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Drive to expand Medicaid is stalled

But the safety net has some gaping holes, and political uncertainties could make them even bigger.

By ALAN BAVLEY and ERIC ADLER
The Kansas City Star

Patients with cancer, unstable heart disease, uncontrolled diabetes — they all show up at Southwest Boulevard Family Health Care looking for help.

Their problems are critical. They need tests, surgery, specialized treatments.

There’s just so much that Sharon Lee, the family practice doctor who runs this Kansas City, Kan., safety-net clinic, can do for them. And sometimes it’s not enough. Her patients end up disabled, on organ transplant lists or suffering chronic pain because the help wasn’t there.

“Everybody believes our society is taking care of people in dire straits, and it’s not,” Lee said.

That’s why she was thrilled that the Affordable Care Act was going to expand Medicaid, the government health insurance program for the poor, in 2014 to cover an additional 16 million people nationwide.

The ACA, “Obamacare” to its detractors, calls for offering free Medicaid coverage to almost all adults with a household income of 133 percent of the federal poverty level or less. In Kansas, Missouri and most other states now, few non-elderly adults qualify for Medicaid unless they have children living at home. With expansion, a single adult with an income of as much as about $15,000 would be eligible.

But last month, the U.S. Supreme Court’s ruling on the ACA upset that plan. While the court left intact the law’s demand that many people buy health insurance or face financial penalties, it overturned the mandate that states expand their Medicaid programs. So it’s up to each state whether it buys in to the new benefits.

Lee estimated that as many as a fourth of her clinic’s more than 5,000 patients would be newly qualified if Medicaid eligibility expanded. They would gain greater access to hospitals, imaging centers and specialists that now are often out of reach.

Altogether, about 141,000 uninsured adults in Kansas and 351,000 in Missouri would be newly eligible for Medicaid, according to the Urban Institute, a Washington, D.C., think tank.

But in Kansas and Missouri, Medicaid expansion is in doubt. There are serious concerns about the costs and complexity of a larger Medicaid, as well as ideological opposition to any government growth.

Kan. Gov. Sam Brownback, a Republican, has called the state’s role in implementing the ACA a political issue that voters will settle.

“He will wait until after the November elections before making any decisions related to Obamacare,” said spokeswoman Sherriene Jones-Sontag.

Missouri Gov. Jay Nixon, a Democrat, remains noncommittal.

Nixon “is always looking for ways to make health care more affordable for Missouri families, but we must do so in a fiscally responsible way,” said his spokesman, Scott Holste. He said the governor “is committed to working with legislators, health care providers, other stakeholders and regular Missourians to determine the best fit for our state.”

Some Republican governors already have lined up squarely against Medicaid expansion.

In a letter this month to Health and Human Services Secretary Kathleen Sebelius, Texas Gov. Rick Perry said it would “simply enlarge a broken system that is already financially unsustainable.”

Medicaid expansion is intended to be one of the tent poles holding up the Affordable Care Act. People newly eligible for Medicaid were to account for about half of all the uninsured who were expected to gain insurance coverage through the health care law.

Medicaid programs are administered by states, but the federal government makes many of the rules and picks up half or more of the costs. In Kansas, the federal share of the bill is 59 percent; in Missouri, it’s 63 percent.

Since it was enacted in 1965, Medicaid has focused on coverage of people with low incomes, but only in certain categories: pregnant women, children and their parents, the elderly and the disabled. Other poor adults are left out of most states’ programs.

As health care costs have risen, Medicaid has taken up a growing and burdensome share of state budgets.

Medicaid expansion was designed to be less onerous: For the first three years, the federal government will pay the full cost of the newly eligible recipients. The federal share then will taper gradually until 2020, to 90 percent, where it will stay.

The first six years of Medicaid expansion would cost Kansas $166 million, but bring in an additional $3.5 billion in federal money, according to the Kaiser Commission on Medicaid and the Uninsured. Missouri would spend an extra $431 million and receive $8.4 billion more. But costs could be considerably higher if more people sign up than expected, or if people who had been eligible all along decide it’s the right time to apply.

States are worried.

“I think there is a lot of concern about the bottom line. What is the bottom line and what is the real financial outlook?” said Suzanne Schrandt, a policy analyst with the Kansas Health Institute in Topeka.

Yes, the federal match is not supposed to drop below 90 percent, Schrandt said, but “what if, because of the budget situation, that is not what happens?”

But it also may be hard for states to walk away when there is so much federal money on the table, said Ryan Barker, director of heath policy with the Missouri Foundation for Health in St. Louis.

“In the basic equation, it would take more state spending, but part of the argument is having $8.4 billion in federal money. That’s not just sitting there. It’s going to doctors and hospitals and clinics, and that generates economic activity.”

There are other reasons for states to go along with Medicaid expansion, Barker said.

The ACA will offer tax credits to people with low and moderate incomes to buy private insurance. But the law doesn’t provide the subsidies to anyone with an income less than the federal poverty level; it assumes that they will be covered by the larger Medicaid programs. If a state doesn’t expand Medicaid, these very poor people will be shut out.

The ACA also assumes that with millions more people insured, hospitals will no longer need all the subsidies they receive through Medicare to cover the costs of uninsured patients. Most of these subsidies are scheduled to go away in 2014. If Medicaid isn’t expanded to cover the uninsured, “it really puts hospitals in a financial bind,” Barker said. They can’t stop treating uninsured emergency patients, so they will try negotiating higher payments from private insurance plans to cover their losses.

“All of this is connected, and it’s a domino effect. It jeopardizes the financial stability of hospitals; it jeopardizes price stability of private insurance,” Barker said.

Stan Dorn, a senior fellow at the nonpartisan Urban Institute, thinks much of the opposition to Medicaid expansion right now may be political posturing by governors looking for concessions from Washington.

“There are some people who think that, after the November election, if the president gets re-elected, or Democrats take (full control) over the Senate, states will negotiate for the best deal they can get from the federal government,” Dorn said. “I have heard some say this is about bargaining leverage. Fight it now; get a lever later.”

Sharon Lee has to believe that opposition to Medicaid expansion comes from a lack of awareness of the health care problems faced by people without insurance rather than mean-spiritedness.

“Only when it happens to you or someone close to you do you go, “Wow, now I understand,’ ” she said. “I hope our politicians rise to the occasion. They have to.”

To reach Alan Bavley, call 816-234-4858 or send email to abavley@kcstar.com.

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