Bill Puts Spotlight On Potential Savings From Medicaid Expansion

Andrew Kitchenman | June 17, 2013 | Health Care
Analysis by officials points to larger savings in 2015, opponents question findings

A bill that backers say would expand Medicaid eligibility, save the state money, and potentially reduce the mortality rate for low-income residents serves as a reminder that federal healthcare reform is still a bitter pill to some New Jerseyans.

The bill (S-2644A-4233) amends the current state Medicaid eligibility law, detailing a new framework for Medicaid expansion.

The legislation, which was voted out of committee this past Thursday, would bring another $227 million in federal dollars into the state. That figure came courtesy of Gov. Chris Christie when he announced his support of Medicaid expansion in his budget proposal.

But neither the governor’s imprimatur nor the federal funds are enough to quiet some critics.

“There’s some talk of this being free money — there’s no such thing as free money,” said Mike Proto of Americans for Prosperity, a group that opposed the ACA.

He argued that the additional federal spending will add to the national debt.

Proto also cited studies that Medicaid enrollees have worse health outcomes than residents without insurance. “Adding more patients into Medicaid is like adding more passengers to the deck of the Titanic,” Proto said.

Health experts have questioned these studies, noting that they did not adjust for the fact that some providers help uninsured patients enroll in Medicaid only after patients seek emergency care.

An analysis of the bill’s fiscal impact provides more detail on the potential savings: $176 million comes from the federal government increasing its share of costs for current Medicaid and FamilyCare recipients and $48 million comes from federal funding for future enrollees. An additional $3 million in savings result from federal payments to fund the hospitalization of prisoners in the state.

The bill is hardly set in stone. In fact, there’s fundamental disagreement between Democrats and Republicans as to whether the measure is needed at all to ensure Medicaid expansion.

Further, Christie administration officials have expressed concern that the legilslation doesn’t include provisions that would allow the state to reverse the decision to expand eligibility if the federal government “doesn’t live up to its obligations over funding,” according to Sen. Samuel D. Thompson (R-Burlington, Middlesex, Monmouth, and Ocean).

In addition, the administration is concerned that the bill would allow providers to treat some patients — including low-income pregnant women — as though they were eligible for Medicaid before they apply for the program. This issue is still being negotiated with federal officials, Thompson said at a May hearing.

Other states have opposed the expansion, including states where legislatures have blocked governors who supported it.

Bill sponsor Sen. Joseph F. Vitale (D-Middlesex) said the expansion would allow low-income residents to receive essential healthcare.

“In New Jersey, we’re not going to sit by and watch tens of thousands of individuals go without the care that they need, even though that system might not be perfect,” Vitale said.

State officials estimate that the savings will be larger in the fiscal year that starts on July 1, 2014, since the state will save money for the entire fiscal year. Since the eligibility expansion will occur on January 1, 2014, it will only the save the state money for the last six months of the fiscal year that starts on July 1, 2013.

Along with money saved, supporters said the bill could lower the mortality rate of the newly enrolled residents.

They cited a 2012 New England Journal of Medicine study that found expanding Medicaid would reduce the mortality rate by 19.6 deaths per 100,000 adults.

“It’s a good bill it will save money and most important it’ll provide appropriate healthcare for people — that’s something that needs to be taken into any discussion we have,” said Sen. Loretta Weinberg (D-Bergen), a bill sponsor.

The 2010 Affordable Care Act funds the expansion. The U.S. Supreme Court upheld the law last year, Chief Justice John Roberts required that each state determine whether it would expand Medicaid eligibility.

The bill would expand Medicaid eligibility from roughly 26 percent to 138 percent of the federal poverty line, which currently amounts to single residents with incomes between $2,987 and $15,856 and couples with incomes between $4,033 and $21,430.

The Rutgers Center for State Health Policy estimates that the expansion will bring 104,000 residents into the system. Factor in those who are expected to enroll due to the new federal mandate to have health insurance and the outreach that’s expected over the next year, and the state’s Medicaid rolls are predicted to grow by 234,000.
While the federal government will cover 100 percent of the expansion’s cost through 2016, the state share of the expense will rise to 10 percent by 2020.

Dena Mottola Jaborska, organizing director for the nonprofit New Jersey Citizen Action, said consumer organizations strongly support the bill. She is a spokeswoman for New Jersey for Health Care, a coalition of healthcare advocacy groups.

The Senate Budget and Appropriations Committee released the bill by a 7-4 vote on Thursday, with Democratic members supporting it and Republicans opposing. Sen. Jeff Van Drew (D-Atlantic, Cape May and Cumberland) abstained from the vote. The Assembly version is scheduled for a hearing today with the Assembly Budget Committee.