Decision to Expand Medicaid Coverage in New Jersey is Christie’s Call

Andrew Kitchenman | November 16, 2012 | Health Care
Whether the state can afford to extend Medicaid to adults without dependent children depends on who's doing the math

While the future of the Affordable Care Act seems brighter with the re-election of President Barack Obama, the same can’t be said for one of its provisions — Medicaid expansion — at least not in New Jersey, where Gov. Chris Christie casts his shadow over its prospects.

The governor has already expressed his skepticism about expanding the program, citing its impact on the state’s already overburdened budget. Ultimately, his decision will determine the number of New Jersey residents who are eligible for Medicaid.

The ACA lets states decide for themselves whether to take advantage of federal funds to increase the size of their Medicaid rolls. Given New Jersey’s divided legislature, the call is Christie’s: will the state accept Medicaid dollars to insure residents without dependent children who earn up to 138 percent of the federal poverty level, or FPL?

Currently, the state provides health insurance for children whose family income is 250 percent of the federal poverty level, as well as parents with a family income up to 133 percent of the FPL

But adults without children are not eligible unless they earn only 26 percent of the FPL.

Sen. Joseph Vitale (D-Middlesex), who chairs the Senate Health, Human Services and Senior Citizens Committee, notes that New Jersey is among the states with the strictest eligibility for childless adults. Single adults with more than $2,900 in annual income and couples with more than $3,930 are ineligible.

“If you’re living in a park or under a tree, you’re eligible,” Vitale said. “Otherwise, you’re not.”

Medicaid Demographics

The Rutgers Center on State Health Policy estimates that the expansion would provide health coverage for 234,000 New Jerseyans, although some of these residents are already eligible for Medicaid but haven’t enrolled.

“There’s probably a net savings to the state of enrolling them in Medicaid,” said center director Joel Cantor, noting that at least part of the new costs would be offset by reduced costs to charity care and other programs.

The mathematics of Medicaid expansion are fairly straightforward.

From 2014 to 2016, the federal government would cover 100 percent of the cost of expanded eligibility. After that, the state would be required to pick up part of the cost, with the level increasing from 5 percent in 2017 to 10 percent in 2020. The level would then hold steady at 10 percent, with the federal government picking up 90 percent of the cost.

Medicaid is currently a shared expense, with both the federal government and the state covering 50 percent of the cost. The expansion coverage would apply only to new Medicaid patients.

“There’d be serious downsides to not doing it and few if any downsides of doing it, at least in the first three years,” Cantor said. He added that the federal government is cutting its subsidy to charity care — government payments for healthcare for the uninsured.

“Either the state will have to pick up the tab or the hospitals will be stuck with it,” Cantor said.

Medicaid expansion will be the subject of a Senate Health, Human Services and Senior Citizens Committee meeting on Monday. Vitale is sponsoring a resolution urging Christie to expand eligibility,

Vitale’s position is supported by Katherine Grant-Davis, president and chief executive officer of the New Jersey Primary Care Association, which includes community health centers that serve low-income residents.

Grant-Davis said Medicaid has the potential for opening up more specialized care, including dental care, to currently uninsured adults, adding “it’s a better way of insuring that health disparities are addressed.”

She said Medicaid expansion has the potential to reduce hospital visits for patients with chronic diseases, adding that Christie has been a strong supporter of community health centers.

“He knows the work that we do and I remain hopeful he will agree” to the expansion, Grant-Davis said.

Medicaid and Medicine

While expanded eligibility is supported by many healthcare providers, that support will be meaningful only if more doctors agree to accept Medicaid payments.

Randy Minniear, senior vice president of government relations and policy for the New Jersey Hospital Association, said expansion would only be effective if more doctors take Medicaid patients.

“We do support the expansion,” but the association also appreciates Christie’s careful consideration, Minniear said. He also expressed skepticism that reduced charity care spending would offset added Medicaid costs, noting that many illegal or undocumented immigrants receive charity care and are ineligible for Medicaid

Dr. Steven Kairys, chairman of pediatrics at Jersey Shore University Medical Center, is hopeful that a two-year program under the Affordable Care Act to raise Medicaid reimbursement rates to equal Medicare rates will induce more doctors to take Medicaid patients.

“I’m hoping that that will have a large impact at the same time that the expansion occurs and that it will be a real carrot,” said Kairys, the medical director for the American Academy of Pediatrics New Jersey chapter.

However, New Jersey Academy of Family Physicians government affairs director Claudine M. Leone noted that the equalized payments will only be in place for two years, which may not be enough time to draw primary care doctors into the program.

“Access will be an issue with any expansion of Medicaid enrollment,” Leone said, adding that while she supports the concept, “You might get an influx of physicians in the next two years, but then where are [patients] going to go?”

Dr. Michael Gerardi, an emergency-room doctor at Morristown Medical Center, said he expects ERs to continue to serve as a form of primary care for many residents, regardless of expanded Medicaid eligibility.

“Any increased coverage for patients is good, but I just think as a specialty we’re carrying a tremendous burden and being ignored,” said Gerardi, the vice president of the American College of Emergency Physicians. “We’re already the safety net for a lot of these Medicaid patients, and we’re not recognized as such.”

Christie’s decision may boil down to fiscal impact on the state budget, which is due to be introduced in February. Christine Stearns, vice president of health and legal affairs for the New Jersey Business & Industry Association, said the importance of the budget impact can’t be minimized.

“It is a significant investment of resources, which cannot be denied, in really tough fiscal times,” Stearns said, noting that the budget now has to address the after-effects of Hurricane Sandy. “We now have a rebuilding we have to go through. It’s not an easy decision about what’s right and what’s wrong.”

Christie is also hearing from opponents of expanding government programs, including Medicaid. Americans for Prosperity New Jersey state director Steve Lonegan said the expansion is unaffordable.

“The state has a huge revenue shortfall,” said Lonegan, the runner-up to Christie in the Republican nomination for governor in 2009. He noted that the state was below revenue projections before the hurricane: “This is like a train wreck.”

Raymond J. Castro, senior policy analyst for New Jersey Policy Perspective, estimates that at least half of the $675 million the state spends for charity care would be saved from expanding Medicaid.

“This is an overwhelmingly positive benefit for the state fiscally. There’s also the issue of doing the right thing,” Castro said. He said it would “very inequitable” to opt against expanding eligibility when the federal law offers subsidies for all residents above the poverty line, or $11,170 for a single person and $15,130 for a couple.

Ev Liebman, AARP New Jersey associate director of advocacy, said the federal funding makes the case clear for expansion.

“It’s really a great bargain for the state and it’s also a program that our residents are paying for, so we should get the benefit of those programs,” she said.

Federal officials haven’t set a deadline for states to decide whether to expand eligibility.