscal crisis in which investors would lose confidence in the government’s ability to manage its budget, and the government would be forced to pay much more to borrow money."
The study's "main finding is that across both advanced countries and emerging markets, high debt/GDP levels (90 percent and above) are associated with notably lower growth outcomes."
The US now has a debt to GDP ratio of 106%, and Medicaid expansion continues this trajectory. By way of comparison, Greece has a Debt to GDP Ratio of 157% while China's is 16% and Saudi Arabia's is 6.2 % Why should the people of the US have to go to foreign governments like China, hat in hand, to ask them for money to fund the operations of their government? Why should we be willing to place this burden on our children for ideas that we think are good but that we cannot pay for?
Currently, the Congressional Budget Office (CBO) projects that the debt-to-GDP ratio will rise in coming years, increasing the government’s debt burden.
Ben Bernanke, testifying before the Senate Banking Committee Tuesday Feb., 26, 2013 said that Congress must reverse this trend. He said " To promote economic growth in the longer term, and to preserve economic and financial stability, fiscal policymakers will have to put the federal budget on a sustainable long-run path that first stablizes the ratio of federal debt to GDP and, given the current elevated level of debt, eventually places that ratio on a downward trajectory"
In other words Ben, we have to stop spending so darn much money or we are headed for big trouble. How do we do that? In my view we start by not spending a half a trillion dollars to expand a program that is not worthy of further expansion but rather needs major surgery.
High Debt to GDP ratios are associated with low economic growth, and the US GDP increase just released was just 0.1% in 4th quarter of 2012. Low economic growth means fewer people with jobs and that means lower standards of living for our citizens. That is what is at stake with further additions to our national debt and it is one of the main reasons I oppose expansion of Medicaid as it is.
If We Don't Expand Medicaid, Will Our Money Go To Other States?
Medicaid is not just “given” to states. People have to be enrolled, services provided etc. in order for the federal government to provide Medicaid funding. The cold hard fact is that if any other state enrolls and provides services to more people than was projected, they will receive MORE Medicaid funds from the feds whether Missouri expands Medicaid or not. That money would not come from Missouri’s “share” because we did not expand Medicaid.
As far as paying for those people in other states – we already are. Every Missourian who pays federal taxes pays for the funds expended by the federal government everywhere, not just in our state. We are currently paying a portion of California’s Medicaid program through our federal taxes. This will not be any more if Missouri doesn’t expand Medicaid. In fact, the federal deficit and our share of it would be less if more states refused to expand Medicaid.
Expand Medicaid as an Ongoing Stimulus Plan?
Those that contend Medicaid expansion will create thousands of jobs in Missouri may be using out-of-date Keynesian models that have been eminently disproven over the last six years. These same forecasts were used to predict that the American Recovery and Reinvestment Act of 2009 (ARRA), commonly known as the “stimulus” would bring the national unemployment rate below 6 % by 2012. Instead, the unemployment rate remained around 8 percent. Using borrowed money to create jobs could be a viable short term strategy, but to propose an ongoing stimulus program, with the ongoing piling up of debt is folly.
No mention is made of the impact of taking money from our taxpayers to fund this expansion. When they are forced to give the government money, they can't spend it in the private sector, invest in their own future, their children's future or save it.
Would Missourians Vote To Raise Taxes to Expand Medicaid?
As the last issue in Part 1 of Why Missouri Should Not Expand Medicaid, let me talk more about the cost to the state and federal government. The state of Missouri spends about 8 billion dollars on Medicaid every year, and costs continue to rise. The cost of expansion to the state according to analysis by the Heritage Foundation would be about 514 million from 2014 -2022, and for the feds, about 7.5 billion dollars over the same period. If however, there is no gradual phase-in of the state's 10% share, but it is brought on abruptly, the state's cost would be 802 million and the feds 7.2 billion. If the feds were to decide that the 10% share from the state is not "their fair share", and 10% reductions of federal subsidy were implemented, then the state's share would be 1.3 billion and the feds 6.7 billion. All of these scenarios are budget busters for the state of Missouri and would necessitate either a tax increase or reduction in other funding priorities such as elementary and secondary education or higher education. I doubt that an electorate in Missouri that has rejected provisions of ObamaCare twice, voted against President Obama twice, and who just rejected a cigarette tax for education programming, would embrace a tax for example on gasoline or on cigarettes or an income tax increase to expand a program that so badly needs reform, that doesn't incentivize recipients to be cost conscious and that doesn't serve the recipients very well either. I don't plan to propose such a tax to the voters of Missouri because I believe they have already spoken. I believe that one of the goals of the grand plan of ObamaCare, that of placing large numbers of additional people on Medicaid, is akin to asking people to step onto a sinking boat. I say we should reform Medicaid and the federal government should remove the substantial obstacles that are in place that prevent that. Speed up the 1115 waiver process, and give more leeway to the states to innovate.
Stay tuned for Part 2 of Why Missouri Should Not Expand Medicaid.