Deciding on Medicaid Expansion, Christie Sides with Uninsured, Cites Cost Savings for NJ

Andrew Kitchenman | February 27, 2013 | Health Care
Hospitals, activists and legislators from both parties applaud move to insure more than 100,000 currently without coverage

After six months of deliberation, Gov. Chris Christie announced in his budget address Tuesday that he will accept federal funds to expand Medicaid in New Jersey, which will save the state $227 million and cover more than 100,000 residents currently without health insurance.

Christie became the eighth Republican governor to endorse Medicaid expansion, which is called for in the 2010 Affordable Care Act. An even greater number of Republicans, however, have chosen to reject the expansion – and its federal funding – as part of a broader effort to repeal the ACA.

While reiterating his opposition to the ACA, Christie said he decided that it would benefit the state to expand Medicaid, a form of federally supported health insurance for low-income residents.

“It is now the law of the land,” Christie said of the ACA. “I will make all my judgments as governor based on what is best for New Jersey.”

A broad range of healthcare providers and policy experts, as well as legislators from both parties, hailed the decision. Christie said he decided after considerable discussion and research to expand “one of the most expansive Medicaid programs in the nation.”

The expansion primarily affects adults without children who have incomes above the level allowing them to participate in the General Assistance program, or $2,520 for a single adult, but below 138 percent of the poverty line, which currently amounts to $15,856 for a single adult.

Christie said the expansion would cover 104,000 adults. However, more adults and children are expected to enroll in Medicaid due to the new federal mandate to have health insurance and the outreach that’s expected over the next year. Including that population, the state’s Medicaid rolls are expected to grow by 234,000, according to the Rutgers Center for State Health Policy.

Christie said the state would save $227 million in the coming fiscal year from the expansion, since the federal government will be picking up some of the state’s share of costs for low-income parents under the expansion.

Rutgers Center for State Health Policy Director Joel Cantor said the savings will be real and will grow over time as more residents enroll in the program.

“I think it was the rational thing to do in the face of the reality of the numbers,” Cantor said of the decision. Healthcare providers, from family doctors to hospitals, will benefit from having more patients with health insurance.

“It’s good for New Jersey – frankly, it’s just the right thing to do,” said Betsy Ryan, New Jersey Hospital Association president and CEO.

The expansion will allow newly insured residents to seek care from primary-care providers, rather than going to hospital emergency rooms for non-emergency care. Hospitals currently get only partial reimbursement for emergency room care. Hospitals will also benefit from having more patients who have insurance.

Suzanne Ianni, president and CEO of the urban hospital group the Hospital Alliance of New Jersey, said the expansion is a “win on all fronts,” adding, “hospitals are always concerned about access to primary care.”

While Christie didn’t reduce the current level of $650 million for annual charity care in the proposed budget, most experts expect this amount to drop in the future. Ianni cautioned that this isn’t guaranteed, noting that hospitals are only reimbursed for a fraction of the more than $1 billion in charity care they provide.

It will take a large outreach effort to sign up the thousands of residents eligible for the expanded Medicaid program.

Sen. Joseph F. Vitale (D-Middlesex) plans to introduce a bill that would require healthcare providers to automatically enroll all Medicaid-eligible patients when they visit their offices. Vitale expects that the pressure on residents to get insurance due to the federal mandate and the self-interest of providers also will lead to increasing the Medicaid rolls.

“It will be a mandate in 2014 and hospitals and other providers and other community groups will be ready, willing and able to enroll them,” Vitale said.

A key role in outreach efforts will be played by “navigators,” nonprofit organizations that will help residents sign up for insurance through health-benefit exchanges, basically an online marketplace for buying insurance and learning about eligibility for Medicaid and federal subsidies.

However, this funding for “navigators” may need to be stretched to meet the goal. Dena Mottola Jaborska, organizing director for the nonprofit New Jersey Citizen Action, said she expects New Jersey “navigators” to receive $3 million to $9 million. She suggested that hospitals and insurance companies might want to be partners with nonprofits to fund the outreach.

Ryan said stakeholders will “buckle down” to increase enrollment faced by the prospect that “we have this magnificent expansion and no one comes” to sign up for Medicaid.

Christie garnered bipartisan praise, with members of both parties rising during his budget message to applaud the Medicaid expansion announcement.

Assemblyman Herb Conaway Jr. (D-Burlington), a doctor, said he’s pleased with Christie’s decision, adding that it’s well established that having health insurance improves health. Medicaid recipients will also have the opportunity to receive healthcare sooner by going to primary-care providers, he said.

Sen. Robert W. Singer (R-Monmouth and Ocean) said “helping insure more residents is a great thing.” He noted that it would strengthen federally qualified health centers, which serve many Medicaid patients.

Democratic members of the state’s congressional delegation, including Sen. Frank Lautenberg and Sen. Robert Menendez, as well as U.S. Rep. Frank Pallone, also applauded ed Christie’s decision.

Even some who are critical of Medicaid said Christie made the right move, including Dr. Poonam Alaigh, a former member of Christie’s cabinet as health and senior services commissioner.

While Alaigh said she supported the decision, she cautioned that Medicaid is in need of major reforms, including more transparency and accountability to reduce costs.

“If all we did is expand, then obviously there’s an issue with affordability,” at the federal level, said Alaigh, a board member of the Common Sense Institute of New Jersey, a think tank that supports limiting the size of government.

Other critics of Medicaid had wanted Christie to reject the expansion, saying that states accepting expansion would perpetuate Medicaid and other aspects of the ACA.

However, Christie said that refusing the federal dollars would just mean that they would be used to expand healthcare access in other states.

“Accepting these federal resources will provide health insurance to tens of thousands of low-income New Jerseyans, help keep our hospitals financially healthy and actually save New Jersey taxpayers money,” Christie said.

In addition to hospitals and doctors, organizations that treat residents with mental health and addiction problems may stand to receive additional funds.

Debra L. Wentz, CEO of the New Jersey Association of Mental Health and Addiction Agencies, said the decision by Christie was well-timed. Wentz expects, based on previous natural disasters, that the number of New Jersey residents who have mental-health or related problems linked to Hurricane Sandy will spike in coming months.

“It’s going to bring all these new dollars and really help people,” facing job losses and increased anxiety as they realize that their lives aren’t returning to normal, Wentz said.

Cantor said increased funding for mental-health treatment fits with other Christie priorities, including his drug-court program, which provides increased substance-abuse treatment for non-violent offenders.

It would be difficult to address substance abuse without providing Medicaid coverage for other healthcare needs, including mental-health issues, Cantor noted.

Christie’s decision may reverberate beyond New Jersey.

Dr. Risa Lavizzo-Mourey, president and CEO of the Robert Wood Johnson Foundation, said foundation officials hope Christie’s action “will demonstrate to other states the value of expanding their own Medicaid programs.”

Christie’s decision may also reflect a pivot in the national debate of the issue, according to Raymond J. Castro, senior policy analyst for New Jersey Policy Perspective and author of a series of reports that found benefits from Medicaid expansion.

“I think it’s going to result in more and more governors expanding Medicaid,” Castro said. He cited Pennsylvania Gov. Tom Corbett, who has rejected the expansion but did not do so in absolute terms, as someone who may ultimately be swayed by the same factors that led Christie to embrace the expansion.

But Christie’s stance may be temporary. He said he could reverse his decision in the future, and would maintain the Medicaid expansion only if it’s the still the smart thing to do.

“If that ever changes because of adverse actions by the Obama administration or broken promises, I will end it as quickly as I started it,” Christie said.