Think Tank Cautions NJ Needs to Do More to Prepare for Medicaid Surge

Beth Fitzgerald | February 15, 2012 | Health Care
As state plans for changes, conservative group differs from Rutgers study on impact of healthcare reform

As state plans for changes, conservative group differs from Rutgers study on impact of healthcare reform

While supporting most of the measures the state is taking to address the rising cost of Medicaid, the Common Sense Institute of New Jersey, a conservative think tank, argues that more needs to be done if the state is to wrestle with a surge in Medicaid patients due to the federal Affordable Care Act.

Indeed, the think tank cites estimates developed by the Cato Institute that Medicaid patients could rise from its current 1.2 million members in New Jersey to more than 2 million.

Dr. Poonam Alaigh, a director of the Common Sense Institute, said that projection was a “worst case scenario” because it assumes the federal healthcare law, requiring most Americans to get health coverage, will drive nearly everyone who is eligible for Medicaid into the program.

Joel Cantor, director of the Rutgers Center for State Health Policy, took issue with the estimate. “It appears that they are assuming that everyone who is eligible for Medicaid will enroll in 2014. That is not a realistic assumption,” he said.

The analysis by the Rutgers group, part of a regional study conducted for the state Department of Banking and Insurance, projects far fewer new Medicaid patients.

“In its report, Rutgers estimated that 234,000 more New Jerseyans will be covered by Medicaid as a result of the Affordable Care Act (ACA). This is a projection, not a forecast. What happens in 2014 will depend on whether the economy gets better or worse,” said Nicole Brossoie, spokeswoman for the state Department of Human Services, which oversees Medicaid.

Although the Affordable Care Act imposes a penalty on individuals who fail to get health coverage in 2014, low-income Americans are exempt from penalties. There is “no reason to believe that take-up rates will increase to anywhere near 100 percent.,” Cantor said. “Our report assumes a 73 percent take-up rate for adults in 2014, which is based on research conducted by the Urban Institute. We further assume an 82 percent take-up rate for children post-ACA, also based on Urban Institute research and our observation that New Jersey has done a very good job of outreach to children in recent years.”

Alaigh said what will happen in 2014 “is obviously not something anyone can predict, but this is the potential [Medicaid] population that has been untapped at this point. With the individual mandate we are going to be seeing movement into the Medicaid population. We are getting ready for the worst case scenario in terms of the population that will potentially be coming into the [Medicaid] system.”

Although there is disagreement on the number of future Medicaid enrollees, there is widespread agreement that access to medical care is going to be a problem when the healthcare reform expands coverage to thousands of the uninsured in 2014.

“We have a physician shortage, and half the physicians don’t take Medicaid patients” because the reimbursement levels are so low, Alaigh said. Under the Affordable Care Act, the federal government will pay the cost of increasing the reimbursement of Medicaid primary care doctors up to the level of Medicare for two years, in 2013 and 2014. Then some other revenue source would have to found if the higher reimbursement is to continue.

Alaigh said she advocates more regional health planning, in which doctors, hospitals and insurers in an area explore together how to provide care to the sickest patients. She also supports one solution, pioneered through state law in New Jersey and now awaiting implementation, that will allows Medicaid providers to create Medicaid Accountable Care Organization in which the providers share in the savings that Medicaid realizes when care is delivered efficiently, patient health improves, and fewer healthcare resources are wasted.

During a press conference Tuesday, Alaigh said she agrees with much of what Department of Human Services is now doing to rein in the rising cost of Medicaid, the largest program in state government. The state Medicaid budget is about $4 billion a year and the federal government matches those state dollars.

Human Services is seeking federal approval to make major changes to Medicaid, including reducing the number of elderly placed in nursing homes by providing supportive services to keep them in their homes; piloting “patient centered medical homes” that provide more preventive care and coordinate medical care to improve public health; and reducing the overuse of hospital emergency rooms.