The consequences of Obamacare repeal for Arizona

ObamacareThe Arizona Capitol Time (subscription required) reports that “The financial fallout from repealing Obamacare without replacing it will make everything else Arizona’s policymakers have so far worried about look like small potatoes.” Do you have $1 billion to spare? What Obamacare repeal would look like for Arizona:

Officials from the Arizona Health Care Cost Containment System, the state’s Medicaid program, have mapped out several scenarios if the federal law is abolished outright, and the options aren’t pretty. Under the worst scenarios, a straight repeal would devastate Arizona’s health care infrastructure, undermine the state’s much-touted managed care system, and leave a gaping hole in the state budget.

It’s unclear what a replacement would look like, but officials say Arizona will face a steeper challenge under a block grant, under which the states would have more flexibility in running Medicaid but face more financial exposure since they would get a set amount, instead of a guarantee that the federal government will shoulder the burden of insuring anyone who is eligible. Additionally, Arizona is under a voter mandate to insure all low-income residents, and the courts are unlikely to accept in perpetuity policymakers’ argument that the state can’t afford to adhere to the people’s will.

Congressional inaction amid so much talk of repealing Obamacare would also sow chaos on the insurance market place, as insurers get increasingly unsure about how many will enroll, and enrollees face uncertainty about their ability to keep their health plans.

Here are a few numbers to think about.

$3.2 billion

would be sucked out of Arizona’s economy if the repeal resulted in eliminating medical coverage for low-income childless adults, as well as individuals who earn between 100 and 133 percent of the federal poverty level (FPL).

For a family of four, 138 percent FPL equals to an annual income of $33,534.

425,000

If 425,000 residents lose Medicaid coverage, lawmakers would have to find $328 million more than what the state currently spends on health care.

1.9 million

Arizonans or 28 percent of the state’s population currently get health insurance through AHCCCS.

50 percent

of the AHCCCS population is between 19 and 64 years old. 44 percent are between the ages of 0 and 18.

$1 billion more

That’s how much the general fund would have to shoulder if Medicaid expansion was rolled back, and the federal government provides only regular matching funds to insure individuals who earn up to 100 percent of the federal poverty level. This scenario removes $600 million from Arizona’s economy, and 116,000 Arizonans will lose Medicaid coverage.

It would also cost the state $1 billion more if eligibility for the expansion population (those who earn between 100 and 133 percent FPL) is frozen, while the state still provides insurance coverage to those who earn up to 100 percent FPL at the regular federal matching levels. Under this scenario, nobody will get immediately kicked out of AHCCCS. Instead, members will drop off as their eligibility expires, and they can’t re-apply for coverage.

For context, $1 billion is about 10 percent of the state’s annual budget and roughly pays for the spending of all smaller state agencies, not counting money for education, health care, corrections, the universities, welfare, and child safety.

$24 million

is available to spend in the next fiscal year, if the governor and lawmakers want to maintain a structurally-balanced budget. That’s not counting $460 million in the state’s rainy day fund account.

74 percent

That’s the share of federal spending for Arizona’s Medicaid program. Currently, the feds assume the bigger risk of providing health care coverage, as the entitlement program guarantees coverage of anybody who is eligible and the federal commitment to help the states in paying for the program is open-ended.

repeal-and-replaceFunny how you did not hear any of this from Tea-Publicans running for office this year.

And you are only now hearing it from the Arizona media, something it should have been reporting on during the election.

With a Tea-Publican governor and legislature opposed to ever raising taxes for any reason, their alternative health care plan for you will be “perhaps you should die and decrease the surplus population.”

13 responses to “The consequences of Obamacare repeal for Arizona

  1. We cannot agree that a reasonable level of healthcare is a right and not a privilege is because so many Americans do not want other “undeserving” Americans to get something for nothing.

    Why should anyone in this country, one of the wealthiest on the planet, be without access to reasonable healthcare?

    If we start from that point, with that basic belief, then we eventually solve the problem. We direct our energy and resources toward providing healthcare as opposed to rationing it or denying it completely.

    I believe that private insurance has failed and is now increasing the numbers of under-insured people. And this is the problem with Obamacare as well as health care insurance provided by many employers. The right answer may be a gradual lowering of the age for Medicare eligibility.

