Medicaid Expansion Supporters Build Case on Potential Savings

Andrew Kitchenman | November 21, 2012 | Health Care
Senate panel urges Christie to increase eligibility for low-income program

Jeff Brown of New Jersey Citizen Action and David Knowlton of the New Jersey Healthcare Quality Institute.
Advocates for expanding eligibility for Medicaid in New Jersey are attempting to make their case in financial terms, but it remains to be seen whether they’ve developed enough evidence to convince a skeptical Gov. Chris Christie.

Several policy experts endorsed a resolution that was advanced by the Senate Health, Human Services and Senior Citizens Committee on Monday that urged Christie to support the expansion. Committee Chairman Sen. Joseph Vitale (D-Middlesex) sponsored the resolution.

Ray Castro, senior policy analyst for New Jersey Policy Perspective, said the expansion is “financially a great deal” because the federal government would cover the entire cost of the expansion for the first three years, before the state share would gradually rise until it reached 10 percent of the expansion’s cost in 2020.

“It seems to me to be a no-brainer,” Castro said of the decision.

The expansion would affect residents whose incomes are above the maximum allowed for the state’s General Assistance program, or $2,520 per year for single person who isn’t disabled, but below the level at which they can participate in a health-benefit exchange. That level is 133 percent of the federal poverty line, or $15,415.

January Angeles, a senior policy analyst for the Washington, D.C.,-based Center on Budget and Policy Priorities, pointed to Urban Institute estimates that New Jersey would spend 1.2 percent to 2.5 percent more on healthcare with Medicaid expansion than it would have without the federal Affordable Care Act, while increasing the number of adults eligible for Medicaid by between 390,000 and 568,000.

Angeles added that the state would save money from Medicaid expansion, since new enrollees will reduce state costs for uncompensated hospital care, as well as for mental-health and substance-abuse treatment.

Angeles also cited a study by the American Academy of Actuaries showing that states that don’t expand Medicaid will see private insurance premiums rise by 2 percent. This results from previously uninsured people who would have been eligible for Medicaid under an expansion instead buying private insurance. This group is more likely to seek medical care.

“A Medicaid expansion, on the other hand, would mean far fewer gaps in coverage, lower premiums for insurance in the individual market (in general), and greater predictability for commercial insurers operating in the state,” Angeles said, adding that the Affordable Care Act’s risk adjustment system would be more effective at compensating insurers that take on higher-risk populations because costs will be more predictable and there will be less adverse-selection risk.

Along with the financial impact, much of the case for expansion has focused on making healthcare more accessible.

David Knowlton, president and CEO of the New Jersey Health Care Quality Institute, said the Medicaid expansion presents an opportunity to move the focus for primary care for many low-income residents from emergency rooms to primary-care doctors.

Knowlton also pointed out that many residents who would be eligible for the Medicaid expansion won’t be eligible to participate in the health-benefit exchange, which is cut off at a the federal poverty line, currently $11,170 for a single person.

“It’s a Catch-22 that will especially impact the newly unemployed,” Knowlton said.

Medicaid expansion also is the best way to approach the development of safety-net accountable care organizations, an ACA-encouraged form of coordinating care through a group of providers. Knowlton said this would help meet the goals of a working group he chaired that examined healthcare reform beginning in 2006.

The effort led to state officials to endorse the concept that “it was a moral imperative in our state that every citizen have access to health insurance,” Knowlton said.

Drew Harris, chairman of the New Jersey Public Health Institute, said Medicaid has a history of reducing mortality in low-income and minority communities.

John Tomicki of the League of American Families was the only person attending the committee hearing who vocally opposed the resolution proposed by Sen. Joseph Vitale (D-Middlesex), the committee chairman.

Tomicki said he was concerned that the wording of the resolution was only made available to the public a short time before the hearing. He said a better way to provide healthcare to low-income residents is a bill sponsored by Sen. Robert W. Singer (R-Ocean and Monmouth) and Sen. Brian P. Stack (D-Hudson) that would limit providers’ liability to malpractice lawsuits if they volunteer for four hours per week at a free clinic.

“I’m hoping you keep the door open for discussions,” Tomicki said.

All six committee Democrats voted in favor of the resolution, while three Republicans abstained and a fourth was absent.

Nationally, eight Republican governors have said their states won’t participate in Medicaid expansion, while 11 Democratic governors and one independent governor have said they support expansion, according to American Health Line.

The other governors, including Christie, have not announced a decision on the issue.

While the federal government hasn’t announced a deadline for state decisions, many governors have said they will decide as part of their state’s annual budgets. Christie is scheduled to propose a budget in February.