Gov. Jan Brewer: Medicaid Restoration Plan makes sense once people ‘do the math’

Posted by AzBlueMeanie:

"We don't need a new idea. There is an idea. The idea is called America, and it still works." – Sen. Marco Rubio (R-FL) at CPAC 2013.

This is the kind of bumper-sticker jingoism that passes for policy in the Tea-Publican Party. "Don't bother me with facts and figures, I don't do math. It makes my head hurt!"

Which brings me to Governor Jan Brewer's Medicaid (AHCCCS) Restoration Plan. Jan Brewer says her plan makes sense once people “do the math.” But Tea-Publicans don't do math, Jan!

BrewerMath

The Arizona Capitol Times (subscription required) has a lengthy report today on Jan Brewer's Medicaid Restoration Plan (h/t above photo). AZ Gov. Jan Brewer's Medicaid, AHCCCS plan by the numbers:

Do the math.

Those three words essentially sum up Gov. Jan Brewer’s core argument in favor of expanding the Arizona Health Care Cost Containment System, the state’s Medicaid program. She repeats them at every press event, every interview and every plea for support.

So that’s what the Arizona Capitol Times decided to do.

Brewer’s plan is laden with numbers: the number of people who would get Medicaid coverage under her plan; the number of people who will lose coverage if it isn’t implemented; the amount of federal money the state will get; and the “hidden health care tax,” as Brewer calls it, that Arizona families will continue to face if the burden of uncompensated care isn’t eased for hospitals.

“I’m going to work as hard as I know how. I think the greater percentage of the people in Arizona will do the math and I think that we can get it done,” Brewer said on March 12, after unveiling the draft language of her Medicaid plan.

* * *

But between the human impact, budget analysis and health care costs, Brewer is counting on the numbers to persuade Arizonans to support her.

BUDGET IMPACT

On a budgetary level, the numbers involved in Brewer’s Medicaid plan are staggering.

Instead of the two-to-one match Arizona has historically received from the U.S. Centers for Medicare and Medicaid Services (CMS) for AHCCCS coverage, the feds will provide 90 percent of the cost of the expansion. Brewer often says that her plan will bring $8 billion in federal money to Arizona in its first four years.

According to Brewer’s budget office, the federal match for about 300,000 childless adults on AHCCCS — a figure that includes the 50,000 who are estimated to still be receiving coverage at the end of 2013 — would be about $1.8 billion in fiscal year 2015, nearly $2 billion 2016, just over $2 billion in 2017 and $2.1 billion in 2018. Arizona would also receive about $464 million for the second half of fiscal year 2014, when Brewer expects the expansion to go into place.

The other half of that equation — the state’s 10 percent match — is equally eye-catching. Brewer frequently emphasizes that the estimated cost to the state’s general fund will be zero dollars, thanks to the hospital tax that will be used to pay for the state’s match.

The hospital tax is expected to bring in $82 million in fiscal year 2014, $256 million in 2015 and $224 million in 2016. The tax is expected to not only cover the state’s match for new coverage, but Arizona’s share of preexisting coverage as well, meaning it will offset money the state is already spending. As a result, Brewer’s Office of Strategic Planning and Budgeting estimates that the general fund will get an extra $62 million in 2014, $136 million in 2015 and $155 million in 2016.

Brewer and her allies refer to her plan as a restoration, not expansion, of AHCCCS to emphasize that it would restore coverage for childless adults earning up to 100 percent of the federal poverty level, which was mandated by the voter-approved Proposition 204 in 2000. In the midst of an economic downturn, the governor and Legislature froze enrollment for that population in 2011. Brewer’s plan would restore that coverage while expanding it to tens of thousands of newly eligible people.

But because CMS has indicated that it will not renew its current agreement with AHCCCS at the end of the year, the Brewer administration believes Arizona will no longer be eligible for the two-to-one federal match it currently gets for childless adults. AHCCCS believes Arizona won’t get any federal matching funds unless it expands coverage to the full 133 percent.

That means that if Arizona wants to restore that coverage for the Prop. 204 population, it will have to do so without federal matching funds. OSPB estimates the cost to the state will be $1.4 billion in FY 2015 alone.

Critics of Brewer’s plan don’t dispute the numbers.

* * *

HUMAN IMPACT

After imploring people to do the math at her Medicaid rollout and reciting the dollar figures that went with it, Brewer said there is something bigger at stake — people.

“I’m talking about the tens of thousands of fellow Arizonans who have lost jobs and their health insurance during the great recession. I’m talking about the thousands more who continue to work but simply don’t earn enough to afford private insurance,” she said.

Since AHCCCS implemented an enrollment freeze for childless adults in July 2011, about 150,000 have fallen off the rolls. John Arnold, Brewer’s budget director, said there are an estimated 80,000 left, and AHCCCS expects about 50,000 childless adults to remain at the end of the year. At that point, if no deal is reached to expand Medicaid, those people will likely lose coverage as well. Brewer frequently emphasizes that those 50,000 people who remain on the AHCCCS rolls would lose coverage even if they are in the middle of life-saving treatments.

If the expansion is implemented, Arnold said AHCCCS expects to gain about 240,000 new patients, in addition to the 50,000 who would retain their current coverage. Most of those people, he said, are childless adults who earn less than 100 percent of the federal poverty level. AHCCCS expects about 57,000 childless adults and parents who earn between 101 percent and 133 percent of the federal poverty level to enroll as well.