    However, what Obamacare has accomplished so far is huge. Twenty Americans have gained insurance.
    You cannot be turned down for pre-existing conditions and there is no “running of out benefits”. The percentage of Americans without insurance has plummeted to 9%, and would be even lower if the GOP governors would expand Medicaid.

    It is interesting that people talk about spending on healthcare like it’s money down a rathole. In 2012, one in eight Americans worked in the healthcare industry and those are some of the better jobs out there. Quite obviously, people use their earnings to buy goods and services, creating a multiplier effect in their local economies and enabling others to make a living.

    Furthermore, we cannot lower healthcare costs by simply excluding ten percent of the population and under-insuring another 10 – 15 percent. Health care costs are lowered overall when there is universal access to preventative care either by preventing illness or diagnosing and treating illness in the early stages. And, of course, there are a multitude of other cost saving opportunities in health care delivery. The use of information technology in doctors offices and hospitals has dramatically improved in the last decade and will continue to do so.

    The weak link is private insurance with all their different plans and options and ridiculously high cost of administration. Most of this is invisible until you actually get sick and see it firsthand. Then you start to learn about that high deductible, high out of pocket maximum, negotiated rates that will be paid by your insurance, etc… Tracking your claims will begin to feel like a part time job. I have to believe we can do better.

  2. John Huppenthal is correct. The level of healthcare we are use to in the United States is head and shoulers above the healthcare available in the rest of the world. That is why those who could afford it have come here for their healthcare. We were warned to look carefully at the healthcare systems of Canada, Great Britain, France, etc., because we would be disappointed in what we found if we looked close. For 90% of our ailments their systems were adequate, but that dditional 10% is where we succeeded and they failed. And it is that 10% that Americans expect from their healthcare system. We are spoiled.

    The healthcare system we had before Obamacare did not insure everyone, but it was a good system for those who could afford it. After Obamacare, it was a different group of people who became uninsured, but the system is still good. At some point in the future, though, in order to insure everyone, the cost will go through the roof, healthcare will become unaffordable, and the quality will have to be curtailed in order to make it affordable. It will be for us as it is for everyone else…the exorbitant expenses due to the “flash-bang” (and very expensive) developments in medicine such as MRIs, CAT Scans, Advanced Surgical Techniques, etc., will have to go – or be rationed – to make healthcare more affordable.

    Whether Obamacare survives or not, if we are demanding that everyone everyone be insured, then healthcare is either going to become more manageable cost wise or it will bankrupt us. In Obamacare, the Democrats sold us a “Cadillac” system with promises it would be top shelf care at a “Chevrolet” cost. We will have to lower our expectations for healthcare because we can’t afford what the Democrats sold us.

    We should have known because Nancy Pelosi warned us when she said, “We won’t know what’s in it (Obamacare) until we pass it and see.”

    • It’s always a question of scarce resources against virtually unlimited wants, and healthcare is no exception. But I think there are some questions we can (and should) be asking.

      1) Should continue tying health insurance to employment. I would imagine that a not insubstantial number of individuals choose not to start small businesses because they rely on employer-sponsored group coverage and cannot afford insurance in the individual markets.

      2) Should private for-profits (i.e. the United Healths, Blue Crosses, etc.) be acting as gatekeepers for medical access? Never mind the fact that a substantial amount of money each year is diverted to administrative staff, marketing, executive salaries, and private profits each year. Remember that when one of these companies devises a reason to deny care, that increases their profits. A perverse incentive if ever there was one. Another potential perverse incentive, though less clear-cut: marketing of drugs to consumers. The USA is one of the few (only?) countries in which this is legal.

      3) Healthcare, like education and environmental quality, has a lot of positive externalities. This means that a decentralized system of markets and prices will lead to inefficiently low levels of provision.

      4) As far as I understand, a lot of basic medical research on new drugs is conducted by universities and other public entities (NSF grants, among others). Yet, the fruits of that research end up being captured by the private sector through an inefficient patenting system where drug companies reap the returns.

      5) Fee-for-service models of compensation by Medicare/-caid and private insurers alike promote overdiagnosis and overtreatment.

      However, apart from these, I do think we have to start wondering if experimental high-cost treatments or very intensive life-support systems that add little quality or length of life are worth covering by a government program. Somewhere between 25-30% of a person’s lifetime health expenses are in their last year of life.

      Despite all of these, I do think there’s a place for private health insurance. I think that there is a basic responsibility to cover that 90%. If individuals with means want to buy that last 10% with their own money, let them. I don’t want to see substantial portions of the population locked out of even basic care, though.

  3. “…Arizona is under a voter mandate to insure all low-income residents,…

    As I read that line I was reminded of the slew of initiatives wherein the voters have voted to give themselves something from the state streasury or private buisnesses. I remembered Alex de Toqueville wrote in “Democracy in America” that Democracy was a wonderful thing but it could not survive the voters realization that they could vote themselves largesse from the public treasury. When I look at the Federal and state budgets, I can’t help but notice all the handouts from the national and states treasuries and I wonder how long it will be before our democracy collapses of its own “generosity”.

  4. John Huppenthal

    The main concern hasn’t been addressed. You can’t separate health care and quality. You can wax poetic all you want about universal health care in Cuba but we wouldn’t define it as healthcare if it were here, we would define it as malpractice. I haven’t been able to ascertain a single MRI or CAT machine in Cuba.

    Seeing someone called a doctor is not healthcare, getting cured for cancer or alzheimers is and would be.

    The dimensions of healthcare that make it healthcare are CAT scans, MRI’s, drugs and diagnosis. The typical European country is not in the same ballpark as the US in this regard for the typical citizen. We have close to 100% more CAT and MRI machines per capita than the typical European Union country. These are the workhorses of healthcare quality.

    And, Europe is only close because they can parasite on development in the United States.

    The joker has been in charge for 8 years, throwing open the doors and saying “Its free, its free.” Now, serious people have to put the pieces back together.

    Just letting it burn to the ground is still a serious option.

    We are in the race of our lives with our deadly foes in the microbial world.

    Ocare puts everything at risk.

    • universal care is in more places then cuba herr huppenthal as civilized countries believe we should have healthcare even if your poor. if you say their is no right to healthcare then there is no right to life as both are privileges that can be recinded at anytime. what are you going to do when we take over. remember how long it took to call arizona this time. latinos voting the nazi arpaio and the fool purcell. maybe not 2018 especially if dems nominate moor rich old whites on their $$$ ego trips. but soon!

      • John Huppenthal

        In the US, everyone has always been covered. If you doubt that, just visit the Maricopa County Hospital emergency room at midnight.

        It is always been a discussion about quality, effectiveness and how do you pay for it without schemes that destroy quality.

        As for your electoral prospects prediction, how is that going? Down over 1,000 elected positions in the last 8 years. House and Senate in Arizona, US House and Senate, Governor and President, Corporation Commission, All state-wide elected offices.

        Here is a prediction for you – the Republicans retain control of the House and gain a filibuster proof Senate in 2018 after scoring the first 5% growth year in 32 years. Then, Trump gets reelected with over 40% of the Black and Latino vote after scoring the first 8% growth year in 65 years.

        The stock market is predicting it and unlike you and I, they are putting their money on the line.

        Unlike all the polls, the economic predictor models were very accurate this election.

        Of course, in three minutes and two tweets, it could all go down the drain.

  5. For Sure Not Tom

    As I recall, it was the hospitals in Arizona that put the pressure on Jan Brewer to opt in to the Healthcare Exchange’s Medicaid expansion.

    I think Brewer’s about as smart as an an old wood fence, but I give her credit for thinking with Arizona’s wallet on that one.

    I would hope those same market forces (campaign donors?) that leaned on Brewer would be leaning on the current crop of TeaPublicans.

  6. Well, as I recall, John McCain ran TV ads attacking Ann Kirkpatrick for supporting Obamacare and he was re-elected with almost a 13 point spread. Of course, it is McCain’s seething hatred for President Obama that is behind his hatred for Obamacare, but that doesn’t help the people who need it.

    Voting against one’s best interest is difficult to understand, but people do it all the time.

    It is not clear to me why Republicans hate the social safety net especially when so many of them are beneficiaries. Are they really that stupid?

    • I’m sure stupid applies to some of them. The vast majority of the rank and file safety net haters have been brainwashed by decades of Rupert & Roger, Rush, Ann, etc., though for many of them a light rinse would have sufficed. (NOTE: Stole the “light rinse” comment from Gene McCarthy who was responding to George Romney’s claim to have been brainwashed into supporting the Vietnam war.)

  7. do you think republican elected officials care?