If there is no expansion, those 57,000 people would still receive nearly free health care from the federal government in the form of subsidies, which would be used to purchase coverage through a health insurance exchange the federal government will run for Arizona. But childless adults who earn less than 100 percent of the poverty level won’t receive those benefits.

Pete Wertheim, vice president for strategic communications at the Arizona Hospital and Healthcare Association, said this would leave a massive “doughnut hole” in Arizona’s health care coverage.

* * *

UNCOMPENSATED CARE

The cost of uncompensated care for uninsured Arizonans has been one of the centerpieces of Brewer’s push for Medicaid expansion. It has also been one of the most scrutinized and questioned aspects by critics of her plan.

According to the Arizona Hospital and Healthcare Association, uncompensated care accounted for about 3.6 percent of Arizona hospitals’ expenses from 2008 to 2011, the last three years before implementation of the AHCCCS enrollment freeze. In 2012, that number jumped to about 6.8 percent, Wertheim said.

The total cost of uncompensated care to Arizona hospitals was about $777 million in 2012, Wertheim said. That number jumped by $293 million from 2011 to 2012, the first partial year of the freeze.

* * *

But hospitals don’t bear the brunt of those costs alone. Insurance providers pay more as well, and pass the costs on to patients through their premiums.

Brewer has repeatedly said that uncompensated care adds about $2,000 a year to the average cost of health insurance for an Arizona family, which she often refers to as a “hidden health care tax.”

Wertheim said the bulk of those costs are from uncompensated care, though other factors contribute as well. But Arizonans with private health insurance were absorbing most of those costs before the freeze went into effect. Wertheim said the cost of uncompensated care was an average of about $1,700 per family prior to the freeze.

Dr. Daniel Derksen, a professor and chairman of the Public Health Policy and Management section at the University of Arizona’s Mel and Enid Zuckerman College of Public Health, said uncompensated care is especially troublesome in Arizona and other border states. Arizona has one of the highest rates of uninsured residents in the country, he said.

Insurers account for that, and that adds to the cost for everyone who has health insurance, he said.

* * *

“I don’t think anybody can dispute that we have significant uncompensated care in this state as a result of the large number of people who are uninsured,” Benson said. “Regardless of whether that figure is 2,000 or 1,500 or 1,700, there is a price to be paid, and we’re all paying it.”

Arizona hospitals may soon face an additional shortfall in compensation for uninsured patients. The Affordable Care Act reduces Disproportionate Share Hospital payments, known as DSH payments, starting in fiscal year 2015.

According to the American Hospital Association, Arizona could lose as much as $52.9 million in Medicaid DSH payments in 2015, $55.3 million in 2016, $78.8 million in 2017, $105 million in 2018 and $117.6 million in 2019. Based on the formula used to determine DSH payments, the reductions will be greater if Arizona expands its Medicaid program.

The decrease in DSH payments will depend on whether Arizona expands its Medicaid program.

According to a December article in the New England Journal of Medicine, Arizona’s payments of $133 per-patient-per-day will drop by $40 if AHCCCS expands and by $20 if it does not.

“As more people get insured, the idea was, well there would be more individuals covered with a payer source so that hospitals would require a less disproportionate share,” Derksen said.

ECONOMIC IMPACT

One of the less frequently mentioned impacts of Medicaid expansion would be on the economy. But economists say that impact is very real.

According to a study by Arizona State University’s W.P. Carey School of Business, the proposed expansion would create 2,717 new jobs in 2014, 13,821 new jobs in 2015 and 15,419 new jobs in 2016.

The study, published on Jan. 30, also estimated that Arizona would bring in about $7.3 million in additional sales tax and income tax revenues in fiscal year 2014 from expansion. That number would jump to $37.2 million in 2015 and $42 million in 2016.

“It’s a no-brainer in terms of a potential huge benefit to the economy,” said Professor Tim James, one of the study’s authors.

Economist Dennis Hoffman, also of the W.P. Carey School of Business, said any injection of out-of-state money into Arizona is an economic win. He compared it to the effects of bringing in a company such as Intel or Raytheon.

Hoffman said the estimates in the report authored by James and Anthony Evans were conservative. He estimated that Arizona would gain additional jobs due to economic benefits to the regional economy that will result from nearby states like California and Nevada expanding their Medicaid programs. And he noted that the additional money the plan is expected to pump into the state’s general fund will likely benefit the economy as well.

“This would be the opportunity to create on the order of 25,000 or so jobs at a time when those would come in pretty handy,” Hoffman said. “I clearly see it as an economic win for the state.”

* * *

“The economics of this … is mostly pretty straightforward. It’s the politics of it that gets in the way,” Hoffman said.

[See also the earlier Grand Canyon Institute study, grandcanyoninstitute.org, which reached a similar conclusion. The full study can be found here.]

The reporter to this story quoted at length from Byron Schlomach of the "Kochtopus"-funded Goldwater Institute, because this is an unfortunate practice that reporters have all too readily engaged in since 1988. Any study produced by the Goldwater Institute is immediately suspect, because they do not follow the scientific method. GI starts with the "conclusion" that supports its propaganda and then GI reverse engineers the "research" to make it appear plausible to reporters who are unfamiliar with research studies. GI has engaged in this kind of scientific fraud for years. Its studies frequently fall apart under closer scrutiny of peer review.

Goldwater Institute is a lobbyist organization that does propaganda for its benefactor, the "Kochtopus." That is the purpose of its existence and what it is well paid to do. Allowing its propagandists to "catapult the propaganda," as George W. Bush once said, does nothing to inform readers, but only misinforms and misleads them. Just stop.

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